engaging senior managers and boards of directors …...10/21/2013 1 tish patel william b. lee,...
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10/21/2013
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Tish PatelWilliam B. Lee, Ph.D., CFPIM
Engaging Senior
Managers and Boards of
Directors with S&OP
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Tish Patel
• President, Houston APICS chapter, 2011-2013
(A Platinum Chapter)
• SAP, senior management consultant, manages
global PMO office; global security; mobile strategy
• Six Sigma Black Belt; CompTIA project certified professional;
supply chain risk associate
• Over twenty years of broad experience in global supply chain
and IT integration projects
• HP, set up large control tower operations in China; Compaq
Computers and AT&T Mobility, created and led large supply
chain and logistics projects; also worked in oil and gas, life
sciences, and consumer products
• Education: double BBA, University of Houston, International
Marketing, Organizational Behavior and Management
For more information, please see LinkedIn profile.For more information, please see LinkedIn profile.
10/21/2013
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William B. Lee, Ph.D., CFPIM, CMC
Educator, consultant, author, and board member• Books: Creating Entrepreneurial Supply Chains: A Guide
for Innovation and Growth, 2012; Leading Effective
Supply Chain Transformations: A Guide to Sustainable
World-Class Capability and Results, 2010; (both with J.
Ross Publishing)
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For more information, please see LinkedIn profile.For more information, please see LinkedIn profile.
• Recent Article: “How to Communicate with Your Board of
Directors,” Supply Chain Management Review, March/April 2013
• APICS E&R Foundation: Board of Directors
• APICS Knowledge Delivery Committee: Chair
• Rice University Jones Business School: Professor, Dean of
Executive Education, and Director of International Alliances
• Freeman Companies: Board of Directors
What Do Boards of Directors Do?-- PROVIDE OVERSIGHT --
LEGAL AND ETHICAL PERFORMANCE
STRATEGY IMPLEMENTATION AND PERFORMANCE
FIDUCIARY RESPONSIBILITY
STRATEGIC ADVICE
HUMAN CAPITAL
CEO’s PERFORMANCE MANAGEMENT
CRISES
ETC., ETC., ETC.
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Questions for Boards of Directors
From where is the company’s growth coming?
What is the business’ health?
What is the impact of globalization and complexity?
Do metrics capture the root causes of performance?
Do you get bad news early or bad news late?
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Questions for S&OP
• Does S&OP include issues of concern to the board
of directors?
• Does S&OP include a precise understanding of the
company’s business model for success?
• Does S&OP recognize that processes have become
more complex and dispersed?
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Why Link S&OP with Boards?
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All directors should have an
understanding of the company’s:
– Operational and financial
objectives, strategies, and plans;
– Results of current operations,
financial condition, and risks; and
– Relative standing vis-à-vis
competitors.
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More on Linking S&OP with Boards
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Without superior supply chains,
an organization experiences:
� Dissatisfied customers
� Disappointed suppliers
� Increased cost
� Reduced revenues
Forcing multiple interactions
throughout the enterprise.
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Corporate Governance Triangle and S&OP
Board of Directors
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S&OP
S&OP Linkages with the Board of Directors
Director Director Director Chair
CEO
Finance Operations Marketing & Sales
Human Resources
Product Dev. Other
Director Director Director
Executive Involvement inExecutive Involvement in
Sales & Operations PlanningSales & Operations Planning
BOARD OF DIRECTORSBOARD OF DIRECTORS
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How to Better Communicate
Many board members do not understand supply
chains.
Many supply chain people cannot speak the
language of their boards.
Communication needs to be improved both ways.
“If you ask me a
question I don’t
know, I’m not going
to answer.”Yogi Berra
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Learn the Different Languages
Language
of Money
Language of
Things and Stuff
The bottom of the organization
talks about things and stuff.The top talks
about money.
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Learn the Different Languages of
Management Reporting and S&OP
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S&OP Is Mostly S&OP Is Mostly
About the About the
FutureFuture
Management Management
Reporting Is Mostly Reporting Is Mostly
About the PastAbout the Past
The PastThe PastThe FutureThe Future
NOW
Learn the Language of Business Models
ASK YOURSELF THESE QUESTIONS ABOUT YOUR ASK YOURSELF THESE QUESTIONS ABOUT YOUR
COMPANYCOMPANY
– Do people understand our business model?
– Do directors understand the supply chain strategy and how it
supports the business model?
– Is management looking at strengths, weaknesses,
opportunities, and threats?
– What external forces can impinge on the company:
• competitive rivalry within the industry,
• governmental regulations,
• customer and supplier difficulties,
• global economic trends?
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Learn the Language of the Board
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Cash Flow
Balance
Sheets
Financial Financial
Decision
Making
Strategic
Thinking
Risk
M & A
FORM 10-K
S&OP / Board Linkages
Grow the
Business
SUPPLY
REVIEW
FINANCIAL
REVIEW
EXECUTIVE
S&OP
MEETING
Typical S&OP Process
Add to the Business
Capabilities Run the
Business Well
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DEMAND
REVIEW
PRODUCT
DEVELOP.
REVIEW
SPECIAL
PROJECTS
REVIEW
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Learn the Language of Value Maturity
Bu
sin
ess
Pe
rfo
rma
nce
Time
Think
Value
Begin
to
Deliver
Value
Expand
and
Build
Value
Scale
Up for
Long-
Term
Value
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ALONG THE VALUE CHAINALONG THE VALUE CHAIN
Connectivity of Boards and S&OP
A grocery supply company’s gains from increased A grocery supply company’s gains from increased
connectivity between its Board and its S&OPconnectivity between its Board and its S&OP
– Better, faster growth
– Increased operating flexibility
– More value for the customers’ customers, including faster
and better responses to new needs and opportunities
– Enhanced leverage with technology, including more control
over technological change
– More powerful competitive strategies
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An Oilfield Equipment Company’s Strategy
Manage the current economic environment.
Maintain liquidity and financial flexibility.
Complete redesign and re-implementation of ERP.
Pursue development of new products.
Increase global strategic alliances.
Enhance market positions with acquisitions.
S&OP and boards of directors
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Foreign Corrupt Practices Act (FCPA)
The FCPA has several provisions that
can snare companies. One of the
most important is bribery of foreign
officials. The FCPA is of great
concern to Boards of Directors and
should be of concern to supply chain
personnel as well. Supply chains
frequently are scattered around the
world and need strong FCPA
compliance programs.
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One large equipment company got into big trouble because of the FCPA.
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NEW
CUSTOMERS
AND
MARKETS
(NATIONAL OIL
COMPANIES)
“WHITE SPACE”
(ACQUISITIONS)
CORE
BUSINESSES
ADJACENT
PRODUCTS
AND
TECHNOLOGIES
(SHALE)
Ne
wE
xis
tin
g
Existing New
2
1
PRODUCTS AND TECHNOLOGIES
CU
ST
OM
ER
S A
ND
MA
RK
ET
S
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Idea-Generation Processes
OILFIELD
EQUIPMENT
COMPANY’s
S&OP / BoD
LINKAGE
Opportunities with Customers
1. Rationalize customers
2. Improve relationships with customers
3. Improve service to customers
4. Integrate customers
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Growth
Provisional
Phase-Out
Our
Company
Our
Customers
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Opportunities with Suppliers
1. Rationalize suppliers
2. Improve relationships with suppliers
3. Help suppliers improve
4. Integrate suppliers
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Our
Company
Our
Suppliers
Growth
Provisional
Phase-Out
Why We Do Formal Change Management
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Misconceptions About Change
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“There will be no
emotional reaction
to change”
“The ‘weak’ people
are the ones who
will leave”
“People ‘hear’ what
management
communicates”
“Time takes care of
everything”
“Change happens
quickly”
“Change just takes
strong leadership”
“Change always
goes according to
plan”
“Management
behavior during the
transition is
invisible”
“Causes of the
change will be
viewed rationally”
If change is easy, why is the press so full of stories
about organizations which cannot achieve it ???
Different Attitudes Toward Change ...
“It’ll be good
for you!”
“None of
this is
logical!”
“Change would
be easy if it were
not for people.”
“If we build “If we build
it, they will
come.”
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Neil Armstrong lands on
the moon, July 20, 1969
President Kennedy at Rice
University, Houston,
September 20, 1962.
Kennedy’s “Man-on-the-Moon” Speech
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“Current situation”
“Vision”
“Path forward”
< 7 YEARS
LATER
< 7 YEARS
LATER
“That’s one small step
for man, one giant leap
for mankind.”
Attitudes Toward Risk
• “When we linked S&OP with our board, it helped us
define the risks faced by the company.”
• “We cannot eliminate risk – at best, we can manage and
mitigate risk.”
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“WE HAVE OPPORTUNITIES in OUR RISKS“WE HAVE OPPORTUNITIES in OUR RISKS
andand
RISKS in OUR OPPORTUNITIES.”RISKS in OUR OPPORTUNITIES.”
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Risk: Linking Supply Chains and Boards
The “BP oil spill” in the
Gulf of Mexico had many
implications for supply
chain management and
boards of directors.
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The “Standard” Payoff?
Increased
revenue
Reduced
costs
Enhanced
service
Improved
quality
REAPING THE
PAYOFF?
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Problems with Benchmarked Payoffs
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“We usually
shoot behind
the duck!”
Reaping the Payoff
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“Most innovations, especially the successful ones,
result from a conscious, purposeful search for
innovation opportunities, which are found only in
a few situations.”
Peter F. Drucker
10/21/2013
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Thank You for Coming
Please ask your questions and make your Please ask your questions and make your
commentscomments
We have all sorts of ways to deal with them!We have all sorts of ways to deal with them!
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Contact Information
Tish PatelTish Patel
Houston, TX
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William B. LeeWilliam B. Lee
713-963-8339
Houston, TX
10/21/2013
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Survey
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