presentation given at ibp presentation miami march29

Supply Chain Insights, LLC © 2012

Supply Chain InsightsDelivering Actionable Advice to the Supply Chain

Leadership Team

BRICKSMatterThe Role of Supply Chains in Building Market-Driven Differentiation

LORA M. CECERE CHARLES W. CHASE JR.

BookPublishes in August

2012


What’s in a name?

A rose by any other name would smell as

sweet.

William Shapespeare


Integrated business planning (IBP) refers to the technologies, applications and processes of connecting the planning function across the enterprise to improve organizational alignment and financial performance. IBP accurately represents a holistic model of the company in order to link strategic planning, and operational planning, with financial planning. By deploying a single model across the enterprise and leveraging the organization’s information assets, corporate executives, business unit heads and planning managers use IBP to evaluate plans and activities based on the true economic impact of each consideration.

Sales and operations planning (S&OP) is an integrated business management process through which the executive/leadership team continually achieves focus, alignment and synchronization among all functions of the organization. The S&OP plan includes an updated sales plan, production plan, inventory plan, customer lead time (backlog) plan, new product development plan, strategic initiative plan and resulting financial plan. Plan frequency and planning horizon depend on the specifics of the industry. Short product life cycles and high demand volatility require a tighter S&OP planning as steadily consumed products. Done well, the S&OP process also enables effective supply chain management.

What is in a name?

4


CostVolumeGrowth

Typical Organization6

CEO

Chief Customer

Officer

Chief Marketing

OfficerSales

Account Teams

COO

VP of Supply Chain

Customer Service Procurement Logistics

CFO

CIO

VP of Manufacturin

g

Quality


What is the goal?

How do we make decisions?

What do we measure?

The Questions to Ask

7


Progression

Organizational Driver Goal Focus

Manufacturing visibility Feasible Plan Inside-out

Improve customer service

Match demand and supply

Inside-out

Align plans Profitable plan Inside-out

Demand driven Sense and shape demand

Outside-in

Market driven Align and orchestrate demand market to market

Outside-in


A Supply Chain is a Complex System with Complex Processes with Increasing Complexity

Looking at Supply Chain as a Complex System

Inventory

Supplier Strategy

Growth

Revenue Cost of Goods

Working Capital

R&D Strategy and Investment Asset Strategy and Investment

Corporate Social Responsibility

Forecast Accuracy Customer Service

Channel StrategyProduct and Service

Portfolio

Sales Policies

Distribution Policies

ManufacturingPolicies

Procurement Policies

Logistics Policies

ReturnsBackorders

ObsolescenceFirst Pass

YieldMaterial

YieldEmpty Miles

Corporate Trade-offs

Investment Trade-offs

Supply Chain

Trade-offs

Supply Chain Waste

Apply the Technology

11

Network Design: What is the role of inventory in our network design?

Inventory Configuration: What is the right Form & Function of Inventory?

Inventory Policy: What is the Right Level of inventory?


Value: Price, trade incentives, new products, services, freshness, responsiveness

Variety: Configurations, items, platforms, components, brands, processing technologies

Velocity: Lead-times, order to delivery, inventory turns, time to market

Volatility: Demand, inventory, schedules, reliability, yields

Volume: Plants, warehouses, distribution centers/points, product flow

What drives Variability?


Getting to Letter Perfect….Common Practice Market-driven Focus

S Ask sales Focus on market drivers:How do we best shape demand?

& Direct integration to supply Design of the value chain to optimize trade-offs, minimize risk, balance cycles, and orchestrate demand

OP Manufacturing plan Trade-offs between make, source and deliver

13


The Need for Balance

14

S: Go-to-Market

Strategies

OP: Demand Orchestration

Commodity Strategies

Network Strategies: Make/Source & Deliver

Inventory: Form & Function

Competition

Market Drivers

&

Goal


Business Planning

Demand-Driven Forecasting

Constrained Forecast

Increasing levels of granularity

Increasing need for value network strategy alignment

The Need for Balance


S&OP Evolution

Manufacturing-Driven

Deliver a Feasible Plan for Operations

Sales Driven

Match Demandwith Supply

Business-planning Driven

Coordination of Plans

Demand Driven

Sense andShape Demand

Market Driven

Orchestrate Demand

Market to Market

Greater Benefit• Growth• Resilience• Efficiency

Goal

A feasible plan • Model the network• Recognize and respect

constraints• Gain plan visibility

Match demand with supply • What-if analysis• Multi-tier inventory analysis• Network design

Deliver the most profitable Plan

• Demand translation• Supply orchestration• Optimize financial drivers

Demand-driven • Sense channel demand• Shape demand• Drive the most profitable

response

Market-driven • Sense buy and sell-side market conditions

• Bi-directionally orchestrate demand

Technology

17Demand Planning Supply Planning Inventory Planning Demand Translation Platform

Key: Financial Planning Market Sensing


Historically, we have:

• Tried to get precise on inaccurate data.

• Believed that the most efficient supply chain is the most effective supply chain.

• Built efficient chains, but not effective networks.

• Focused inside-out, not outside-in.

• Rewarded the urgent, not the important.

18


What is the goal?

How do we make decisions?

What do we measure?

Ask the Right Questions

19


Who is Lora?

•Partner at Altimeter Group (leader in open

research)

•7 years of Management Experience leading

Analyst Teams at Gartner and AMR Research

•8 years Experience in Marketing and Selling

Supply Chain Software at Descartes Systems

Group and Manugistics (now JDA)

•15 Years Leading teams in Manufacturing and

Distribution operations for Clorox,

Kraft/General Foods, Nestle/Dreyers

Grand Ice Cream and Procter & Gamble.


Where do you find Lora?

Contact Information:

[email protected]

Blog: www.supplychainshaman.com

(3500 pageviews/month)

Twitter: lcecere 2900 followers. Rated

as the top rated supply chain social

network user.

Linkedin:

linkedin.com/pub/lora-cecere/0/196/573

(2300 in the network)