s&op at newell rubbermaid: moving beyond the basics
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S&OP at Newell Rubbermaid: Moving Beyond the BasicsTRANSCRIPT
Beyond the Basics:
Leveraging S&OP to Deliver Results
January 27, 2011
Andrew Downard and Bill Norman
2
Agenda
Background An overview of Newell Rubbermaid.
Strategy Why we are working to improve S&OP. How our strategy for
S&OP fits in to the goals and objectives of the business.
People Who is involved, and how.
Process How we do S&OP. How we have structured our S&OP
improvement initiative. Executing the basics well.
Measures How do we know we are having an impact?
What’s next? Moving beyond the basics.
Forecasting Value Added X-ray vision for the forecasting process.
Facing the Customer Integrating S&OP and Customer Demand. Signals within
Forecasting.
3
Agenda
Background An overview of Newell Rubbermaid.
Strategy Why we are working to improve S&OP. How our strategy for
S&OP fits in to the goals and objectives of the business.
People Who is involved, and how.
Process How we do S&OP. How we have structured our S&OP
improvement initiative. Executing the basics well.
Measures How do we know we are having an impact?
What’s next? Moving beyond the basics.
Forecasting Value Added X-ray vision for the forecasting process.
Facing the Customer Integrating S&OP and Customer Demand. Signals within
Forecasting.
Newell Rubbermaid: Groups and GBUs
4
5
Agenda
Background An overview of Newell Rubbermaid.
Strategy Why we are working to improve S&OP. How our strategy for
S&OP fits in to the goals and objectives of the business.
People Who is involved, and how.
Process Executing the basics well. How we have structured our S&OP
improvement initiative.
Measures How do we know we are having an impact?
What’s next? Moving beyond the basics.
Forecasting Value Added X-ray vision for the forecasting process.
Facing the Customer Integrating S&OP and Customer Demand. Signals within
Forecasting.
6
Falling Short on Measures of S&OP Performance:
» Fitch Ratings: Measures of S&OP
Performance
▪ Inventory growth
▪ Turns
▪ Working Capital
» External Benchmarks: Forecast accuracy
▪ NWL 2008 forecast accuracy was significantly below best-in-class,
presumed to be 80% (60 day based on units)
The Opportunity - 2008
Source: Cash Conversion Cycle for Household Products and
Personal Care, Fitch Ratings, July 2, 2007
7
Agenda
Background An overview of Newell Rubbermaid.
Strategy Why we are working to improve S&OP. How our strategy for
S&OP fits in to the goals and objectives of the business.
People Who is involved, and how.
Process How we do S&OP. How we have structured our S&OP
improvement initiative. Executing the basics well.
Measures How do we know we are having an impact?
What’s next? Moving beyond the basics.
Forecasting Value Added X-ray vision for the forecasting process.
Facing the Customer Integrating S&OP and Customer Demand. Signals within
Forecasting.
8
Newell
Rubbermaid
Tools,
Hardware, and
Commercial
Products
Office
Products
Home and
Family
Decor CLB&PE B&SRFH MHA EDW FW&L Tech IP&S RCP CT&A HW
GBU
9
Example: Entities
GBU X
“owns” the
global
S&OP
Process
S&OP is
executed in
each of 5
distinct entities.
Each entity has
its own supply
and demand.
Some
entities
belong to
larger
regional
units.
10
Newell
Rubbermaid
Tools,
Hardware, and
Commercial
Products
Office
Products
Home and
Family
Decor CLB&PE B&SRFH MHA EDW FW&L Tech IP&S RCP CT&A HW
GBUEntity
(business)
Entity
(region)
11
Agenda
Background An overview of Newell Rubbermaid.
Strategy Why we are working to improve S&OP. How our strategy for
S&OP fits in to the goals and objectives of the business.
People Who is involved, and how.
Process How we do S&OP. How we have structured our S&OP
improvement initiative. Executing the basics well.
Measures How do we know we are having an impact?
What’s next? Moving beyond the basics.
Forecasting Value Added X-ray vision for the forecasting process.
Facing the Customer Integrating S&OP and Customer Demand. Signals within
Forecasting.
12
S&OP Workstreams (APQC Webcast)
Area People Process Tech. Past/Present
Steering
Team
Define the process by mapping Wallace and Stahl to Newell Rubbermaid. First
drive compliance to the process, then drive effectiveness of the process.
Community of
Practice
Build cohesion and consistency of purpose in the community. Get everyone on
the same page. Leverage the community we have built to drive business
results.
Training Make sure everyone involved with the process has a solid understanding of
the basics, fundamental S&OP roles, good meeting behavior, etc
Global Scope First focus on the S&OP process within each entity. Then focus on building
global coordination between entities at the GBU and group level.
Assessments
First focus 85% focus on compliance, 15% on results and effectiveness. Then
shift the emphasis and structure. 15% focus on compliance, 85% on results
and effectiveness.
Process
Manual
Apply the generic Wallace and Stahl 5-step meeting cadence to the Newell
Rubbermaid environment. Standardize metrics and reports. Then expand
manual to cover key “effectiveness” areas such as inventory optimization,
forecasting, etc.
Forecasting Focus on parent S&OP process first. Then build out and deploy as a key
capability within the S&OP framework.
Inventory
Optimization
Focus on parent S&OP process first. Then build out and deploy as a key
capability within the S&OP framework.
Global
Reporting
Optimize and harmonize existing local solutions first (mostly Excel). In parallel
build out an SAP-based reporting solution with data from all regions.
Harmonize new reporting solution with process manual, training, and
assessment paths.
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The Newell Rubbermaid S&OP Process
» The Newell Rubbermaid S&OP Manual can be thought of as “Wallace and Stahl as
applied at Newell Rubbermaid”.
» Annual S&OP assessments measure how closely the process as defined in the
manual is being followed.
+ =
14
Assessments to Actions
Complexity
Cri
ticality
3
Location GBUOrigination
Date
Priority
S&OP Process
Section Gap Driver Action Responsible
Date to
complete StatusFundamentals
Data Close/ Update
Demand Planning
Supply Planning
Integration
Executive Review
S&OP WORKOUT ACTION PLAN Lastest Update Date
2
GAPS
Absence or systemic
breakdown as shown
through multiple lapses or
continual underperformance.
OBSERVATIONS
Minor lapses or trending
unfavorable.
1
15
Agenda
Background An overview of Newell Rubbermaid.
Strategy Why we are working to improve S&OP. How our strategy for
S&OP fits in to the goals and objectives of the business.
People Who is involved, and how.
Process How we do S&OP. How we have structured our S&OP
improvement initiative. Executing the basics well.
Measures How do we know we are having an impact?
What’s next? Moving beyond the basics.
Forecasting Value Added X-ray vision for the forecasting process.
Facing the Customer Integrating S&OP and Customer Demand. Signals within
Forecasting.
16
2008-2009 Year-over-Year Results
YOY
Total inventory (raw + FG + WIP)
Total E&O dollars
E&O percentage
Turns
Days on Hand
Forecast Accuracy (60 day lag)
Perfect Order
SKUs
S&OP Assessment Score
17
GBU X Results
» While assessment scores went up, business results improved
dramatically:
Metric: 2008 2009
Gross Inventory 32%
E&O Inventory 43%
Line Fill 5.2%
Forecast Accuracy 38%
SKU Count 15%
Inventory & Line Fill for GBU X
$30
$40
$50
$60
$70
Jun-08
Jul-0
8
Aug
-08
Sep
-08
Oct-08
Nov
-08
Dec
-08
Jan-09
Feb
-09
Mar
-09
Apr-09
May
-09
Jun-09
Jul-0
9
Aug
-09
Sep
-09
Do
llars
90.0%
91.0%
92.0%
93.0%
94.0%
95.0%
96.0%
97.0%
98.0%
99.0%
100.0%
Lin
e F
ill
%
Inventory Line Fill
18
Agenda
Background An overview of Newell Rubbermaid.
Strategy Why we are working to improve S&OP. How our strategy for
S&OP fits in to the goals and objectives of the business.
People Who is involved, and how.
Process How we do S&OP. How we have structured our S&OP
improvement initiative. Executing the basics well.
Measures How do we know we are having an impact?
What’s next? Moving beyond the basics.
Forecasting Value Added X-ray vision for the forecasting process.
Facing the Customer Integrating S&OP and Customer Demand. Signals within
Forecasting.
19
S&OP: Compliance and Effectiveness
Compliance Effectiveness
Compliance Assessment
What To Do
Current S&OP Compliance
Low <80%
Are we doing this?
How well are we doing this?
Is it translating into business results?
How can we do it better?
Do we hold a demand agreement
meeting?
Is a waterfall report run every
month?
Do we monitor the required
metrics?
Does our demand agreement process result in better
forecasts? Higher service levels? Lower inventory?
Do we have the data and reports we need to make
better decisions?
How do our customers measure us, and how do we
score on those metrics?
new
Compliance
Effectiveness Workshop
How To Do It
High >80%
Effectiveness
20
Agenda
Background An overview of Newell Rubbermaid.
Strategy Why we are working to improve S&OP. How our strategy for
S&OP fits in to the goals and objectives of the business.
People Who is involved, and how.
Process How we do S&OP. How we have structured our S&OP
improvement initiative. Executing the basics well.
Measures How do we know we are having an impact?
What’s next? Moving beyond the basics.
Forecasting Value Added X-ray vision for the forecasting process.
Facing the Customer Integrating S&OP and Customer Demand. Signals within
Forecasting.
21 21 21
Forecast Value-added Analysis
21
» Where do we add value during the forecasting process?
21
Stat
Forecast
65%
Naïve
Forecast
60%
Consensus Demand
Forecast
62%
Simplest forecast: “tomorrow will be like
today”
Generated using tools like SAP APO and Demand Solutions
Adjustments that incorporate additional
market/economic information
Forecast Accuracy
FVA% = FA%(CD) - FA%(Stat #3)
22 22 22
FVA: “Background” Stat vs.
Consensus Demand
22 22
FVA>0: 353 SKUs (41.0%)
CD more accurate than Stat
FVA<0: 332 SKUs (38.5%)
Stat more accurate than CD
FVA=0: 177 SKUs (20.5%)
Technical Notes:
• Stat #3 chooses the best model (Croston or Seasonal Linear Regression) based
on whatever SOH data is available at the time of forecast
• The spikes at FVA=0 and FVA=-100% occur n cases where SOH=0
Notes:
• US and Canada Status 25 products only
• The Analysis does not include SKUs where CD=0 and
SOH=0. They are assumed to be discontinued
23
Agenda
Background An overview of Newell Rubbermaid.
Strategy Why we are working to improve S&OP. How our strategy for
S&OP fits in to the goals and objectives of the business.
People Who is involved, and how.
Process How we do S&OP. How we have structured our S&OP
improvement initiative. Executing the basics well.
Measures How do we know we are having an impact?
What’s next? Moving beyond the basics.
Forecasting Value Added X-ray vision for the forecasting process.
Facing the Customer Integrating S&OP and Customer Demand. Signals within
Forecasting.
24
Sales & S&OP – Forecasting Evolution
Sales & S&OP Crossroads: Overview
Leveraging Customer Partnerships: Next Generation CPFR
Sales & S&OP Summary: Forecasting Essentials
Salesperson’s View of S&OP “What about my Customer??!!”
25
KPIs?
Service?
Inventory?
Common Goals Gravitation to Forecasting Excellence
26
Global S&OP Inventory Optimization Sales Excellence
Organizational Development
Reduce Working Capital E&O Reduction Reduce the Cost to Serve
Improve Customer Service Maximize Turns Improve Customer Service
Optimize Processes Improve Customer Service Market Share Gain – Brand
Expansion
Standardization – One Language Reporting
Sales Development - Evolve
Visibility – Reporting
Forecasting Methods
Customer Planning
Forecasting Improvements
Improved Customer
Collaboration
S&OP - Forecasting
Improve Customer Service Improve Customer Service
Forecasting Improvements
Forecasting Methods
Improved Customer
Collaboration S&OP Forecasting
Improve Customer Service
Customer Planning
Sales Excellence & S&OP Crossroads Healthy Tension – Understanding What Works
27
Socialize Best Practices GBU Best Practices
Demand Signals - Forecasting Fcst Technology & Process
Socialization Customer/Strategic Planning
Forecast Improvement Activities
Forecasting/Planning & Process Improvement
Sales Excellence S&OP
40 Major Demand Indicators Sales Excellence Case Study
28
Current Forecasting Process & Rigor Strategic Customer Base
29
Are Customers Willing
& Capable to Engage
This Process?
Customer Data
Evaluation Sub-
Processes
If So, What Feedback
is Necessary to Make
an Impact?
POS
POS
POS Forecasting Case Studies Forecast Accuracy Benchmarking
30
Bus 1 Bus 2 Bus 3 Bus 4 Bus 5
All developed similar processes, templates and methods
All felt like POS & customer data was a necessity
All have very mature S&OP processes
Primarily working with strategic customers
All felt that customer data improved forecast accuracy &
had PROOF
All had relatively similar forecastability & customer profiles
All directed to improve rigor surrounding CUSTOMER &
CONSUMER demand triggers
Forecast Accuracy Case Study Next Generation CPFR: Strategic Customer Buy Planning
31
-40%
-20%
0%
20%
40%
60%
80%
100%
32 32 32
Forecast Value-added Analysis S&OP Forecasting - Leading the Charge
32
» Where do we add value during the forecasting process?
32
Forecast Accuracy
Stat
Forecast
65%
Naïve
Forecast
60%
Consensus Demand
Forecast
62%
Simplest forecast: “tomorrow will be like
today”
Generated using tools like SAP APO and Demand Solutions
Adjustments that incorporate additional
market/economic information
33
Socialize Best Practices GBU Best Practices
Demand Signals - Forecasting Fcst Technology & Process
Socialization Customer/Strategic Planning
Forecast Improvement Activities
Forecasting/Planning & Process Improvement
Sales Excellence S&OP
Healthy Tension to “Open Book” A Collision of Effective Processes
SALES EXCELLENCE S&OP
S&OP & Sales Excellence Marriage How We Work Together
34
Next Generation CPFR:
Customer Planning & Demand
Signals Review. Provide Item
Level Input and Engage the
Judgment Forecast. Evaluate
Bottoms up Vs. Tops Down &
Lead Demand Planning to
Improved Reporting Platforms
Next Step S&OP:
Verify Judgment Forecast
Accuracy and Benchmark
Performance. Begin the “Shift” to
the Most Effective Fcst. Model.
Illustrate the ROI. If the Existing
Model works, Explore Detail.
S&OP & Sales Excellence Marriage Low Hanging Fruit
35
The Future: Dynamic Forecast Management Approach – Leveraging
Statistical Models within FVA to Solve for a Forecasting Utopia. The Results will Decide the Forecasting Landscape
Significant short term gains in FA are possible through a rigorous evaluation of
customer data. Even more is possible through a “Re-Invention” of CPFR …..Even if the
rigor only occurs at a strategic level with your customers. “Pull vs. Push”
FVA can liberate the forecasting process within S&OP….but it takes time
A reenergized customer planning focus is necessary for S&OP maturity. Lead your
sales team to water and illustrate the power of their decisions.
Competition drives involvement! Incent and socialize forecasting best practices
Additional levels of consensus are born with S&OP forecasting maturity – That
intelligence is key to a proper long term forecasting strategy
Re-Invest in demand planning – Consider tenacity and the ability to collaborate
regarding the DP profile. The most statistically advanced planner is ideal but consider
evaluating the Customer’s Profile when aligning a planner to a customer.
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About Us
Andrew Downard
Director, Supply Chain
Newell Rubbermaid
3 Glenlake Parkway
Atlanta, GA 30328
p: 770-418-7550
f: 770-677-8550
Bill Norman
Manager, Supply Chain
Newell Rubbermaid
1000 SW 14th St
Bentonville, AR 72712
p: 479-254-7900
f: 479-254-7910
Andrew’s current roles focuses on global Supply Chain,
Operational Excellence, and Management Development. He is an
experienced global Director with a strong background in Sales
and Operations Planning (S&OP), Continuous Improvement
(Lean, Six Sigma, etc), Research and Development, New Product
Development, and Talent Development.
Andrew’s previous experience includes Operations Director,
Continuous Improvement Director, Deployment Leader, and Six
Sigma practitioner positions in consumer products, the chemical
industry, and healthcare/medical services. He is a certified Black
Belt and Master Black Belt and holds a B.Sc. and Ph.D. in
chemistry from the University of Calgary, Canada.
Bill’s core responsibilities include customer facing Supply Chain,
Sales & Operations Planning, POS Forecasting, Global Customer
Logistics & Compliance and Merchandising support. He is an
experienced Supply Chain Manager with a strong background in
Retail Inventory Management, Replenishment, Demand Planning,
Orders to Cash, and Customer Logistics.
Bill’s previous experience includes Supply Chain Manager,
Channel Marketing Manager and Sales Manager in the household
pesticide industry supporting the world’s top retailers. He holds a
B.Sc. in Organizational Management and sits on various
customer and supplier operational councils.