top 10 success factors for sales and operations planning joachim schulte, senior sales consultant
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Top 10 Success Factors for Sales and Operations Planning
Joachim Schulte, Senior Sales Consultant
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Safe Harbor Statement
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Agenda
• Challenges withSales & Operations Planning
• Oracle Demantra overview
• Using Oracle Demantra
Company• One of South Africa’s leading CPG companies, producing tea, coffee, biscuits, and
snacks• Many new product introductions• Extensive promotional activity
Planning problem solved• Consensus demand and supply plans
Unique aspects of implementation• Introduction of an integrated Sales and Operations Planning Process
• Improved forecast accuracy by 13%• Cut finished goods stock levels by 20%• Improved service levels from 94% to 96%• More effective production planning
Consensus demand and supply plans
National Brands Ltd.
Demand Driven leaders have:• 15% less inventory• 17% stronger order fulfillment• 35% shorter cash-to-cash cycle
times
Which translates to:• 60% better profit margins • 65% better EPS • 2-3x the ROA
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Strong Weak
Perfect Order Inventory
Cash-to-Cash SCM Costs
Source: AMR Benchmark Analytix
Improved Demand Management is the first important step !
Demand Driven – Significant Benefits
Multiple,non-integrated
systems
Manual processesMultiple data sources
FinancialPlanning
New ProductPlanning
SalesQuotas
ProductionPlanning
Measurementand Reporting
MarketingForecasting
Your Company
Low forecast accuracyDepartmental orientation to demand forecastingMisalignment between metrics and objectivesNot tied to Sales and Operations Planning process?
Traditional Approach – DisconnectedHigh latency, limited collaboration, no consensus forecasting
• Eliminate decision making latency by focusing on excellence in demand visibility
• Sense demand more frequently and closer to the point of consumption
• Replace spreadsheets with one number demand management -
Collaborate with all constituents
• Improve your forecast accuracy • Use advanced analytics and statistics
• Shape demand • Promotion excellence and decomposition
• Leverage granular demand signals (customer, channel, store, shelf) • Identify and simulate cross selling opportunities
• Evolve to real-time S&OP• Profitable demand response• Identify supply side opportunities• Define and monitor customer based metrics• Get real time visibility to sales tactics (price breaks, promotions, deals)
Better ApproachReal-time demand sensing and collaborative consensus forecasting
Top 10 Success Factors for S&OP
1. Use graphical presentation
2. Make it easy to grasp what has changed and any issues
3. Ensure an “integrated” tool is used -- same tool for each step in the process
3 Critical Success Factors -- Tools
Adapted from Top 10 Success Factors for Sales and Operations Planning by Oliver WightAdapted from Top 10 Success Factors for Sales and Operations Planning by Oliver Wight
Sense Demand Real-Time
• Sense demand real-time, at more granular level, and closer to the point of consumption
• Report and measure demand in the ways important to your business - role-based Collaboration Workbench for coordinated demand response
• Support different demand data for each customer and channel• Easily add additional sources of information, such as external syndicated
and POS data, using data integration profiles• Use multiple units of measure and multiple currencies• Collect information from multiple source ERP instances • Out-of-the-box integration for Oracle EBS, JDE E1
• Leverage built-in intelligence to automatically select which level’s data to use for forecasting
• Roll up data across unlimited hierarchies• Forecast at any level of time, product, and location aggregation• Completely meta data driven – change on the fly• Weekly and daily forecasting support• Simulate and compare different demand scenarios
• Automate collaboration through workflow• Ensure all constituents submit numbers on time• Configurable push exception management automates review process
Involve all constituents and forecast closer to the point of consumption
Improve Forecast Accuracy
• Bayesian mix modeling• 15 model library
• Auto-regressive moving average (ARMA)• Regression integrated winters• Logistic and logarithmic models• Ridge regression, Markov chain regression• Intermittent regression
• Unlimited causal factors• Seasonality, weather, market indicators• Base + price + multi-event lift decomposition
Historical dataBayesian Estimator
Forecast
Estimator’s models
Multiple causal factors
Bayesian combined model
Superior Bayesian-Markov Analytics
• Promotion effects• Cross-product and cross-location effects• Pre and post event
• Automatic outlier detection• Trend long, short, dampening• Missing data interpolation• Shape modeling and auto-correction• Regime change• Fit and forecast validation
Designed for planners, not programmers (“PhD in a box”)
Shape Demand for Profitability
• What incremental volume will result from a marketing program?
• How will it impact the sales of other products?• How does a marketing program at a brand or
product family level impact a specific item?• What were the indirect effects such as
cannibalization and consumer stockpiling?• What is the ROI on my marketing and trade
spending?• What is the predicted impact of future activity?• How does a promotion impact shipments and DC
replenishments?
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Period 1 Period 6 Period 11
Cannibalization
Pre- and post-effects
Competitive switching
Category growth
Baseline
Actual
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Period 1 Period 6 Period 11
Ca
se
s
Cannibalization
Pre- and post-effects
Competitive switching
Category growth
Baseline
Actual
Past Future
Leverage Advanced Forecasting and Modeling to understand the real impact of promotions and sales incentives
Company• Leading producer of juices and jams• > Mio $750 Mio. revenues world-wide • Thousands of different promotions per year
Planning problem solved• Promotion planning synchronized with demand planning
Unique aspects of implementation• „One-Number“ Forecast as base for improved forecasting• Promotion planning integrated with demand planning• > 100 sales reps plan promotions• Post event analysis of promotions
• Increased forecast accuracy at SKU level • Enables trade promotion planning to be integrated with RT S&OP• Reduced supply chain costs• Improved HQ and sales planning productivity
Live on Demand Management, Trade Management
Welch’s
Top 10 Success Factors for S&OP
1. Roles and responsibilities are defined and communicated
2. Manage by exception – and focus on the key issues• Gap closure (volume, revenue, and profit expectations)• Resource issues• Alignment of demand, supply, and new product plans• Performance issues
3. Implement quickly and improve each month
3 Critical Success Factors -- Process
Adapted from Top 10 Success Factors for Sales and Operations Planning by Oliver WightAdapted from Top 10 Success Factors for Sales and Operations Planning by Oliver Wight
Top 10 Success Factors for S&OP
1. Senior executives do not delegate their participation in the S&OP process
2. Senior executives utilize S&OP as their process for managing the business
3. Senior executives insist on the truth
3 Critical Success Factors -- Leadership
Adapted from Top 10 Success Factors for Sales and Operations Planning by Oliver WightAdapted from Top 10 Success Factors for Sales and Operations Planning by Oliver Wight
Consensus Planning
• Create consensus plan through continuous collaboration across sales, marketing, finance and customers
• Each participant gets tailored view
• Configurable worksheets
• Combine top down business planning with precise bottom up forecasts to project payments
• Automate process with workflow
• Send reminders• Task notifications in dashboard
Inclusive consensus process improves plan quality and acceptance
SalesMgrs
SalesForecast
Sales: Plan by Product Line
PlantMgrs
OperationsForecast
Manufacturing: Plan by Plant
Sales Reps
MarketingForecast
Marketing: Plan by Region
Asia Americas
FinanceForecast
Finance: Budget in Dollars
Inputs display from entire collaboration
group – Finance, Marketing, Operations,
Key Customers and Suppliers
Integrated approval workflow process
Each S&OP participant has a configurable role-
based view
Review historical accuracy for each
input
Evolve to Real-Time S&OP
Interactive Management Review
• What has changed since last month?• Are we on plan financially?• How are we performing to performance
metrics?• What new risks do we need to consider?• What decisions need to be made now?• What decisions need to be made in the near
future?• How are product families performing?• Are we on track with product development?• Do we have any critical constraints?• Is there any need to revise long term plans?
Adapted from “Enterprise Sales and Operations Planning” by Palmatier & Crum
Typical S&OP Management Review agenda
Sales and Operations Planning Process
Product ReviewDemand Review
Supply ReviewExecute and Measure
Management Review
Sense Respond
Shape
Company• $1 billion in revenues, operating worldwide• Leading provider of cordless phones and electronic children’s toys• 85% of US revenues through Wal-Mart, Target, Best Buy, and Circuit City
Planning problem solved• Real-time S&OP process driven by one demand number• Seasonal demand plans
Unique aspects of implementation• Generates forecasts from customer POS data • Web-collaboration with customers• Automatic forecast evaluation and exception management • Implementation within 90 days
• Increased order fill rate from 55% to 95%• Increased inventory turns by 100%• Reduced price protection claims by 40%• Reduced logistics costs by 65%
Live on Demand Management, Real-Time S&OP
VTech
Top 10 Success Factors for S&OP
Adapted from Top 10 Success Factors for Sales and Operations Planning by Oliver WightAdapted from Top 10 Success Factors for Sales and Operations Planning by Oliver Wight
PeoplePeople ToolsTools
ProcessProcess
Execute
Demand Planning Supply Planning S&OP Meeting
Market Demand
ForecastingMarket Demand
Forecasting
New Product
ForecastingNew Product
Forecasting
Promotion PlanningPromotion Planning
Consensus
ForecastConsensus
Forecast
Safety Stock DemandInventory
OptimizationInventory
Optimization
•Constraint-Based Production Scheduling
•Strategic Network Optimization
Evaluate Supply
ConstraintsEvaluate Supply
Constraints
Measure Financial and Customer Service Level Results
S&OP Outputs:Service levels
Profitability
Inventory Levels
Promotions
DRP
MPS
S&OP Outputs:Service levels
Profitability
Inventory Levels
Promotions
DRP
MPS
S&OP ReviewS&OP Review
Oracle Closed Loop S&OP Planning
Demand Data
EDI 867
IMS data
Excel
Pedigree
xml
Oracle Demantra OverviewComplete, best-in-class and integrated planning process platform
Future *
IntegratedPlanningFunctions
Products
Platform
E1 EBS …Legacy
ERP* *
WFL Common planning data model
Connectors
NetworkDesign Demand Sensing
And Shaping PostponementOptimization Holistic
Supply Planning
Promise,Distribute, and
ReplenishExecute to plan
Embedded Analytics
Role-based Portals
Preconfigured Worksheets and
Workbenches
Operational Excellence
Real-Time S&OP
Demand drivenadaptive planning
Multi-EnterpriseCollaboration
Trading Partners
Best in classBusinessProcesses
Supply ChainRisk Management
StrategicNetwork
Optimization
InventoryOptimization
Real-TimeSales &
OperationsPlanning
DemandManagement& AdvancedForecasting
PredictiveTrade
Planning &Optimization
AdvancedSupply Chain
Planning
ProductionScheduling
GlobalOrder
Promising
CollaborativePlanning
Demantra
State-of-the-art and Scalable Architecture
• Scalable• Handle millions of combination
• Web-based user interface personalization
• Dynamically configure• Drag-and-drop
• Tailor workflow processes to unique company requirements
• Demand Management adapts to your business process
• Create alerts and exception rules• Customize reports on-the-fly• Dynamic open link to MS Excel• Work in disconnected modeEnterprise Technology Stack
• SOAP / XML / HTML / HTTP(S)
• J2EE Server
• RDBMS
Enterprise Technology Stack
• SOAP / XML / HTML / HTTP(S)
• J2EE Server
• RDBMS
Demantra Infrastructure
• User / Role Security Services
• Administration & Configuration
• Business Object ServicesDemantra Infrastructure
• User / Role Security Services
• Administration & Configuration
• Business Object Services
Data Integration Services
Unified Demand Data Repository
Business Application Language
OLAP
Optimiz-
ation
Business
Logic
GUI
Workflow &
Exceptions
Predictive
Modeling
Data Integration Services
Unified Demand Data Repository
Business Application Language
OLAP
Optimiz-
ation
Business
Logic
GUI
Workflow &
Exceptions
Predictive
Modeling
Wendy's has ~1M combinations, 730 history daily buckets, 48 half-hour buckets per day for 90 historical days and 90 future days - over 9B data points
Proven Success – Many Live Customers
Oracle Demantra Demand Management
Eliminatespreadsheets
Manage rolling forecasts
Collaborate with all constituentson one number
Use basic statistics, alerts, andseeded worksheets
Tailor worksheets for individual users
Leverage POS and channel data
Forecast new product introductions
Collaborate with customers
Use advanced statistics and causal factors
Complex alerts and custom worksheets
Forecast based on attributes and product characteristics
Compute promotional lifts and analyze impact of demand drivers
Assumption based forecasting
From less complex to best in class
Manage rolling forecasts
Collaborate with all constituentson one number
Use basic statistics, alerts, andseeded worksheets
Tailor worksheets for individual users
Leverage POS and channel data
Forecast new product introductions
Collaborate with customers
Use advanced statistics and causal factors
Complex alerts and custom worksheets
Manage rolling forecasts
Collaborate with all constituentson one number
Use basic statistics, alerts, andseeded worksheets
Tailor worksheets for individual users
Start anywhere
Evolve at your own pace to a best-in-class solution
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Summary
Oracle Demantra Demand Management
• Sense demand real-time• Sense demand more frequently, closer to the point of consumption• Capture demand and forecast at more granular level (store, shelf,
attributes, product characteristics)• Achieve consensus demand number more quickly by involving all
constituents at the same time, including customers• Quickly identify and react to demand changes and exceptions
• Improve forecast accuracy• Leverage advanced statistics for more accurate demand number• Use any combination of quantitative or qualitative data to establish your
base line forecast• High precision statistical forecasting, no statistical background required –
Superior Bayesian-Markov forecast analytics• Forecast based on attributes and characteristics• Leverage Advanced Forecast Modeling for promotion lift decomposition
and causal analysis
• Shape demand for profitability• Plan new product introductions• Plan promotions and sales incentives• Identify cross selling opportunities
• Evolve to real-time S&OP• Profitably balance supply, demand, and budgets
Shipments
Marketing
forecast
Order
history
CHANNEL DATA
Customer
sales
CollaborationWorkbench
Demand Hub and Seeded Worksheets
Real-time demand sensing and collaborative consensus forecasting