Inappropriate S&OP– issues, challenges and consequences Scope of the S&OP– synchronising marketing and sales plans with operations plans and business strategy Quartz+Co best practice framework – from corporate strategy to key enablers Optimising the S&OP process – tailoring the process to client needs
Sales & Operations Planning (S&OP) process
Many operational issues and challenges are connected to inappropriate Sales and Operations Planning (S&OP) 1/2 Typical issues/challenges Low forecast accuracy
1
Consequences 100% 50-70%
• Lack of or excess capacity • Incorrect inventory • Stock out
2
3
Incorrect raw material and intermediate stock
Fluctuating productivity
• Stock out • Unable to deliver on customer orders
• Uneven pressure on workforce • Reduced employee satisfaction
4
Increasing inventory levels and obsolete inventory
• Increasing capital binding • Stocking of non-sellable items
2
Many operational issues and challenges are connected to inappropriate Sales and Operations Planning (S&OP) 2/2 Typical issues/challenges 5
Consequences
High stock-out • High working capital • Risk of scrap
6
7
Low delivery performance
High number of ad hoc deliveries
100%
• Low customer satisfaction
60-80%
• Uncompetitive value proposition
• High overtime payment • High distribution cost
8
3
Good performance on internal performance measures, but low customer satisfaction
• Unsatisfied management • Frustrated employees • Demotivation for action
S&OP attempts to synchronise marketing and sales plans with operation plans consistent with business strategy and budgets to optimise customer service, costs and investments Scope of the S&OP – the full value chain Raw material and capacity constraints
Sales forecast Supply planning
Demand planning
Customer agreements • Service Level Agreement (SLA)
Suppliers
Customer
• Efficient Consumer Response (ECR)
Master schedule (Tactical and executive meetings)
Raw material
Source Procurement • Raw material • Ingredients • Packaging material • …
4
Make Production
Deliver Logistics
• Intermediate • Finished stock goods inventory • People • Storage • Equipment • Distribution • … • …
Finished goods
• Collaborative planning, Forecasting and Replenishment (CPFR)
Quartz+Co's framework takes a broad and deep view on S&OP, from corporate strategy to key enablers making the S&OP successful S&OP best practice framework
1
Group Strategy Vision, mission and high-level business objectives
S&OP vision and mission
Strategy
Customers and collaborative agreements 2
Process
Supply planning
Source
3
Organisation
4
Enablers
Demand planning
Make
Deliver
Organisation and structure Roles and responsibilities Documented standards and methodology
Systems
Skills and competences
Performance management and incentives
Culture and behaviour
Leadership and change management (communication, training and anchoring)
5
Based on client situation and needs, Quartz+Co will tailor a project seeking to optimise the S&OP process Quartz+Co best practice assessment approach 1 week 1
4 weeks 2
Initiate project
Key deliverables
Key activities
•
6
Sponsor and client alignment/buy-in
•
Alignment of project targets/expectations
•
Stakeholder assessment and mapping
•
Project organisation, availability and involvement
•
Data request
• •
3 weeks 3
Business case and benefits
As-is assessment •
Develop and document baseline –
Mapping of process and organisation
–
Performance on key indicators (data analysis)
1 week 4
•
•
Develop high-level key recommendations/initiatives (within the framework)
•
Assess business case –
Benefits/potential
–
Costs/investments
• •
Interviews with key customers and suppliers
•
Interviews with internal stakeholders and S&OP responsible
Data quality assessment
•
Consolidate assessment results
Define key interviews (internal and external)
•
Client alignment on results
•
Size economic effects of current gap to best practice
•
Alignment of sponsor and stakeholders on key objectives
•
Documented baseline including: process and organisation and data results
•
Clear targets for deliverables
•
•
Stakeholders assessment and resource allocation
Interview guides and interviews with internal and external parties
•
Data validation
•
Interview list
•
•
Key barriers for success
•
Prioritise recommendations
•
Recommendations/initiatives with sized potential, costs and key barriers for success documented and prioritised
•
Alignment of key decisions
Quantified S&OP assessment
Note : The As-is assessment phase can be reduced through initial analysis by the client
5
Implementation support
Implementation roadmap Develop implementation roadmap for S&OP process, including possible pilot Anchor roadmap with key stakeholders with regard to execution of the prioritised initiatives
•
Sign-off workshop with management team
•
Implementation roadmap, including selection of pilot and allocation of resources
•
Initiate pilot
•
Track, manage and execute necessary corrective actions to ensure successful implementation
•
Training
•
Implementation support