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Bullets from Bob August/September
2007
In this
newsletter:
EXECUTIVE S&OP -
Sales & Operations Planning is a set of processes to balance demand and supply, integrate units and
dollars, and align aggregate plans (volume) with
detailed plans (mix).
Executive S&OP is that part of Sales & Operations Planning that
sets the plans for success. These plans enable product to be delivered to customers
when they
want it, cost effectively, all the time. Top management is able to set targets for customer service performance, inventory levels, customer order
backlogs, and production rates -- and then manage the business proactively to meet those targets.
As such, the Executive S&OP process needs to do a variety of things:
- Establish volume balance by product families
- Tie volume to mix inside the
planning time fence
- Integrate operational plans fully with financial
plans
- Set appropriate policy
and strategy
While most companies are doing some form of Sales & Operations Planning, few are doing the executive
piece well. Doing Executive S&OP 'right' requires more than the support of top management. It requires that top management 'do' Executive S&OP with
hands-on involvement.
The challenge in getting started right comes from the fact that doing Executive S&OP is not an extension of a typical executive's past experience.
It's not doing what they're doing better, but rather it's doing something different to become better. That's the rub - it's foreign to the
executive's experience and therefore involves risk, uncertainty, and discomfort. Dealing with and mitigating this circumstance is necessary if you
are to get started 'right.'
If implementing Executive S&OP requires a single decision to implement it across the entire company, many executives would not agree to do so. This
approach would require a large investment of the organization's time doing something that the leadership doesn't understand, and that is foreign to
their past experience. That's why we recommend a different approach.
We believe there are three levels of commitment, leading to two distinct go/no-go decisions. They are:
Commitment
Resulting Action
Uninformed
Executive Briefing and Go/No-Go Decision #1
Semi-Informed
Live Pilot and Go/No-Go Decision #2
Fully-Informed
Complete
cutover
Uninformed Commitment - This comes from reading a book or listening to
an advocate. The executive does not fully yet understand what Executive
S&OP
is and what it will take to make it work, but is willing to invest a
few hours listening to more from and Executive S&OP expert.
An Executive S&OP expert is someone who's been deeply involved in
at least one - preferably multiple - successful Executive S&OP
implementations. To
qualify as an Executive S&OP expert, the individual needs to have
been in a significant leadership role in directing the implementation.
You may have
an Executive S&OP expert working in your company: a person with
successful and meaningful Executive S&OP experience at a sister
division or another
company.
Semi-Informed Commitment - This comes from gaining a better
understanding of what Executive S&OP is and how it is different
from what is being done
today. It also includes an understanding of top management's role in
making Executive S&OP work. It results in the first of two go/no-go
decisions:
the first being a commitment to provide the resources to do a live
pilot in 90 days running in parallel with the current practices.
Fully-Informed Commitment - This comes from seeing it work via the
demonstration of a live pilot. It creates a 'line of sight' as to how
the
benefits will be derived from the implementation of authentic Executive
S&OP. This results in the second go/no-go decision - a commitment
to cut
Executive S&OP across all product lines and begin to run the entire
company that way.
Getting started with an Executive Briefing
For most companies, the best way to get started with Executive S&OP
is to conduct an initial briefing - at the executive level. This is a
several
hour session facilitated by the Executive S&OP expert.
The purpose of the executive briefing is to transfer enough information
about the process to enable the senior management group to:
- Understand the capabilities of Executive S&OP. They need to learn
what it does, how it works (in very general terms), and what kinds of
benefits
companies have realized from using it.
- Match Executive S&OP's capabilities to their business problems.
This is where the business case is made for Executive S&OP. What
problems is the
company experiencing in shipping to its customers on time, running the
plants effectively, keeping finished goods inventories low and customer
order
backlogs in line? Which of these would get better if Executive S&OP
were used well?
- Learn how Executive S&OP is different from current practices, even if the current
process is
already
called S&OP.
- Develop a rough-cut benefit statement, covering both hard benefits
(financial) and soft ones: enhanced teamwork, better decision-making at
both the
tactical and strategic levels, more control over the business, and so
forth.
- Understand how the process is implemented and what will be required of
them personally and the company in general, including resource
requirements.
- Make an informed decision to put up a live Executive S&OP pilot in parallel
with current
practices
In some companies there's a reluctance to conduct such a briefing
because they think they know all about Executive S&OP. Skipping
this step is almost
always a mistake, even if this is the case. The executive briefing
gains a collective and common understanding between and among
executives. To not do
the executive briefing often results in surprises later that delay or
derail the implementation.
Good luck and best wishes,
Bob Stahl
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We' d like to introduce you to the other members of our consulting team, Bill Kerber and Tony Zampello. As you will see they have a wealth of
experience and
knowledge and are key to providing our clients with professional, results oriented
consulting.
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Bill Kerber specializes in Executive Sales and Operations Planning
and Lean Manufacturing. In his more than thirty years of industry and consulting experience, he has worked with the following companies, among
others:
• AT&T • Hamilton Sundstrand • Raychem • Avery Dennison • Murray • Sunnen • Black
& Decker • Philips Electronics • Viking Pump • Engineered Mat'l Solutions • Price-Pfister •
Bill has been a key member of many projects which have delivered significant operating results, such as improving inventory turns from four to
45 per year in an entire product line, improving customer service by 10 percentage points while simultaneously reducing inventory, and reducing lead
time through several value streams by over 50 percent.
Bill is currently a faculty member at the Lean Enterprise Institute, the world's leading educational organization focusing on Lean Manufacturing.
Bill
has spoken to numerous professional and technical groups, including APICS International Conferences, the QAD User
Conference, the Bull Users Society, the Computer Associates Applications Conference, and many chapter meetings.
Bill received his Bachelor of Science degree in Biology from Lafayette College in Easton, Pa., and received his APICS Fellow level certification in
1991.
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Tony Zampello serves as a consultant, educator, and trainer to the
manufacturing industry. He's been involved for over thirty years in a broad range of industries, product types, and market environments and has
held senior management positions with Engelhard, Hasbro, and Schroff, and has consulted with Vermont Castings, Rolls Royce, JR Music Supply, and
Tiffany among others.
During his long tenure in industry, Tony has managed a wide range of initiatives, including: S&OP and ERP implementations, lead time reduction
projects, offshore sourcing efforts, and inventory reduction programs. His over thirty years of experience give him a broad perspective in his
consulting and teaching work.
Tony has been active in APICS for over twenty years, and holds the following certifications:
- Production and Inventory Management (CPIM)
- Certified Supply Chain Professional (CSCP)
- Integrated Resources Management (CIRM).
He has held various leadership positions in APICS, including: VP Region 1, Finance Committee Member,
International Board of Directors, and President of the Providence Chapter and New Bedford Chapters. He's served on the Seminar 1 Board of
Directors, and is an APICS certification instructor. In addition, Tony has taught as an adjunct professor at the Worcester Polytechnic
Institute.
He holds an Associates Degree in Applied Science from Union County Technical Institute and a
Bachelor of
Science degree in Business Administration from Seton Hall University.
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Here's some info on upcoming speaking engagements.
IBF Las
Vegas. This is the annual Executive Forum of the Institute of
Business
Forecasting. I'll be moderating a half-day panel discussion on Executive S&OP with Jay Nearnberg from Wyeth, Martin Joseph of Astra Zeneca,
Mark Deuschle of ImagePoint and John Gallucci from Gerber Products.
In addition, Larry Lapide from MIT will be moderating a panel on Demand Management and Ken Kahn,
University of Tennessee will head up a panel on New Product forecasting.
Dates: September 10 and 11. For more info see www.ibf.org
APICS Denver. Bob Stahl and
I will be at the APICS International Conference
in Denver, speaking
on Executive S&OP, of course. For the second year in a row, we'll
be doing an interactive session, meaning that attendees will be
provided with a
hand-held feedback device.
Bob
and I will present "mini-cases" of companies
struggling with Executive S&OP and the audience communicates their
evaluation of issues raised in the case, via the hand-helds. Then the
responses
are electronically collated and displayed, and from this we can
discuss, evaluate, and draw conclusions about what the company should
be doing
differently - and why.
Last year's session was very successful and we
expect this one to be also. If you're at the Conference, you might want to stop by and catch it: Monday 10-22 at 1:00 pm. But
come
early: last year's session in Orlando was standing room only.
For information about the Conference: www.apics.org.
CSCMP Philadelphia. The
Council
of Supply Chain
Management Professionals annual conference
has, for
the first time, a separate track on Sales & Operations Planning. A
tip of the hat to the CSCMP folks for recognizing the importance of
this powerful
set of processes.
One day after the APICS session, I'll be in Philly
speaking on Executive S&OP: The State of the Art. That's at 4:00 pm on Tuesday, 10-23.
While I'm giving that talk, Bob Stahl will be flying
in from Denver to give his talk the following day, on how to successfully implement Executive S&OP. That's on Wednesday
10-24 at 9:15
am. To sum it up, I'll be speaking on what Executive S&OP is and where it's going; Bob will be talking about how the make it
work.
For information about the Conference: www.cscmp.org.
IBF Atlanta. In conjunction with the Institute of
Business
Forecasting, Bob and I are presenting a two-day session on Executive S&OP.
The two-day format gives us ample time to cover S&OP from soup to
nuts, so to speak. We'll be
talking about high level issues such as the participants in the
Executive meeting, nitty gritty topics such as how to display the
S&OP information,
and lots of other items in between.
You may want to consider attending or sending others
from your company if: you
- Are evaluating S&OP but want input on how
best to get started.
- Have been having difficulty "selling" the
process to your executives.
- Feel that your S&OP process is broken and
want to know how to fix it.
- Are aware that S&OP is growing and becoming
more powerful, and you feel the need for refresher education
- Have some new people on board who need
initial education on Executive S&OP.
For complete information: www.ibf.org.
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