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Bob Stahl & Tom Wallace

S&OP Success:. Achieving Transformational Business Results. Bob Stahl & Tom Wallace. Objective of this Presentation. Learn how to achieve transformational benefits Learn the proven path to that success Expand your contribution to company ’ s success. Agenda.

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Bob Stahl & Tom Wallace

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  1. S&OP Success: Achieving Transformational Business Results Bob Stahl & Tom Wallace

  2. Objective of this Presentation • Learn how to achieve transformational benefits • Learn the proven path to that success • Expand your contribution to company’s success

  3. Agenda • Introduction to Presentation Tom • Characteristics of successful S&OP Bob • Understanding the role of Top Management Bob • Questions for personal reflection Tom & Bob • Resolving both parts of Disagreement Bob • Engaging Top Management Bob • Steps of successful implementation Bob • Questions & Answers Tom & Bob • Closing Thoughts Tom

  4. Tom Wallace Background • Written 13 books, translated into Chinese (Mandarin), French, Italian, Korean, Mongolian, Portuguese (Brazil), Russian, Spanish and Thai • Authored/co-authored the best selling book on S&OP • Taught in Australia, Belgium, Canada, China, Denmark, France, Great Britain, Japan, Mexico, New Zealand and the United States • Distinguished Fellow at Ohio State University’s Center for Operational Excellence

  5. Introduction

  6. One of Top Management’s Major Tasks “Keep the Herd Moving Roughly West”

  7. Energy Alignment Before S&OP Accomplishment After successful S&OP Accomplishment

  8. Keeping the Herd Moving Roughly West . . . is more Cultural and Behavioral than Technical

  9. Culture Change Definition of Company Culture: “how we do things around here” Changing how we do the important things around here means: Top Management providingcommitment, involvement, and leadership This means engaging Top Management

  10. What is authenticS&OP? What are the characteristics that make S&OP operate at its best?

  11. Bob Stahl Background • 40+ years in manufacturing companies • Started as Schedules Coordinator (1970) • With help of Oliver Wight, achieved Class A success (1979) • Became an associate of Oliver Wight – 1981 (passed in 1983) • Have worked with some of the best companies in the world • Today = S&OP Coach, Educator, Author • Has written six books with Tom Wallace – • three have been used for APICS Certification • S&OP Editor and Columnist – • Inaugural for the IIF’s Journal of Forecasting - Foresight • Heads up support services for TFWallace & Company • “Retired” = choices

  12. Volume Supply Demand Balance Mix Four Fundamentals . . . Sales & Operations Planning (eS&OP) • How Much? • Rates • Mkt Facing Families • The Big Picture • Strategy/Policy/Risk • Monthly / 18 - 36 Mos • Executive Resp. ProActive Behavior • Which Ones? • Timing/Sequence • The Details • Products/SKU’s/Orders • Tactics/Execution • Weekly/Daily 1-3 Mos • Middle Mgt. Resp. ReActiveBehavior Different& separate practices, but integrated! Routinely

  13. Executive S&OP is . . . APICS Dictionary, 13th Edition, October 2010 (First Appearance) • The executive portionof the overall sales and operations planning set of processes. • It is a decision-making activity involving the leader of the business(president, general manager, COO, managing director), his or her staff, and a number of middle managers and specialists. • Its mission is to: • balancedemand and supply at the aggregate level, • alignoperational planning with financial planning, • link strategic planningwith day-to-day sales and operational activities. • Is a forum for disciplined discussion about setting Policy, strategy, risk, budget changes • It is a multi-step process involving demand planning, supply planning, and middle and top management meetings for decision-making and authorization Top Management’s Handle on the Business Executive S&OP – does the proper prior planning to allow the routine things in the MIX Space to be done routinely!!

  14. The eS&OP Process Step #5 Executive Meeting Heavy Lifting Decisions & Game Plan Step #4 Pre-S&OP Meeting Step #3 Supply Planning Step #2 Demand Planning It is a multi-step process involving demand planning, supply planning, and middle and top management meetings for decision-making and authorization Financial Involvement Creates a Disciplined Rhythm New Product Involvement Step #1 Data Gathering

  15. eS&OP = Keystone of the Supply Chain • If supply chain practices can be compared to a stone arch, Executive S&OP is the Keystone: • The Keystone alone does not make an arch, but • Without the Keystone, nothing else can stand

  16. Characteristic that make eS&OP Operate at it’s Best • Cross-functional, collegial, collaborative, consensus building mindset, and a disciplined process that aligns human energy – Step #1 - #4 • Holistic ownership (leadership) of demand, supply, and fiduciary responsibilities, with authoritative decision making power, creating ONE set of numbers– Step #5

  17. Need to be Hands-On with the Executive S&OP Process Top Management andExecutive S&OP Done Properly . . . It takes Top Management between 1 & 2 Hours per Month President Authorative Decider VP Sales/Mktg VP Operations VP Finance VP R&D Demand Supply $$$ Tech Stewardship & Leadership (Manager/Trustee & Guide/Command)

  18. Characteristic that make eS&OP Operate at it’s Best • Cross-functional, collegial, collaborative, consensus building mindset, and a disciplined process that aligns human energy – Step #1-#4 • Holistic ownership (leadership) of demand, supply, and fiduciary responsibilities, with authoritative decision making power, creating ONE set of numbers – Step #5 • View the implementation of eS&OP as a Strategic Imperative

  19. The Problem:“Executives know that strategy is important. But almost all find it scary, because it forces them to confront a future they can only guess at.” . . . “Strategy making is uncomfortable.” The Solution: “Reconcile yourself to feeling uncomfortable, and follow three rules: Keep it Simple Don’t Look for Perfection Make the Logic Explicit” “A detailed plan may be comforting, but it’s not a strategy.” The implementation of authentic eS&OP is (in and of itself) a Strategic Imperative! “The Big Lie of Strategic Planning” (HBR – Jan/Feb 2014 by Roger Martin)

  20. Characteristic that make eS&OP Operate at it’s Best • Cross-functional, collegial, collaborative, consensus building mindset, and a disciplined process that aligns human energy – Step #1-#4 • Holistic ownership (leadership) of demand, supply, and fiduciary responsibilities, with authoritative decision making power, creating ONE set of numbers – Step #5 • View the implementation of eS&OP as a Strategic Imperative • Integrated performance measurements that align with desired performance – Including Compensation Incentives

  21. Top Management’s Role

  22. Routinely Raising Disagreement In an authentic eS&OP process, it is not OKto disagree, it is necessaryto disagree. Disagree without being disagreeable * Putting the Mooseon the table. * Everett Dirksen Sales/Marketing (Units or $ by Family) Finance (Revenue) Executive S&OP A process to raise and reconcile disagreement/conflict, agree upon, & communicate THE company game plan President Product Dev. (New Product Issues) Operations (Units/hours/ Material)

  23. Top Management’s Role (in part) . . . • Create an environment (culture) that allows the Ugly Mooseto be put on the table -- so that . . . • They can completely and effectively resolve disagreements and conflict, setting proper: • Policy • Strategy • Risk assessment • Performance measurementsBefore it’s in the MIX Space!

  24. Leadership’s Role During Change • Lead educational process • Manage cultural changes • Assure proper resources • Immerse themselves in the detail • Approve procedures • Insist on clear targets (goals) • Participate • Measure progress

  25. Leadership’s Role Ongoing • Insist on meaningful participation • Insist proper homework be done • Remove themselves from the detail • Clearly raise and resolve disagreement and conflict • Make clear decisions • Hold people accountable (process and results) • Encourage and expect realistic improvement • Lead management development • Measure performance

  26. Corporate Role . . . • Mandate the fundamental concepts and principles of executive S&OP* • Demonstrate a willingness to “put the moose” on the table • Assure resources to develop necessary and appropriate tools; that may vary SBU by SBU • Measure progress – development and process discipline • Help address cultural and performance measurement issues • Reward success * S&OP Principles: The Foundation for Success Robert A. Stahl and Thomas F. Wallace Foresight Journal Fall 2012

  27. Questions for Personal Reflection & Discussion • Do you have an environment where disagreement can be openly and thoroughly discussed and debated, regardless of “rank”? • Do all participants have the opportunity to engage in the debate? • Do you have clear lines of accountability when collegial, cross-functional, collaborative, consensus building results can not be achieved?

  28. Raising and Resolving Disagreement

  29. Raising Disagreement Sales/Marketing (Units or $ by Family) Finance (Revenue) Executive S&OP A process to raise and reconcile disagreement/conflict, agree upon, & communicate THE company game plan Product Dev. (New Product Issues) Operations (Units/hours/ Material)

  30. Conflict Resolution * . . . • Disagreement has two parts: • Substantive issue • Emotionbehind that issue • Disagreementbecomes conflictwhen the emotional is not completely addressed • Lasting conflict resolution must deal with BOTH elements of disagreement • Doing that effectively can be learned: • With a motiveto do so and • A framework on which to work * “Getting to Resolution” Stewart Levine, JD

  31. Keeping the Herd Moving Roughly West . . . is more Cultural and Behavioral than Technical

  32. Culture . . . Is a “fuzzy” word Here’s a more focused understanding: • Interpersonal relationships reflect the culture of an organization. • The sum of those relationships is the culture! • These relationships reflect a web of implicit and explicit agreements that are the organization (process).

  33. Research Reports * . . . Success with Executive S&OP is: • 60% = Culture/Behavior Change • 30% = Process Definition & Discipline • 10% = Technology * Altimiter/AMR Boston, Sept 2010

  34. A Truth . . . If you align human energy an organization can do things not before possible.

  35. How to Engage Top Management

  36. The Top Management ‘Catch 22’ . . . Getting Top Management involved from the start: • If you DON’T – you won’t address the cultural or behavioral changes • If you DO – they realize that success does not come from doing what they do better, but from doing things differently to be better • That translates to personal and/or organizational discomfort and risk for those in charge * Overcoming the "Catch 22" of Implementation by Robert A. Stahl and Joseph F. Shedlawski Foresight Journal Spring 2012

  37. Identify and enlist an Executive Champion; someone with executive influence, willing to put skin in the game Connect the hard benefits of executive S&OP to successful implementation Mitigate risk – path of low risk/low cost Quick results to build confidence – 90 Days Feedbackon progress/success Generatelocal ownership and enthusiasm How to Engage Top Management?

  38. Successful Implementation Steps

  39. Uninformed (before Go/No-go #1) Boss: “Okay, let’s do an Executive Briefing” Semi-informed (after Briefing: Go/No-go #1) Staff: “Okay, let’s do a Live Pilot Demonstration” Fully informed (after Pilot: Go/No-go #2) Staff: “Okay, let’s go to full cutover.” How to do that . . . Mitigate RISK Low Risk

  40. Phase III Financial Integration Phase II Expansion Phase I Pilot Demo Implementation Path Executive Briefing Go/No-Go #1 Live Pilot Demonstration Go/No-Go #2 Kickoff Session Business Improvement Low Cost Low Risk High Impact Quick Results 1 2 3 4 5 6 7 8 9 Months

  41. Questions & Answers

  42. Closing

  43. Closing Thoughts • DISAGREE WITHOUT BEING DISAGREEABLE • ONE SET OF NUMBERS • HARD BENEFITS: CUSTOMER SERVICE, PLANT PRODUCTIVITY, INVENTORY, CUSTOMER ORDER LEAD TIMES, TIME TO LAUNCH NEW PRODUCT, ETC. • SOFT BENEFITS: ENHANCED TEAMWORK, IMPROVED COMMUNICATIONS, BETTER DECISIONS & FINANCIAL PLANS, GREATER ACCOUNTABILITY, WINDOW INTO THE FUTURE, AND ONE MORE . . . • ENERGY ALIGNMENT • TRANSFORMATIONAL THE BEST BENEFIT? Accomplishment

  44. Thanks For listening & Good Luck Bob Stahl 508-226-0477 RStahlSr@aol.com Tom Wallace 513-722-6105 wallacetf@gmail.com

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