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Debrief 2

Debrief 2. Debrief after round 2. Strategy in The Fresh Connection What is your strategy? How did you translate it into action? Was everything clear? Please give us your reflection in headlines Review team results. Maturity scan: Alignment and collaboration. Sales & Operations

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Debrief 2

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  1. Debrief 2

  2. Debrief after round 2 • Strategy in The Fresh Connection • What is your strategy? • How did you translate it into action? • Was everything clear? • Please give us your reflection in headlines • Review team results

  3. Maturityscan:Alignmentandcollaboration

  4. Sales & Operations Planning

  5. What is happening 6-12 months from now?

  6. A typical board meeting:Let’s eavesdrop President: “This shortage situation is terrible. When will we ever get our act together? Whenever business gets good, we run out of product and our customer service is lousy.” VP Operations: “I’ll tell you when. When we get some decent forecasts from Sales and Marketing…” VP Sales (interrupting): “Wait a minute. We forecasted this upturn.” VP Operations: “… in time to do something about it. Yeah, we got the revised forecast – four days after the start of the month. By then it was too late.” VP Sales: “I could have told you months ago. All you had to was ask.” VP Finance: “ I’d like to be in on those conversations. We’ve been burned more than once by building inventories for a business upturn that doesn’t happen. Then we get stuck with tons of inventory and run out of cash.” Source: Thomas F. Wallace, Robert A. Stahl, ‘Sales & Operations Planning’, 3rd ed., 2008

  7. What is causing these type of discussions?

  8. No connection between business strategy and execution No ownership, high forecast bias, no identification of gapsbetween forecast, plan, budget etc… Execution Business Strategy We allmean well, but we get nowhere

  9. Where does S&OP fit? No ownership, high forecast bias, no identification of gapsbetween forecast, plan, budget etc… Execution Business Strategy S&OP We allmean well, but we get nowhere

  10. What is S&OP? S&OP, at heart, is a very simple idea: make forecasts of what you are going to sell and what you can make (or buy) take actions to balance the equation supply = demand over the whole horizon you have decided you need to look at look at the financial consequences of those actions versus your targets initiate actions to address the difference between the target and the current, balancedforecast

  11. S&OP is business planning in 5 steps… From Forecasting to Demand Shaping Getting the right info to make decisions into the last 60 minutes of the process Demand Reconcile demand and supply Reconcile with financial plans Sales and Ops Planning Meeting Supply “What if?” Rather than “Yes/No” From Capacity Planning to Supply Network trade offs & design Source: DeepParekh, Partner, Equus Group, LLC

  12. S&OP is also about behavior and collaboration “You have done well: you have consistently beaten your forecast.” “You consistently under-forecast; please look into your process.” “Your forecast is well below your target; this is unacceptable.” “What options have you considered already and what can be done more to close the gap.” “This is our bottom up forecast; this is our best outlook based on current plans; there is nothing I can do”. “Our bottom up forecast fell short of target. We are working to improve our Q3/Q4 promotional program.”

  13. Marketing: the promotion will sell 400 Sales:we can sell 200 one consensus plan Finance: we have budget of 300 Manufacturing:they will only sell 150 • Key decision making forum • Manage together • Routine things done routinely • Issues addressed early – efficient response & anticipation • Functional silo approach • Ineffective behaviour • Fire fighting • Lots of ad-hoc meetings • Lots of effort, little reward Source: Red Pepper, Modified E&Y, 1999

  14. Who Brings What to the Table? Engineering Sales Product Development Customer Interface Human Resources Marketing Workforce Availability Product Demand Capital Operations Capacity Finance MPS and Supplier Constraints Business Plan General Management Materials Source: Launchbury, Keith J. Principles of Planning Omeric, 1999

  15. How to translate this to The Fresh Connection Purchasing Sales Servicelevel Demand pattern Shelflife Leadtimes Quality Reliability Trade Unit Strategy Capacity Improvements Operations Frequencies Stocklevel Fixed period Supply Chain Adaptedfrom: Launchbury, Keith J. Principles of Planning Omeric, 1999

  16. Strategyinto actionLevels in version 2013

  17. Extensionsin version 2013

  18. Decision making Sales Operations Supply chain Purchasing • Decision making • Who is involved? • Whatsequencemakes sense? sequence

  19. Set up a logical sequence of decisions and roles involved for The Fresh Connection Sales Operations Supply chain Purchasing Inventorypolicyraw mat. (batch size, safety stock) Productioncapacity plan (shifts/projects) Forecastingdemand (pattern) Inventorypolicyfinished product (safety stock) Supplierselection and agreements Productionpolicy (interval / fixedperiod) Production resources and allocation Decideaboutportfolio/ customerservice The valueproposition Capacity plan inboundwarehouse Capacity plan outboundwarehouse

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