Sales and Operations Planning: How To Put Together the Pieces

Putting Together the
Pieces for S&OP
April 2019
For the Supply Chain Leader Who Wants to Rise Above

Supply Chain Insights LLC Copyright © 2019, p. 2
• Balanced Between the “S” and the “OP”
• Aligned to Business Strategy
• Clear Governance
• Balanced Scorecard to Reward the Right Cross-Functional Behavior
• Tied to Execution
• Delivers a Feasible Plan
• “What-if” Analysis
S&OP: What Does Good Look Like?

Businesses are Complex

Excel Ghettos
Isolated, Disconnected
Decision-making

S&OP Should Follow Business Strategy

Building Horizontal Processes

Supply Chain Center of Excellence Structure

There are usually 4-5 based on the rhythms and cycles of the supply
chain
Companies Do Not Have One Supply Chain

The Supply Chain Is a Complex System with
Increasing Complexity

Responsive
Supply
Chain (s)
Agile Supply Chain (s)
Efficient
Supply
Chain (s)
Long Tail of the Supply Chain
Plot volume against order
frequency for all items for 24
months. Study the patterns of
the tail.

Items Need to be Re-Plotted As the Business
Changes

Align Tactics
Sense Respond
Balance

Start with the Goal in Mind

Evolve Over Time

Factor Consideration
Organizational Size Greater than 25 Planners Needs
Collaboration Software
Bottlenecks Higher ROIC than 10% Tactical
Supply Must Be Able to Model and
Deliver a Feasible Plan
Demand Error With Error Greater than 40% There
Needs to be Inclusion of
Optimization for Form and Function
of Inventory
Governance After Clear Governance, All
Divisions Need to Work on the
Same Time Table
Skill Level Select a System Based on Usability
How to Start?

Strategic
Planning
• Goal: Plan by
Design
• Set Push-pull
Decoupling Points
• Define Buffers
Tactical
Planning
• Goal: Tactical Demand Plan/S&OP
Planning
• Level Load for Manufacturing/Build a
Feasible Plan
• Improve Aggregate Buying of Direct
Materials
Demand
Sensing
• Goal: Improve
Replenishment
• Timing Usually
the Same as the
Slush Period
Understanding Planning

Demand Is….
A River that Flows Through the Value Network

We Are Hard-Wired for Supply

Map Your River
View After
Sprint

Planning Software Satisfaction

Data
Inputs
Engines Plan
Outputs
Align Engines with Outcomes
Planning Master Data

Companies Make the Mistake of
Trying to Get Precise on
Imprecise Numbers.
Instead, they need to manage
demand flows.

• Backcast and Test Engines: Use three years of history to forecast a
known value.
• Test and Develop Different Data Models: Attribute-based, Attach-Rate
and Econometric Models are all Useful
• Align the Engines with the Types of Demand
Selection

• Ensure that you can model a “feasible plan” based on bottlenecks
– Material-centric
– Distribution-centric
– Manufacturing-centric
• Nuances: Reverse bill of materials, floating bottlenecks, network
modeling
Supply Modeling

• Engines: Modeling/Math
• Scalability
• User Interface
• Collaboration/What-if Analysis
• Partner Requirements
• Culture
• System of Record
• Integration
Selection Criteria for Planning

• Scalability
• User Interface
• Culture
• Integration

Inventory Goal Importance vs. Performance:
Cohort Only

Unprecedented Commodity Pressures

Inventory Levels Burgeoning

Form & Function of Inventory

EnterpriseCustomers Suppliers
Demand
Networks
Supply
Networks
Logistics Networks
Decision Support Master Data
Transactional
Systems
Executional
Planning
Operational
Planning
Tactical
Panning
Tactical
Planning
Tactical
Planning
Tactical
Planning
Tactical
Planning
Strategic Planning
Operational
Planning
Operational
Planning
Operational
Planning
Operational
Planning
Executional
Planning
Executional
Planning
Executional
Planning
Executional
Planning
Transactional
Systems
Transactional
Systems
Transactional
Systems
Transactional
Systems

Demand
Networks
Supply
Networks
Logistics Networks

Demand
Networks
Supply
Networks
Logistics Networks
Decision Support Master Data
Transactional
Systems
Transactional
Systems
Transactional
Systems
Transactional
Systems
Transactional
Systems
E
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Strategic Planning
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The Digital Twin

Demand Latency
Forecastability
Customer Service: On-time and Infull
Tactical Plan Feasibility
Schedule Adherence
Loads Tendered. Loads Accepted.Forecast Value Added

Gaps in Alignment

Manage Costs Like a Decathlete

Technology Does Not Always Help: Total Costs

Wrap-up
We Must Learn to Unlearn to
Relearn.
Focus on Basics. Avoid the
Pitfalls and Potholes.
Build Executive
Understanding.

What To Learn More?

Network of Networks

About Lora Cecere
• Founder of Supply Chain Insights
• “LinkedIn Influencer”
• Guest blog for Forbes
• Author of 5 books: Bricks Matter (2012), Shaman’s Journal (2014),
Supply Chain Metrics That Matter (2014), Shaman’s Journal (2015),
Shaman’s Journal (2016), Shaman’s Journal (2017)
• Partner at Altimeter Group (leader in open research)
• 7 years of Management Experience leading Analyst Teams at
Gartner and AMR Research
• 8 years Experience in Marketing and Selling Supply Chain Software
at Descartes Systems Group and Manugistics (now JDA)
• 15 Years Leading teams in Manufacturing and Distribution
operations for Clorox, Kraft/General Foods, Nestle/Dreyers Grand
Ice Cream and Procter & Gamble.
Contact Information:
• Email: lora.cecere@supplychaininsights.com
• Blog: www.supplychainshaman.com (15,000 pageviews/month)
• Forbes: www.forbes.com/sites/loracecere
• Twitter: twitter.com/lcecere (9,100 followers)
• LinkedIn: www.linkedin.com/in/loracecere (262,000 followers)
• LinkedIn Influencer: www.linkedin.com/today/author/446631

Complimentary Monthly Networking
Monthly networking calls. To sign up contact
Regina.Denman@supplychaininsights.com.

About Lora Cecere
• Founder of Supply Chain Insights
• “LinkedIn Influencer”
• Guest blog for Forbes
• Author of 5 books: Bricks Matter (2012), Shaman’s Journal (2014),
Supply Chain Metrics That Matter (2014), Shaman’s Journal (2015),
Shaman’s Journal (2016), Shaman’s Journal (2017)
• Partner at Altimeter Group (leader in open research)
• 7 years of Management Experience leading Analyst Teams at
Gartner and AMR Research
• 8 years Experience in Marketing and Selling Supply Chain Software
at Descartes Systems Group and Manugistics (now JDA)
• 15 Years Leading teams in Manufacturing and Distribution
operations for Clorox, Kraft/General Foods, Nestle/Dreyers Grand
Ice Cream and Procter & Gamble.
Contact Information:
• Email: lora.cecere@supplychaininsights.com
• Blog: www.supplychainshaman.com (15,000 pageviews/month)
• Forbes: www.forbes.com/sites/loracecere
• Twitter: twitter.com/lcecere (9,100 followers)
• LinkedIn: www.linkedin.com/in/loracecere (262,000 followers)
• LinkedIn Influencer: www.linkedin.com/today/author/446631

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