Copyright 2011 Kinaxis Inc. All Rights Reserved. 1
Integrated Business Planning: Fact or Fiction? Bill DuBois business consulting bdubois@kinaxis.com Copyright 2011 Kinaxis Inc. All Rights Reserved. 2 Copyright 2011 Kinaxis Inc. All Rights Reserved.
What s wrong with this picture? Copyright 2011 Kinaxis Inc. All Rights Reserved. 3
Agenda Market drivers IBP = Mature S&OP? People, Process, Technology Continuous and Collaborative S&OP Copyright 2011 Kinaxis Inc. All Rights Reserved. 4
Market Drivers Copyright 2011 Kinaxis Inc. All Rights Reserved. 5 Copyright 2011 Kinaxis Inc. All Rights Reserved.
Today s multi-tier global supply chain Pervasive, global outsourcing Product portfolio proliferation Shrinking product lifecycles Increasing demand volatility Copyright 2011 Kinaxis Inc. All Rights Reserved. 6
A volatile economy makes traditional budgets obsolete before they re even completed. Source: McKinsey Quarterly, Just-in-time budgeting for a volatile economy, Spring 2009 Copyright 2011 Kinaxis Inc. All Rights Reserved. 7
Using inventory to buffer volatility Demand forecast (units) Hi scenario 400 300 200 Base scenario 100 Lo Scenario 0 Time Uncommitted Flexible quantity contract Fixed quantity contract These are primarily financial decisions They have impact on Investment Revenue Margin Market share Yet they are expressed in Units Venu Nagali, Procurement Risk Management (PRM) at Hewlett-Packard Company, Stanford Risk Management Roundtable, November 13, 2006 http://www.gsb.stanford.edu/scforum/login/pdfs/hp%20%20prm%20nov%2006%20venu%20nagali.ppt Copyright 2011 Kinaxis Inc. All Rights Reserved. 8
How the CEO/CFO sees the business How to Master Analyzing the Income Statement, Old School Values blog, January 20 th, 2009 Copyright 2011 Kinaxis Inc. All Rights Reserved. 9
How the CEO/CFO sees the business How to Master Analyzing the Income Statement, Old School Values blog, January 20 th, 2009 Copyright 2011 Kinaxis Inc. All Rights Reserved. 10
S&OP Bridging the gap between functions Goal: Make the financial budget. Top-down focus. Wants: Control and predictability of operations Forecast: The budget/annual operating plan Finance Goal: Maximize revenue and market share Wants: Guaranteed product availability Sales and Marketing Demand Side Supply Side Operations Goal: Minimize supply chain costs, often inventory Wants: Minimum demand uncertainty Forecast: Sales plan Forecast: Supply plan Supply Chain Goal: A feasible plan. Bottom-up focus Wants: Minimize risk and disruption Forecast: The demand plan Copyright 2011 Kinaxis Inc. All Rights Reserved. 11 11
S&OP Bridging the gap between functions Goal: Make the financial budget. Top-down focus. Wants: Control and predictability of operations Forecast: The budget/annual operating plan Finance Goal: Maximize revenue and market share Wants: Guaranteed product availability Sales and Marketing Demand Side Supply Side Operations Goal: Minimize supply chain costs, often inventory Wants: Minimum demand uncertainty Forecast: Sales plan Forecast: Supply plan Supply Chain Goal: A feasible plan. Bottom-up focus Wants: Minimize risk and disruption Forecast: The demand plan Copyright 2011 Kinaxis Inc. All Rights Reserved. 12 12
IBP = Mature S&OP? Copyright 2011 Kinaxis Inc. All Rights Reserved. 13 Copyright 2011 Kinaxis Inc. All Rights Reserved.
Gartner Perspective Copyright 2011 Kinaxis Inc. All Rights Reserved. 14
Gartner Perspective Copyright 2011 Kinaxis Inc. All Rights Reserved. 15
Traditional Planning Process Segmentation Copyright 2011 Kinaxis Inc. All Rights Reserved. 16
Traditional Planning Process Segmentation Copyright 2011 Kinaxis Inc. All Rights Reserved. 17
Continuous and Collaborative S&OP Copyright 2011 Kinaxis Inc. All Rights Reserved. 18
Continuous and Collaborative S&OP Copyright 2011 Kinaxis Inc. All Rights Reserved. 19
Process, People, Technology Copyright 2011 Kinaxis Inc. All Rights Reserved. 20 Copyright 2011 Kinaxis Inc. All Rights Reserved.
Gartner: Most companies stuck at stage 1 or 2 Larry Lapide Demand Management Solutions Group 2008 Copyright 2011 Kinaxis Inc. All Rights Reserved. 21
Gartner: Most companies stuck at stage 1 or 2 Larry Lapide Demand Management Solutions Group 2008 Relative importance of technology Copyright 2011 Kinaxis Inc. All Rights Reserved. 22
Continuous and Collaborative S&OP Copyright 2011 Kinaxis Inc. All Rights Reserved. 23 Copyright 2011 Kinaxis Inc. All Rights Reserved.
If I had asked people what they wanted, they would have said faster horses. - Henry Ford Copyright 2011 Kinaxis Inc. All Rights Reserved. 24
Continuous and Collaborative S&OP AND, not OR Collaborative, not linear Event-driven, not calendar-driven What If Anytime Copyright 2011 Kinaxis Inc. All Rights Reserved. 25
Thank you! Questions? Trevor Miles e: tmiles@kinaxis.com m: +1.647.248.6269 t: @milesahead Copyright 2011 Kinaxis Inc. All Rights Reserved. 26 Copyright 2011 Kinaxis Inc. All Rights Reserved.
TOP 5 Top 5 signs your S&OP process is in trouble 1. You hold a tribal council to vote off the customers who won t be getting their orders. 2. You ve just hired a new S&OP consultant: Zelda the online psychic. 3. Your CEO pronounces it Sales and Oooops?! 4. Your IT Director is extremely excited about the new S&OP tool he just purchased. It s called Excel. 5. Your VP of Manufacturing calls it Sales OR Operations Planning. Copyright 2011 Kinaxis Inc. All Rights Reserved. 27
Copyright 2011 Kinaxis Inc. All Rights Reserved. 28