Rohit Parangath - EMD Millipore

After attending the APICS/IBF Best of the Best S&OP conference I came back with a sense of eagerness and ambition to implement what I had learned over the two days I had spent at the conference filled with information.

The sessions that I attended included presentations from Motorola, BASF, Rolls-Royce Energy, Rubbermaid, Timberland, & OfficeMax. Topics varied from Engineer-To-Order which was a session given by a representative from Rolls-Royce Energy, to BASF’s presentation on process environments to the presentation on retail environments from OfficeMax.

The conference was structured to offer Level 1 and Level 2 seminars, where Level 1 was geared towards companies that were in the process of implementing S&OP (or thinking about it) and Level 2 was aimed at companies that had a process already in place but wanted to improve. Most of the sessions that I attended were Level 2 as my company is exactly in that category.

I work in the S&OP department of a bio-science company in San Diego and have held different positions in S&OP throughout my tenure there. I have held positions ranging from Demand Coordinator, to Supply Coordinator to my current role as S&OP consultant. We have had an S&OP process in place for about 2 years now, but something about it didn’t feel right. It has always seemed more like a data extraction and graph building exercise than a decision making process. S&OP reviews were often seen as a burden due to the time that is needed to be invested every month to gather all of that data. For a division with close to 15,000 unique SKUs it can be quite a tedious exercise! The main point from all of the sessions that struck me was the passion that all of the presenters had for S&OP. All the presenters were so enthusiastic about sharing what they had learned and implemented that I actually felt that there was something lacking at my company.  I wondered why that was the case, since we had been doing S&OP for 2 years. Why weren’t we as passionate about the process as these companies were? We even had tremendous support and executive level leadership, which most companies lacked. It didn’t make sense.

While drinking a couple beers at the Hilton Chicago’s Kitty O’Sheas Irish pub after the first day’s sessions, it struck me… Data. I realized that we spend so much time downloading, massaging and formatting the data so that it is in a presentable form that we are left with precious little time to actually analyze the data to make valid decisions based on it. I knew I had suffered from this problem in both my Demand and Supply Coordinator roles.

The next day I spoke to some of the presenters and sure enough, almost all of them had either dedicated teams of Analysts or phenomenal IT support when it came to reporting on S&OP. They spent 20% of their time gathering the data and 80% analyzing the data. It was almost the opposite in my company. I realized my first step after getting back would be to work with our IT department in order to automate our reports as much as possible. For a short term solution I decided to work with the different departments to create standard templates for reports so they don’t have to be done from scratch each time. I felt it was essential to bring back the passion that I saw at the conference to my company and I knew that easing the S&OP workload would be the best way to do so.

While the companies that presented were from varied industries, the ideology remained the same. I thought bio-science was complicated until I heard about Rolls-Royce’s take on risk mitigation in S&OP, where each order was worth millions of dollars! I learned how OfficeMax invested a lot of time in working with their suppliers to get them involved in the S&OP process. I also loved Newell Rubbermaid’s concept of S&OP entities.

Some other tips and ideas that I took from the conference and  plan to implement are listed below

Simplify the Cs.
Let ERP control your Cs. Most of us have multi-million dollar ERP suites. The least it can do is manage your C materials with minimal input. Stop over analyzing C materials and try your best to automate all operational procurement and production processes. Use Safety stock, re-order point planning or min-max levels in order to plan for low sellers with minimal forecasts.

Extend
In order to be successful you need to extend S&OP beyond the organization. Identify key customers and suppliers to work with and then build and value your relationships with them.

Share
Usually only a few lower management level employees are involved in the S&OP process. Spread responsibilities around to get more employee involvement. S&OP is not an elite club, it becomes much more efficient when you build an S&OP knowledge base with key people across your different sites. Increase conversations about the S&OP process to bounce ideas off each other. Do not underestimate the value of visibility. Transparency is worth it’s weight in diamonds.

This was my first APICS/IBF conference and I honestly didn’t know what to expect. I definitely did not expect the lessons that I took home  to be as helpful as it was. I’ll be there next time as well!

Thanks!

Rohit Parangath, CPIM
S&OP and Integrated Planning Processes Consultant
EMD Millipore

Thank you IBF and APICS for organizing a very successful Best of the Best S&OP Conference.  Our company is in the early stages of formalizing our S&OP process.   The presenters shared many great ideas that we will be able to use as we begin our S&OP journey.  I would like to take this opportunity to share  just a taste of what I learned.

Demand consensus is needed in order to achieve success. One of the lessons that I took from the conference states that the whole organization needs to work from the consensus demand in order to be successful. I also learned that there is no room for success when you second guess the demand or apply a separate variation of it.

First and foremost, I learned that it is crucially important to have top management support in the S&OP process. In addition, the concept of range forecasting is another lesson that I brought back to my office and is something we can use with our suppliers at Broan-NuTone. While we know it is difficult to accurately predict 6 months out what our true requirements for the supplier will be, we can provide some range of demand to expect.   As the planning period moves closer, we can narrow the range.  By doing so, this will give our suppliers some tangible data they can use in their planning processes.

One very important question regarding how quickly we can communicate demand changes to our tier 1, tier 2, etc suppliers was a reality check for me. I know this varies from supplier to supplier in our organization, but in looking at our current processes, we see that the communication time can be days and weeks rather than hours or days. We will be employing some new software soon that I will seek to help address this area.

Extending the S&OP process to the suppliers is something I found to be very intriguing at the conference. While we do not yet have a formal executive S&OP process , it is my hope that once we reach this point  we will be able to explore the process of supplier S&OP. I can see how it can provide real value and drive efficiencies within the supply chain.

While we are just in the infancy stages of S&OP at our company, the tips and tools I learned from this conference will be very valuable as we begin to develop our S&OP process.  I know to start with something that we can have early success on and build from there. We see the value in using an S&OP process, we now just need to start.

Matt Treder
Sr. Acquired Products Planner
Broan-NuTone LLC

Nishad Parmar - ITT Corporation

This was the first APICS/IBF Best of the Best S&OP conference that I have attended. . It was a great experience to learn from some of the top companies in the world as the guest speakers share their journey to implementing S&OP throughout their organization.

One key lesson learning & takeaway for me was about the commitment & involvement in S&OP from the organizations’ executive team and whether or not they lend their sponsorship to the process. I learned that educating senior leaders on the process and having them ask the S&OP members the challenging & ‘uncomfortable’ questions is critical to drive the business in the right direction. Those discussions are what truly connects our Sales & Operating Planning with Strategic business initiatives.

Another takeaway that I found useful was the Motorola model & their S&OP Circle. Conducting Procurement & Supplier S&OP separately and then connecting the dots is the key to a successful process. Including the Tier 1 & Tier 2 suppliers in the process and linking demand down the entire supply chain helps you understand the risks and allows the team to counter measure accordingly.

I look forward to attending the 2012 conference…Thank you.

Nishad Parmar
Lean Six Sigma Champion
ITT Corporation

Edward Rodriguez - E-Z UP

We are a medium sized privately held business that has a large ERP, but probably hasn’t invested into its processes and user reporting as much as we should.  In my 6 years with the company, I started as the Controller, and then moved to Director of our retail stores/internet operation, and now I fill a void within Supply Chain.   My emphasis has been with procurement, negotiation, and sourcing, however considering that my background is mainly in Finance, I was not as well versed as I should be in the more detailed aspects Supply Chain and the S&OP process.   I found an advertisement for the IBF & APICS Best of the Best Conference while conducting internet searches related to bringing more value to the supply chain and purchasing process.   Upon first glance it seemed too narrow for my goals, upon closer review it looked like a good opportunity to learn about the overall process of inventory supply/demand, and a good way to bring some badly needed efficiency and harmony to what felt like a less-than-optimal process. I promised my boss a favorable ROI for the trip and off I went to Chicago.

My day started with a review of survey results and challenges.    One revelation that I found interesting was how Sales (Supply) driven the S&OP process is.   As a person looking at this from the Ops side, it was scary to think about bringing our Sales group, whose direction is to “just sell,” into such a complex process. Also, I had never thought of an S&OP “implementation” as much as taking these learning’s and applying them as it seemed right. This was clearly incorrect, as the Best of the Best Conference presented the S&OP process as a multifaceted, challenging change on how to do business. It became obvious that the way our company manages this process is outdated from somewhere in the past decade, so the call-outs from this discussion became very valuable. This included understanding the challenges (strategic coordination, executive buy in, technology, etc.) and recommended steps for a successful implementation. This was going to take a lot of learning to take back to the team at home.  So I became especially devoted to assure that I absorbed all the knowledge I could.  Plus, I networked so I could bounce thoughts and ideas from others in similar (or advanced) circumstances.

As a newbie in this field, it made the most sense for me to go through the level 1 discussions. The track started with a presentation titled, “Resolving Conflict & Building Consensus in the Monthly S&OP Process” by Alan Milliken.   He was a very no-nonsense speaker and delivered many important lessons such as:

• The executive team has to provide the goal and define the way
• Collaboration and consensus decision making are keys to success
• Goal is to resolve problems, not avoid problems
• Never give up trying to prioritize to reach goals, as management bias plays in, and you can’t lose sight of the big picture.
• Watch for “spectators” who have a detailed agenda – take them to the woodshed

Mr. Milliken’s presentation outlined a demand-supply planning model, and documented linkages between the two that will be very applicable during our roll-out.  In addition, he provided some very good ideas regarding agenda development and prioritization for the Executive S&OP.

Next was the presentation called “How to Effectively Utilize Forecasting and Demand Planning in the S&OP Process, by Mr. Bill Oakley of TE Connectivity. Mr. Oakley laid the foundation of his presentation by posing the key question: “How do we evolve?”   This was key for me, as our processes are somewhere in the stone-age, and that’s not acceptable.   Some key lessons from his presentation included:

• S&OP processes need to be concurrent to assure timeliness
• Don’t ambush people with the process – describe, explain, get them excited!
• Every move must have a benefit.
• Metrics must be fully understood
• People, Process, and Technology must all work together to facilitate a functional and well run Demand Consensus

Again, in retrospect some of this is obvious, however while dealing in the day-to-day, these things are easy to overlook.   Next was a lunch presentation by Sheetal Shah of Motorola, where he addressed key points regarding the incorporation of customers and vendors into the S&OP process.   His comments were well noted and will certainly be included in a phase of our S&OP roll-out.

The next presentation of information was by my favorite presenter of the conference, Mr. Craig Faulkner of W.L. Gore.   He is a person who isn’t faking the love of the S&OP process, and who I hope to emulate during our roll-out.     I actually attended two of his presentations:  “Supply Planning for Both In-House and Outsource Manufacturing” on Thursday, and “How S&OP Can Support and Enhance New Product Launches” on Friday.    I absorbed many applicable lessons from this presentation, including:

• Inventory exists to account for uncertainty, otherwise we wouldn’t need it.  The inventory dilemma is how to balance it – not that it’s just “bad” or “good”
• An effective S&OP process is a decision making process.  Communicate and execute one plan.
• S&OP should be dynamic, move with market needs, applies realistic goals, and is flexible to respond to market opportunities.
• There are many evolving benefits of S&OP, including better customer service, reduced obsolescence, enhanced teamwork, and better decisions.

The last presentation on Thursday was “Lean Forecasting” by Mr. Mike Gilliland of the SAS Institute, and Mark Hahn from Amway. Admittedly this is an area that I was least comfortable with, however I felt it was important to get exposed to some of these demand-side concepts that I could hopefully articulate to our Sales group properly.   These gentlemen were sharp and straightforward, and the following lessons stuck with me:

• The primary forecast objective is to forecast as accurately, efficiently,  and unbiased as possible
• Perfect forecasting is not realistic
• Focus on forecast efficiency
• Use FVA analysis to identify and mercilessly eliminate non‐value adding activities; streamline the forecasting process & re‐direct wasted effort
• FVA is measured by comparing the results of a process activity to the results you would have achieved without doing the activity

FVA was certainly a new concept, and I feel well armed to have an intelligent discussion with our Sales team about forecast methods and the benefits of applying statistical elements.

The following morning started with a session titled “Successful Implementation and Revitalization of S&OP,” presented by Mr. Bradley McCollum of Jarden Leisure and Entertainment. Mr. McCollum really went into the details of S&OP, talking through responsibilities of the demand and supply sides in a really understandable manner.   Takeaways that I could appreciate included:

• An S&OP Champion profile should include being well respected and dedicated to the process
• Forecasts need to be challenged – contradictions need to be addressed.   But disagree without being disagreeable.
• Successful S&OP implementations start with executive commitment and ownership
• Build the right team. You want the “A” Team
• Take the time to have an effective kick-off; educate and plan
• Pro-actively communicate and manage risks; off the bat, agree to what you know and what you don’t know

Mr. McCollum’s presentation will certainly be an important part of the road map to developing our process.    Not only did he present the details of demand and supply, but he documented how to make it all work together.

Unfortunately I had to leave before Mr. Todd Gallant’s “Pre and Executive S&OP Session” presentation. However, his presentation had very good, points that leant well to the entire family of sessions, and he has been very kind in answering my follow up questions via email.

All in all, my participation in this event has opened my eyes to many great opportunities for my company, as well as for my professional development.   Unfortunately, this also really highlighted our shortcomings, where I didn’t think we were so bad. However, I am now inspired to move my company forward procedurally and technically so that our processes can reach world-class status and our profitability is maximized.   Admittedly there was some overlap between the presentations; however for my purposes this really drove some key S&OP principles home. You will find me at the crossroads where demand and supply meet.    Thanks IBF and APICS!

Edward Rodriguez
Director, Supply Chain Management
International E-Z UP

Although our company is considered to be ahead of many companies where our S&OP Process is concerned, I am what might  be considered to be a “newbie” in the S&OP arena. I began my journey working in Demand Planning (unfortunately we did not use S&OP then) and now work in supply planning, My direct manager is also the company’s S&OP Group Leader and he brought our team to the recent APICS/IBF Best of the Best S&OP Conference to learn more about the process.  I spent the entire conference in the Level 1 sessions, and learn I did!

The two day conference is a fast paced learning session that will give you an insight to S&OP if you use it at your company like we do now.  The conference delivered excellent presenters (HOOAH!), great topics, and was outstandingly well organized. There were  two levels, one for the more experienced practitioners in S&OP, and one for the less knowledgeable.  I stuck with the sessions on the  level 1 track and learned something from them all. Everything from “Resolving Conflict in the Monthly S&OP Monthly Process” to “How S&OP Can Support New Product Launches”.

I would encourage any one reading this who is close to planning to attend any “Best of the Best S&OP Conference’s” in the future. My manager, since he paid for it, is especially satisfied that I attended and actually got something out of a conference that I went to.

Gary A. Zambo, CPIM
Supply Planning Consultant – Central Service Team
SC Johnson – A Family Company

View Full Conference Details:

Eric Tinker - Nexview Consulting

The Executive S&OP Meeting is the culminating meeting in the S&OP process that is often preceded by a Portfolio Review, Demand Consensus, Supply Consensus, and Pre-S&OP meetings. It’s the S&OP meeting, led by the company’s, or business unit’s senior executive. The Executive S&OP Meeting is also where the management team:

• Confirms the summary level operating and financial plan
• Makes executive level decisions on items that have been escalated to them
• Manages summary level KPI performance
  

While the Executive S&OP Sponsor should provide guidance to make things work well at this level, here are five suggestions to consider as well.

1. Integrate the Executive S&OP Meeting with the Executive Management Meeting Structure

Most executive teams have a well-defined system of meetings and business reviews as part of their annual calendar. Adding another monthly meeting to an already packed executive life and travel schedule across multiple geographies and time zones will often not be popular. I suggest you make the Executive S&OP Meeting part of the agenda for an already existing monthly meeting. The hitch can sometimes be that the timing of this meeting doesn’t fit into the S&OP calendar flow. Work with your sponsor to move the meeting a week forward or back if possible. If that is not possible or doesn’t help, then you will have to work out some trade-offs where schedules are concerned so that the  information can be reviewed in a timely manner, or possibly schedule  a separate meeting.

2. Make Sure the Reports and KPIs Are At The Right Level

The Executive S&OP report (i.e. Executive or Company Operating Plan) and KPIs used in this meeting should be at a higher level than those used in Pre-S&OP.  For example, in Pre-S&OP you’re usually examining the product family levels for a business unit. In the Executive S&OP meeting it’s one level up, meaning at the business unit, geography, or company level. The level should match the P&L level they are already looking at. You can bring exception-based supporting detail to cover a particular agenda item as required.

3. Set a Dollar/Currency Level for Exception Items That Go to This Group

This can be an effective objective guideline to help define what needs to go to the Executive S&OP  meeting. In some organizations where the accountability definition is shaky this can be a challenge initially.  But, I would suggest that you strive to get there over a few months. Exception items that should be discussed for this group are typically big dollar items like capacity decisions, large inventory write downs, significant labor decisions, significant allocations across business units, significant decisions involving third party partners, and risk management involving large dollars.

4. Ensure the Executive KPI Scorecard Balances Operational and Financial KPIs

It is still very common for executive teams to not have an executive level KPI scorecard that balances operational and financial KPIs. Executive S&OP is a great way to fix this and gain support for the overall process. A good scorecard will highlight the results that S&OP generates. Plus, even if you’re fortunate enough to not have these executive exceptions to discuss each month, the management team still need to manage KPIs. Similar to reports, KPIs are at the business unit and company level here.

5. Prepare and Facilitate Well

Most importantly, preparation for this meeting is key. The S&OP process leader does the leg work to coordinate the various parties in order to gain support and foster the development and recommended paths  to solving issues coming into this meeting. This means pre-presenting to key executive team members, getting their informal opinions, and defining the next level down team’s recommendation that has dollar implications quantified. While your executive leader presides over the meeting, it’s your S&OP process leader who will typically frame the S&OP issues and facilitate discussion in an efficient manner.

The executive level component of S&OP is a critical one. Please feel free to comment on what has worked in your organization and I look forward to exchanging a few ideas with people at the upcoming “Best of the Best Sales & Operations Conference” in Chicago later this month.

Eric J. Tinker
Principal
Nexview Consulting, LLC

Meet Eric and Hundreds of Other Professionals in the Field at:

Melissa Takas - V&M Star

Tom Wallace and I are currently collaborating on a portion of his new book. According to Tom, the book is titled Sales & Operations Planning: Beyond the Basics and according to Tom, “will focus on innovative enhancements to the basic S&OP set of processes”. One such innovative enhancement that has been made by V&M STAR is the full integration of cash flow forecasting within the S&OP process.

At V&M STAR, Finance was involved with S&OP from day one and within six months, after the process was stable, we were able to begin integrating financial data. I believe that one of the best choices we made was involving Finance from the beginning so that they would be able to understand the S&OP process better, and begin to understand where the data would now come from.

Don’t worry though if you didn’t include Finance in your S&OP process in the beginning because it’s not too late! The important thing is that your finance department becomes accustomed to how the S&OP process works and what role they will be expected to play going forward.

At V&M STAR we have seen five major benefits from linking financial data to the S&OP process:

1) Better strategic planning for outages (plant shutdowns) and scheduled downtime. Forecasting this far into the future enables us to plan effectively and schedule efficiently planned outages for capital projects or maintenance repairs.

2) Better alignment with strategic goals. Because the operational and financial numbers are now linked we are better able to align with the strategic goals of the company.

3) A more sophisticated annual budgeting process. Since we are forecasting eighteen months into the future we already have a full year forecast in July when the budget process begins and the data is validated and locked in at the Executive S&OP meeting that month.

4) Better cash flow management. Building too much inventory can cause major issues with the company’s cash flow but by integrating financial data into S&OP the team was able to see the impact of the decision and adjust the inventory build to meet both demand and cash flow needs.

5) Increased credibility with Stakeholders and Stockholders. The monthly forecasts given to Corporate are based on information shared during the S&OP Executive Meeting. This gives an up-to-date picture of the current needs of the business. Another benefit is that Corporate now has a more accurate monthly forecast. This in turn increases the business’ credibility, which in my opinion is the most important benefit of all.

I very much look forward to being able to share insights on V&M STAR’s fully integrated financial data and how it has benefited us. More so I am exited to be able to gain new prospective from a large group of presenters at the APICS & IBF’s Best of the Best S&OP Conference in Chicago.

Your comments or challenges on your S&OP experience are welcome!

Melissa R. Takas
Operations Controlling Supervisor
V&M STAR

Hear Melissa Speaker at:

Alan Milliken - BASF

This past week the mighty LA Lakers, were swept by the Dallas Mavericks in four games.  The Lakers had won two straight NBA titles and were favorites of many to three-peat.  Immediately after the 4th loss, which turned out to be one of the five worst losses of  series deciding games in the history of the NBA, rumors began to circulate about conflicts within the organization.

Several experts said that fans should expect to see many changes within the Lakers Organization coming soon that would affect members  from top to bottom.  They commented that LA had not reached a consensus in regards to what is the best strategy or the best way to approach the execution of that strategy. .  There appeared to be disconnects between upper management and the coach as well as between the coach and the players.

The LA Lakers example exemplifies the fact that   it might be easy to bring a group of professionals together and say they are a team but achieving teamwork that leads to overall organizational success is much more difficult.  This  also makes it clear that spending money and throwing resources at a process does not guarantee success.  Quite often in sports when the under-dog wins you hear folks say, they may  not have the best resources but they had the better team.

The same principles apply to businesses and the S&OP process.  A strong S&OP Team can be the difference between winning and losing.  Conflict among team members and lack of consensus on the game plan can lead to disaster. Failure to gain commitment from all key stake holders can derail the process.  LA’s bench (reserves) were totally outplayed by the Dallas reserves.  We must always remember that operational excellence is driven by People-Process-Technology but only one has the ability to think and act accordingly.

Strong teams must be able to anticipate change and respond to issues in real-time whether they work in business or in sports.  Dallas’s strategy was to post up outside 3-point shooters, move the ball inside and then pass outside to take the open 3-point shot and LA was slow to recognize and even slower to respond. . Likewise, S&OP cannot be effective unless team members can quickly change plans and execute  the new plan.  If your competitor has decided to take some 3-point shots you had better be able to quickly mount the proper defense.  Those who cannot do so will find themselves trying to explain their ineptness to their fans in sports or in the case of S&OP to the Board of Directors.

If you are wondering what happened to the Lakers or more importantly why  your S&OP Team is not winning, you should attend the Best-of-the-Best S&OP Conference in Chicago.

There you will learn:

• The latest technology trends with software providers on the leading edge.
• How successful firms leverage people-process-technology to improve performance?
• How to design planning processes and configure software to enable best practices?
• How to build teamwork and consensus that results in winning.

Attend the IBF’s Best-of-the-Best S&OP Conference in Chicago this June.

Alan L. Milliken,  Business Process Education Manager
BASF Corporation

Hear Alan Speak at:

Sanjiv Sharma - Rolls Royce

Having worked in the industry, we all know that Sales & Operations Planning (S&OP) is all about mega decisions being made by executives about issues such as building factories, authorizing inventory or hiring people for major projects. We also know that executive decisions are made with limited information and, especially in the world of S&OP, with uncertain information as well. In a well functioning S&OP process, the consequences of decision making are made clear. However, with all of the weight that hinges on these things, information, decisions, and consequences provide an excellent opportunity to identify your organization’s top level business risks..

At Rolls-Royce, risk management and S&OP are very closely linked together. In fact it is firmly said and widely believed that if we did not have a S&OP process in place, Rolls-Royce will be at risk to be blindsided by major risks. For instance, we discovered first hand that a drop in demand for a particular product, could put a few of our key suppliers in financial distress even though overall demand was growing. We looked to S&OP to provide us with information that allowed us to developed and implement a risk mitigation process as well. We also found that building up our inventory in anticipation of an increase in orders from a major customer was ineffective thus causing Rolls-Royce to rethink how we design our products so as to minimize inventory exposure in future.

I firmly believe that S&OP is the pivotal point in capturing and managing risks provided your organization has implemented a proper risk management process. In fact, an active Risk Manager is an integral part of the S&OP team at Rolls-Royce. Obviously, not all risks are created equal. Some selective risks are reported to the company Board of Directors. This helps to get the executive help needed to mitigate these risks. Managing risks allows us to learn and develop new ways to escape the same risks in the future.

I very much look forward to being able to share some insights into Rolls-Royce’s “S&OP Journey.” More importantly I look forward to being able to learn from a large group of Professionals at the IBF & APICS Best of the Best S&OP Conference

Sanjiv Sharma
Head of Sales and Operations Planning
Rolls-Royce

Hear Sanjiv Speak at:

Tom Wallace

No I’m not talking about the Chicago Cubs or deep dish pizza.

Rather, I’m talking about our third Best of the Best S&OP Conference, co-sponsored by APICS and IBF last month. It was quite a success with a very nice turnout, particularly when one considers the state of the economy. And the speakers – if you’ll pardon my language – did a damn fine job.

One of the pearls that I managed to pick up during the proceedings came from Adam Szczepanski, VP of Strategic Planning with Forum Oil Technologies in Houston and a former CFO in another oil patch company, talked about projecting cash flow 18 or more months into the future, as an integral part of their Executive S&OP process.

Why do this? Why bother? Well, it turns out there are some very good reasons, one being the stockholders. Adam gave the example of a company that made dividend payments on its stock once every six months. Well, four months ahead of time, the Executive S&OP cash flow projection showed that they’d be unable to meet that dividend payment. This was due to a large inventory build-up planned to cover a temporary plant shutdown for major maintenance and upgrades. The cash flow projection in Executive S&OP went negative.

This led them to modify their plans for the plant shutdown. They were able to meet the dividend payment by changing the plans for the plant shutdown and still accomplish what needed to be done. It was S&OP that gave them the “heads-up.”

Another first-rate speaker was Bob Hirschey, VP of Strategy for Weyerhauser’s Cellulose Fiber business. One of Bob’s statements just knocked my socks off: “S&OP has made our strategic planning process come alive.” He went on to say that they don’t rework their strategic plans each month, but rather they check during their monthly S&OP cycle to insure that the sales and operations plans and the strategic plans are in sync, and when they are not, take corrective action.

Last and certainly not least was Ross Bushman, who actually went first as he gave the opening Keynote talk. Ross, the COO at Cast-Fab Technologies, talked about how his company’ wind power business virtually evaporated in the last half of 2008; this was caused by the credit markets drying up and thus virtually no financing available to wind farm developers. Ross’s message was that Executive S&OP enabled them to cope far better than they could have without it.

Do you have a story to tell about how Sales & Operations Planning is helping you to manage during these turbulent times a la Cast-Fab? Or how you’re using it for advanced financial planning as they do at Forum Oil Technologies? Or how it’s helped to make your strategic planning processes more effective, as it has at Weyerhauser? If so, I’d love to hear from you.  We welcome your comments.

Cheers,
Tom Wallace
tom @ tfwallace.com