Improving the Sales and Operations Planning Process

1. Improving the Sales and Operations Planning Process Doug Thomas Associate Professor Smeal College of Business Pennsylvania State University

2. Purpose and benefits of benchmarking consortia • S&OP consortium • Consortium structure and member companies • Working sessions and “knowledge management” system • S&OP Process survey • Wyeth Pharmaceuticals presentation

3. Focus

4. Supply Chain Benchmarking

5. Benefits of Consortium Benchmarking Benefits to Companies Learning and sharing best practices Diversity of industry, years of experience and operations Open environment for discussion and creative ideas Develop network for continuing dialogue Gain an understanding of how your company is doing compared to other companies Cost-effective Benefits to CSCR Faculty learning and sharing Generates research ideas and opportunities for funding Develop new benchmarking areas or educational opportunities

6. Benchmarking Groups • Sales and Operations Planning • Customer Service • Global Trade Compliance • Transportation Management

7. An S&OP definition • Sales and Operations Planning is a formal process led by senior management that, on a monthly basis, evaluates time-phased projections for new products, demand, supply, and the resulting financials. • It is a decision-making process to ensure that the business plans in all functions and geographies are aligned and in support of the company/division strategy. • The objective of S&OP is to reach consensus on a single operating plan, which members of the executive team hold themselves accountable, and allocates critical resources to most effectively and profitably meet customers’ needs.

8. S&OP Benchmarking Objectives The S&OP process facilitates internal and inter-company collaboration to balance supply and demand within an organization. CSCR’s S&OP benchmarking group networks with industry leaders and academics to develop a proactive approach to S&OP. Meetings focus on proven ‘best practices’ in demand and supply .planning, forecasting, collaboration, and the S&OP process. Members have developed an S&OP knowledge management website to provide online access to proven processes and measurements.

9. American Standard Arkema Brown Forman CertainTeed ExxonMobil Chemicals General Mills Johnson & Johnson Kimberly-Clark Kraft Foods Maple Leaf Frozen Foods Pfizer S.C. Johnson Shell Chemicals The Hershey Company Tyco Electronics Unilever Wyeth Pharmaceuticals Current Members No consultants or technology providers!

10. Meetings • 3 times/year hosted by members and CSCR • 2007 Hosts: Wyeth Pharmaceutical, Kraft • 2006 Hosts: CSCR, Kimberly-Clark • 2005 Hosts: Brown Forman, CSCR, Exxon-Mobil • 2004 Hosts: American Std., Campbell’s, CSCR • 2003 Hosts: Hershey • Upcoming meetings • June 12 – 13, 2007, Hosted by Kraft, East Hanover, NJ • October 2007, TBA

11. Typical meeting • A typical 1.5 day meeting would involve 2-3 presentations on various topics combined with several hours of working sessions developing, defining and refining some aspect of the S&OP process • Presentations and results from working sessions are captured in a knowledge management system online for member access

12. Knowledge management system • Agendas, RACI (Responsible, Accountable, Consulted, Informed) diagrams and other materials for each step in the S&OP process are collected. • Knowledge management site • Demand planning RACI example

13. Benchmarking Survey • In addition to the presentations and facilitated working groups, CSCR administers an anonymous S&OP process survey. • The survey covers the areas of: • Overall S&OP process • Training/HR • Technology/Tools used in support of S&OP • Demand planning (FTE, reporting structure, KPIs) • Supply planning (FTE, reporting structure, KPIs) • Exec S&OP (KPIs)

14. For more information about the Sales and Operations Planning consortium or other aspects of the Center for Supply Chain Research, please contact: cscr@smeal.psu.edu www.smeal.psu.edu/cscr