Planning Capacity and Responding to Change

Planning Capacity and
Responding to Change
Barry Elliott
© Oliver Wight
Agenda
Background
The Journey to Business Excellence
Integrated Business Management
How to Deliver and Sustain Outstanding
Business Performance
© Oliver Wight
2
The approach is different
The focus is on integration
The approach is to:
firstly, educate people and develop internal
expertise
secondly, develop appropriate processes
and behaviours
The results are great sustainable benefits in
any industry
© Oliver Wight
3
Background
© Oliver Wight
Defining what we mean by “Excellence”
We “wrote the book”, figuratively and literally
An excellent reference for how best to design and
implement Integrated Business Management
“Library” of hundreds of processes
Nine Chapters, which we will discuss
© Oliver Wight
In more detail...
The nine chapters of the Checklist are the following:
1. Strategic Planning
2. Managing and Leading People
3. Continuous Improvement
4. Integrated Business Management
5. Product Management
6. Demand Management
7. Supply Chain Management
8. Internal Supply Management
9. External Supply Management
© Oliver Wight
Focusing on where will be most beneficial
Tackling the entire Checklist at once is not practical
for any organisation
Therefore, we have defined several “Milestones” to
structure the appropriate approaches, depending
on where focus should lie at various stages of
development
Class ‘A’ Checklist Sixth Edition
Capable Planning & Control Milestone
STRATEGIC PLANNING PROCESS (3)
1.3 Mission & Vision (a)
1.5 Strategic Planning (b,c)
1.11 Business Planning (a,b,d)
PEOPLE (4)
2.13 Leadership for change (a)
2.1 Trust (e)
2.7 People Dev+ Edn. & Training Supplement
2.9 Communication (a,b,e)
DRIVING BUS IMPROVEMENT (6)
3.5 Ownership & Accountability
3.6 Ownership & Improvement
3.7 Continuous Improvement
3.8 Framework for sustained improvement
3.21 Coy Perf Measures –balanced & integrated
3.22 Velocity (a)
INTEGRATED BUSINESS MANAGEMENT (5)
4.1 Process designed (a,b,d)
4.2 Integration
4.3 Characteristics
4.9 Financial projections
4.16 Financial integration (definition + a,b,d)
MANAGING PRODUCTS & SERVICES (4)
5.3 Integration
5.4 Day to day process integration
5.9 New Product Master Plan
5.10 Project Planning (a,b)
© Oliver W ight
© Oliver Wight
MANAGING DEMAND (9)
6.10 Unconstrained demand planning
6.11 Process for multiple views
6.13 Demand Manager
6.14 Sales plans
6.16 Demand constraining
6.17Customer promising/satisfaction
6.18 Demand management
6.19 Demand Controller
6-BPM1 Aggregate Demand Plan
(Sales Plan Performance)
SUPPLY CHAIN MANAGEMENT (2)
7.13 Data Mgmt [definition + a,b,c,d at 95%]
7.10 Distribution & Logistics Planning
INTERNAL SUPPLY (20)
8.3 Integration: Integrated Business
Management
8.5 Master Supply Planning Process
+ Master Scheduling Supplement
8.6 Capable People
8.7 Material Requirements Planning (a,b,c,d)
+ Material Planning & Control Supplement
8.7e/8.9d Supplier Planning & Control
+ Supplier Planning & Control Supplement
8.14 Housekeeping & Organisation (d)
8-BPM1 Customer Service OTIF to Promise
8-BPM2 Aggregate Supply Plan (Production
Plan Performance)
7.7e. Master Schedule Performance - applied
to Supply Point (95%)
8.9 (a) Manufacturing Schedule Performance
(95%)
8.9 (d) Supplier Delivery Performance (95%)
8.11(a) Item Master & Supporting Data
Accuracy (95%) + 7.13d
8.11(b) Bill of Material Structure & Accuracy
(98%) + 7.13d
8.11(c) Routing Structure & Accuracy
( 95%) + 7.13d
8.11 (e) Work Location Record Accuracy
(95%)+ 7.13d
8.11 (f) Inventory Record Accuracy (95%) +
7.9 (b,c)
8.17 Behaviours demonstrate excellence
characteristics
8.18 Behaviours demonstrate excellence
characteristics
MANAGING EXTERNAL SOURCING (2)
9.4 Supplier capability (a,c)
9.13 Supplier Relationships (a,c,d)
8.8 Capability Planning & Scheduling
+ Capacity Planning & Control Supplement
8.9 Executing the schedule (b,c,)
+ Production Planning & Control Supplement
55 elements to score
Require avg 3.5 /5
Class ‘A’ Checklist Sixth Edition
Revision 6
Capable Planning & Control Milestone
STRATEGIC PLANNING PROCESS (3)
1.3 Mission & Vision (a) [3.0]
1.5 Strategic Planning (bc) [3.0]
1.11 Business Planning (abd) [3.5]
PEOPLE (4)
2.1 Trust (e) [3.0]
2.7 People Development (+ topic f *) [3.5]
2.9 Communication [3.0]
2.13 Leadership for change (a) [3.5]
DRIVING BUS IMPROVEMENT (6)
3.5 Ownership & Accountability [3.0]
3.6 Ownership & Improvement [3.0]
3.7 Continuous Improvement [3.0]
3.8 Framework for sustained improvement [3.0]
3.21 Performance Measures – balanced &
integrated [3.0]
3.22 Velocity (a) [3.0]
INTEGRATED BUSINESS MANAGEMENT
(5)
4.1 Process designed [3.5]
4.2 Integration [3.5]
4.3 Characteristics [3.5]
4.9 Financial projections [3.0]
4.16 Financial integration (abd) [3.0]
MANAGING PRODUUCTS & SERVICES (4)
5.3 Integration [3.5]
5.4 Day to day process integration [3.0]
5.9 New Product Master Plan [3.0]
5.10 Project Planning (ab) [3.0]
© Oliver Wight D-W-L Notes 8
MANAGING DEMAND (9)
6.10 Unconstrained demand planning [3.5]
6.11 Process for multiple views [3.5]
6.13 Demand Manager [3.5]
6.14 Sales plans [3.0]
6.16 Demand constraining [3.5]
6.17 Customer promising/satisfaction [3.5]
6.18 Demand management [3.5]
6.19 Demand Controller [3.5]
6.23 Aggregate Demand Plan Performance [3.5]
SUPPLY CHAIN MANAGEMENT (2)
7.10 Distribution & Logistics Planning [3.0]
7.13 Data Mgmt (95%) [3.5]
INTERNAL SUPPLY (20)
8.3 Integration: Integrated Business Management
[3.5]
8.5 Master Supply Planning Process (+ h*) [3.5]
8.6 Capable People [3.5]
8.7 Material Requirements Planning (abcd + f *)
[3.5]
8.8 Capability Planning & Scheduling (+ f *) [3.5]
8.9 Executing the schedule (bc + e*) [3.5]
8.14 Housekeeping & Organisation (d) [3.0]
8.17 Behavioural characteristics [3.0]
8.18 Planning behaviour characteristics [3.5]
8.19 Supplier Planning & Control (+ c*) [3.5]
8-20 Customer Service OTIF to Promise (95%) [3.5]
8-21 Aggregate Supply Plan Performance [3.5]
8.22 Master Schedule Performance (95%) [3.5]
8.23 Manufacturing Schedule Performance (95%)
[3.5]
8.24 Supplier Delivery Performance (95%) [3.5]
8.25 Item Master & Supporting Data Accuracy
(95%) [3.5]
8.26 Bill of Material Structure & Accuracy (98%) [3.5]
8.27 Routing Structure & Accuracy( 95%) [3.5]
8.28 Work Location Record Accuracy (95%) [3.5]
8.29 Inventory Record Accuracy (95%)
[3.5]
MANAGING EXTERNAL SOURCING (2)
9.4 Supplier capability (ac) [3.5]
9.13 Supplier Relationships (acd) [3.0]
55 definitions to score
35 Drivers @ minimum score 3.5
20 Support @ minimum score 3.0
* Signifies a supplementary topic
NB: Original is a controlled Slide
Class ‘A’ Checklist
Sixth Edition
Revision 1
Capable Planning & Control Milestone
for Distribution & Logistics
STRATEGIC PLANNING PROCESS (3)
1.3 Mission & Vision (a) [3.0]
1.5 Strategic Planning (bc) [3.0]
1.11 Business Planning (abd) [3.5]
PEOPLE (4)
2.1 Trust (e) [3.0]
2.7 People Development (+ topic f *) [3.5]
2.9 Communication [3.0]
2.13 Leadership for change (a) [3.5]
DRIVING BUS IMPROVEMENT (6)
3.5 Ownership & Accountability [3.0]
3.6 Ownership & Improvement [3.0]
3.7 Continuous Improvement [3.0]
3.8 Framework for sustained improvement [3.0]
3.21 Performance Measures – balanced &
integrated [3.0]
3.22 Velocity (a) [3.0]
INTEGRATED BUSINESS MANAGEMENT
(5)
4.1 Process designed [3.5]
4.2 Integration [3.5]
4.3 Characteristics [3.5]
4.9 Financial projections [3.0]
4.16 Financial integration (abd) [3.0]
MANAGING PRODUUCTS & SERVICES (2)
5.4 Day to day process integration (bd) [3.0]
5.10 Project Planning (ab) [3.0]
MANAGING DEMAND (8)
6.9 Collaboration with customers (ade) [3.5]
6.10 Unconstrained demand planning [3.5]
6.13 Demand Manager [3.5]
6.14 Sales plans [3.0]
6.16 Demand constraining [3.5]
6.17 Customer promising/satisfaction [3.5]
6.18 Demand management [3.5]
6.19 Demand Controller [3.5]
SUPPLY CHAIN MANAGEMENT (14)
7.3 Integration through Integrated Business
Management [3.5]
7.9 Inventory Accuracy Control (+d,e*) [4.0]
7.10 Distribution & Logistics Planning (+f*) [3.5]
7.13 Data Mgmt (95%) [3.5]
7.20 Inventory management process [3.5]
7.21 Inbound process control [3.5]
7.22 Outbound process control [3.5]
7.23 Returns process control [3.5]
7.24 Stock definition record accuracy [4.0]
7.25 Shipping Schedule Performance [3.5]
7.26 Aggregate Distribution Plan Performance [3.5]
7-27 Customer Service OTIF to Promise 95% [3.5]
7-28 Inventory Levels (turns) [3.5]
7.29 Total Delivered Cost [3.5]
INTERNAL SUPPLY (11)
8.5 Master Supply Planning Process [3.5]
8.6 Capable People [3.5]
8.7 Material Requirements Planning (abcd) [3.5]
8.8 Capability Planning & Scheduling (abde) [3.5]
8.9 Executing the schedule (bc) [3.5]
8.14 Housekeeping & Organisation (d) [3.0]
8.17 Behavioural characteristics [3.0]
8.18 Planning behaviour characteristics [3.5]
8.19 Supplier Planning & Control [3.5]
8.24 Supplier Delivery Performance (95%) [3.5]
8.25 Item Master & Supporting Data Accuracy
(95%) [3.5]
MANAGING EXTERNAL SOURCING (2)
9.4 Supplier capability (ac) [3.5]
9.13 Supplier Relationships (acdf) [3.0]
55 definitions to score
2 Drivers @ minimum score 4.0
35 Drivers @ minimum score 3.5
18 Support @ minimum score 3.0
* Signifies a supplementary topic
NB: Original is a controlled Slide
© Oliver Wight D-W-L Notes 9
The Philosophy
People are the key to success
Education drives behavioural change
Create internal experts
Develop multi-disciplined teams
Improve business to World-Class / Best Practice
levels
Formal environment
Consistent processes, clear responsibilities and
accountabilities
Continuously improve
Deliver sustainable results through integration
© Oliver Wight
10
The Journey to
Business Excellence
Oliver
Wight 11
©©
Oliver
Wight
Integrating the Business - Maturity
© Oliver Wight
Integrating the Business - Prioritising
One agenda
and
set of
numbers
Designing for
our processes
Keeping to plan
across the Business
Working
together to
solve problems
Automation
and business
integration
True cost
of work
Consistent
working
Driving out
defects in all
processes
Ownership and
improvement
With Education and Training at Every Step
© Oliver Wight
13
OWI 0171-02
Integrating the Business - Prioritising
Sales and
Operations
Planning
DFM/DFC
Supply/Demand/
Project Management
Team
working
Automation
and business
integration
Activity
costing
ISO 9000
ISO14000
Closed loop
control of all
processes
5S/TPM
With Education and Training at Every Step
© Oliver Wight
The Journey to Business Excellence
All companies are on a journey to Performance
Improvement but many do not recognise the journey or
where they are on that journey or what to do next.
One needs to understand the journey, how the
techniques fit, when they should / shouldn’t be
deployed, and work through the multiple transitions
showing how a business focus enables Performance
Improvement.
Enables upper quartile performance in any industry
sector and hence become an industry leader. It also
maps the way to becoming an upper decile business.
© Oliver Wight
15
Integrating the Business - Maturity
The Maturity Journey
Transitions on The Journey through Phases 1 & 2
© Oliver Wight
Phase II Process Excellence
• Joined up processes, reliable, knowledge captured and failure free
• Self managed teams
• Responsive optimisation of the business in pursuit of business strategy
• Upper decile performance
Process Competence
• Integrated Business Management drives rolling management, strategy deployment
and directed business improvement. Upper quartile performance
• End-to-end process excellence – process thinking, streamlining and capability,
process organisation, process measures - velocity, responsiveness, variability
• Managing the extended supply chain.
Phase I
Capable Planning & Control
• Capable Planning & Control practices and standards attained across all processes
• Co-ordination across the business and ‘one set of numbers’ secure through S&OP process
• Educated workforce driving honesty and openness, ownership and accountability, realistic
plans, data integrity, democracy in planning: autocracy in execution
• Business performance is 95% capable
Foundations of Planning & Control
• Data management
• Understanding
• Practices and Processes for Planning & Control in design and / or implementation for Supply,
Demand, Product Management, S&OP and Financial Integration
Disconnected Management Processes
• Informality and fire-fighting
• Plagued by unplanned events
© Oliver Wight
16
© Oliver Wight
T121 1-0 OVE 11
The Oliver Wight Journey to Class ‘A’
© Oliver Wight
17
Principle Objective of Integration
© Oliver Wight
Integrated Business Model
MANAGEMENT
BUSINESS REVIEW
STRATEGY
BUSINESS PLAN
PERFORMANCE
PRODUCT
MANAGEMENT
REVIEW
SUPPLY
REVIEW
DEMAND
REVIEW
SUPPLY CHAIN
MANAGEMENT
MARKET
MANAGEMENT
SUPPLY POINT
MANAGEMENT
PROJECT
MANAGEMENT
DEMAND
MANAGEMENT
SUPPLIER
MANAGEMENT
RESOURCE
MANAGEMENT
SALES
MANAGEMENT
PROCUREMENT
MANAGEMENT
© Oliver Wight
PORTFOLIO
MANAGEMENT
PROCUREMENT
MANAGEMENT
How Do We Respond to Change ?
FUNCTIONAL PERSPECTIVE
I “second guess” that plans may or may not happen
I assess the impact this will have
I compensate for change based on what effect it
will have on my function and it’s measures
I take defensive action to protect my function
Everyone has a view, takes different actions, no coordination
© Oliver Wight
IBMP1-20
EAME 0207-02
How Do We Respond to Change ?
BUSINESS PERSPECTIVE
We have a process to identify change occurring in
the business
We ensure that we understand the change and its
full business wide implications
We enable cross-functional discussions and
alternate planning
We identify choices and recommendations to
optimise the business
© Oliver Wight
IBMP1-21
EAME 0208-01
Integrated Business
Management
Oliver
Wight 22
©©
Oliver
Wight
First Priority – A Company Must…
Bring demand and supply in
balance
Understand impact of new
products on demand and
supply
If you don’t do these things first, your time will be
consumed dealing with the consequences of demand
and supply being out of balance.
There will be little time and energy to grow the business
© Oliver Wight
Multiple Sets / Single /
Integrated Set of Numbers
MULTIPLE SETS
SINGLE
INTEGRATED SET
UPSIDE
GAP
DOWNSIDE
© Oliver Wight
24
Integration
STRATEGY / TACTICS / OPERATIONS
STRATEGIC
PLANNING
BUS. PLAN
S&OP
TACTICAL
PLANNING
OPERATIONAL
PLANNING
Source: Coldrick, Ling
© Oliver Wight
25
Integrated Business Management
(Sales and Operations Planning)
Brings together all the plans for the business
(customers, sales, marketing, development,
manufacturing, servicing & financial)
into... integrated set of plans
Monthly process
Reviewed by management at an
aggregate (product family) level
Reconciles supply, demand and new product plans at both
detail and aggregate level and tied to the business plan
Definitive statement of what the company plans to do for
the near / intermediate term covering a horizon sufficient
to:
Plan cross-functional resources
Support business planning
© Oliver Wight
26
Integrated Business Management
(Sales and Operations Planning)
MANAGEMENT
BUSINESS
REVIEW
STRATEGY
BUSINESS PLAN
PERFORMANCE
PRODUCT
MANAGEMENT
REVIEW
SUPPLY
REVIEW
DEMAND
REVIEW
© Oliver Wight
27
‘What if’
Business Scenario Planning
Management needs to have the ability to evaluate
the impact of changes to the plan
© Oliver Wight
Management Business Review
O/T Delivery Performance
Total Number of Changes
30 40 50
20
60
10
70
1st Pass Test Percent
50
25
75
100
80
60
40
3
1
3
2
0
0
0
7
7 12 6
8
6 11
0
100
20
Last Project
Current
Current
0
KPI Dashboard
30
25
SUPPLY
20
15
BUDGET
40
Revenue
125
35
20
40
Current
Last Project
Business Review
RE SOURCE A
Customer's Rating
P LANNED CAPACITY
(DE MONSTRATED OUTP UT)
A
S TD
HRS
OR
UNITS
B
0 +4 +8
© Oliver Wight
29
175
200
Current
Plan FY9x
Project Cost to Date
150
125
W EEKS
Months
100
Plan
175
200
Actual
SUMMARY BY FAMILY
SUMMARY BY FAMILY
SUMMARY BY FAMILY
Budget
Current Plan
Previous Plan
Demand
Prior Year
MAJOR Budget
CHANGES
Current Plan
________________
Previous Plan
Prior Year
________________
MAJOR Budget
CHANGES
________________
Current
Plan
Previous Plan
Prior Year
________________
________________
________________
MAJOR CHANGES________________
________________
DECISIONS MADE ________________
________________
________________
________________
________________
DECISIONS MADE
________________
________________
________________
________________
________________
DECISIONS MADE
________________
________________
VULNERABILITIES ________________
________________
________________
________________
________________
VULNERABILITIES
________________
________________
________________
________________
________________
VULNERABILITIES
________________
________________
________________
________________
________________
________________
Alignment to Business Plans
Alignment to Strategy
150
100
RE QUIRE D CAPACITY
C
Summary by Family
Business Trends – Demand, Supply & NPI
Change
Key Assumptions
Vulnerabilities / Opportunities
Financial Impact
Recommendation
30
ACTUAL
Other
30
25
10
ACTUAL
Last Project
25
Margins
DEMAND
PLAN
35
20
Current
-8 4-
Goal
#No. of Late Deliveries Weeks #N o. of On-Time Deliveries
Engineering
Strategic Programme
Strategic Programme
Strategic Programme
Strategic Programme
Strategic Programme
Strategic Programme
Strategic Programme
Strategic Programme
Strategic Programme
Strategic Programme
Strategic Programme
Strategic Programme
Strategic Programme
Strategic Programme
1
2
3
4
5
6
7
8
9
10
11
12
13
14
Supply
Supply
Inventory
Inventory
Demand
MAJOR
ASSUMPTIONS
________________
Inventory
Supply
Demand
MAJOR
ASSUMPTIONS
________________
________________
________________
MAJOR ASSUMPTIONS
________________
DECISIONS OUTSTANDING
________________
________________
________________
________________
DECISIONS OUTSTANDING
________________
________________
________________
________________
DECISIONS OUTSTANDING
________________
RECOMMENDATIONS________________
________________
________________
AND COSTS
________________
________________
RECOMMENDATIONS________________
________________
________________
AND COSTS
________________
________________
RECOMMENDATIONS________________
________________
AND COSTS
________________
________________
________________
________________
The Maturity Journey Example: Integrated Business Management
Mature Integrated Business Management
• Drives responsive optimisation of the business in pursuit of business strategy
• Continuous Reconciliation, managing gaps and alternative scenario planning
Integrated Business Management
• Rolling business management process including gap analysis versus strategy and
focus on competitive priorities
• Integrated Reconciliation is the driver: business analysis provides underlying
understanding, drives improvement priorities and gap closing actions
• Process frequently reshapes to meet changing organisational structure
• Used to deploy and drive the value proposition
Capable S&OP
• Process is established driving integrated operational and financial planning
• Full suite of KPI’s to drive operational effectiveness, achieving 95%+ capability
• Issues are identified and this is the decision making process
• Annual budgeting process removed – S&OP numbers drive forward plans
• Team working behaviours are demonstrated throughout the process
Foundation S&OP
• All elements defined with correct accountability, KPI’s and structure
• Focus is demand /supply tactical balancing
• Initiate integrated supply chain KPI’s
• Challenging behaviours but not yet team working
Disconnected Management Processes
• Traditional management meeting focused on the past
• Annual budgeting process with poor basis for forward projections
• Functional/silo management – few/unaligned objectives & measures
• Defensive functional behaviours
© Oliver Wight
IBMEP8-30
EAME 0183-09
Implementation
Oliver
Wight 31
©©
Oliver
Wight
The Oliver Wight Proven Path
© Oliver Wight
Oliver Wight Class A
All business processes integrated
Integrated set of numbers
Routine things happening routinely
Planning ahead, preventing rather than correcting
Easier to deal with crisis when you are in control
The whole is greater than the sum
of the parts
© Oliver Wight
33
Focus of Attention
Managing
Director
Senior
Management
Middle
Management
Team
Leaders
© Oliver Wight
34
Strategic
Strategic
Plan
Plan
Business
Business
Plan
Plan
S&OP
S&OP
S&OP
S&OP
&
& SCM
SCM
Demand
Demand &
&
Supply
Supply Mgmt
Mgmt
Execution
Execution
Horizon
Time Fence
Topic
1 – 5 Years
3-4 Months
Strategy
1-5 Months
1 Month
Tactics
1-5 Weeks
1 Week
Operational
Planning
1-5 Days
-
Scheduling
Business Performance Improvements
Class A Companies
80%
68%
70%
60%
50%
40%
29%
30%
20%
24%
17%
9%
10%
Source: Benchmark Research Limited. Nov 1997
© Oliver Wight
35
Continuous
Improvement
Activity
Supplier
Delivery
Performance
Inventory
Performance
Costs
Customer
Service
0%
Class A
Companies
© Oliver Wight
36