The nine chapters of the Checklist are the following: 1. Strategic Planning. 2. ...
Tackling the entire Checklist at once is not practical ..... •Joined up processes,
reliable, knowledge captured and failure free ... The Oliver Wight Journey to
Class 'A'.
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
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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
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© Oliver Wight
T121 1-0 OVE 11
The Oliver Wight Journey to Class ‘A’
© Oliver Wight
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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
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Integration STRATEGY / TACTICS / OPERATIONS
STRATEGIC PLANNING
BUS. PLAN S&OP TACTICAL PLANNING
OPERATIONAL PLANNING
Source: Coldrick, Ling
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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
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Integrated Business Management (Sales and Operations Planning)
MANAGEMENT BUSINESS REVIEW
STRATEGY BUSINESS PLAN PERFORMANCE
PRODUCT MANAGEMENT REVIEW
SUPPLY REVIEW
DEMAND REVIEW
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‘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
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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
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Focus of Attention
Managing Director Senior Management Middle Management Team Leaders
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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
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Continuous Improvement Activity
Supplier Delivery Performance
Inventory Performance
Costs
Customer Service
0%
Class A Companies
© Oliver Wight
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