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Tribute to Dr. Steven R. Covey (who developed the 7 Habits) (So I dont get sued) Our vision of the ideal state of S&OP The 7 Habits of Highly Effective S&OP
1. 2. 3. 4. 5. 6. 7.
Be Proactive Begin with the End in Mind Put First Things First Think Win/Win Seek First To Understand, Then to Be Understood Synergize Sharpen the Saw
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First published in 1989 Regarded as one of the most impactful self-help books ever written.
It might be a good idea to articulate our vision of S&OP (Sales and Operations Planning) Which we like to think of as Demand/Supply Integration
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What is it?
The process by which a company makes strategic decisions based upon market demand, supply capabilities, financial objectives, and the strategic direction of the firm So that marketing will create demand for products that can be produced So that operations will supply products for which there is demand
Bottom line so all sides of a company will be singing out of the same hymnal
Habit # 1 Be Proactive
Your life doesn't just "happen." Whether you know it or not, it is carefully designed by you. The choices, after all, are yours. Just remember that every moment, every situation, provides a new choice. And in doing so, it gives you a perfect opportunity to do things differently to produce more positive results.
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Be Proactive
Demand/Supply Integration doesnt just happen. Many organizations have ingrained cultures that promote siloed thinking. Moving an organization toward a DSI orientation requires proactive planning and execution. Studies have shown that DSI success is determined by: Tools = 10% Culture = 50%
Process = 40%
Organization
The right structure with people who have the right responsibilities and accountabilities
Process = 40%
Tools = 10%
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Culture = 50%
Habit 2 is based on imagination--the ability to envision in your mind what you cannot at present see with your eyes. It is based on the principle that all things are created twice. There is a mental (first) creation, and a physical (second) creation. The physical creation follows the mental, just as a building follows a blueprint. If you don't make a conscious effort to visualize who you are and what you want in life, then you empower other people and circumstances to shape you and your life by default.
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Successful S&OP (or DSI) implementations require a vision of what the process is trying to achieve This vision must be clearly articulated and endorsed by senior leadership
This is a strategy for planning the business, not just for planning the supply chain.
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1 1 Portfolio Portfolio
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Habit 3 is about life management as well--your purpose, values, roles, and priorities. What are "first things?" First things are those things you, personally, find of most worth. If you put first things first, you are organizing and managing time and events according to the personal priorities you established in Habit 2.
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Important
Quadrant 1
Quadrant 2
Not Important
Quadrant 3
Quadrant 4
The Challenge
The key: Dont prioritize whats on your schedule Rather, schedule your priorities
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Day 0
Sales History
Statistical Forecast
Initial forecast
Demand Review
Customer Forecasts
Forecast performance
Important Tasks Are Identified, Priorities are Scheduled, and Everyones Responsibility and Timeline is Clear 17
Win-win sees life as a cooperative arena, not a competitive one. Win-win is a frame of mind and heart that constantly seeks mutual benefit in all human interactions. Win-win means agreements or solutions are mutually beneficial and satisfying. A person or organization that approaches conflicts with a win-win attitude possesses three vital character traits:
Integrity: sticking with your true feelings, values, and commitments Maturity: expressing your ideas and feelings with courage and consideration for the ideas and feelings of others Abundance Mentality: believing there is plenty for everyone
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Think Win-Win
Many times, Demand Planning processes break down because there is a lack of trust between developers and users of forecasts Are any of these situations true in your companies?
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Think Win-Win
Does manufacturing complain that sales overstates demand forecasts, doesnt sell the product and then supply chain gets blamed for too much inventory?
Does the sales team complain that manufacturing cant deliver on its production commitments and its hurting sales? Does manufacturing complain that the sales team doesnt let them know when new product introductions should be scheduled, and then they complain about missed customer commitments?
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Then you might have the Demand and Supply sides of the organization following different agendas. Your incentive systems might be discouraging a Win-Win atmosphere! Remember that People Do That For Which They Are Rewarded! Remember that Culture drives 50% of success! Eliminating siloed thinking is a cultural challenge
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If you're like most people, you probably seek first to be understood; you want to get your point across. And in doing so, you may ignore the other person completely, pretend that you're listening, selectively hear only certain parts of the conversation or attentively focus on only the words being said, but miss the meaning entirely.
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The essence of DSI, or S&OP, is to provide a forum where the primary business functions can articulate their opportunities and constraints, and then make forward-looking plans that benefit the organization as a whole. This requires understanding, and openness, of the realities that each function faces.
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An Example from One Company of How this Reconciliation Can Take Place
Agenda:
Lines of Business Leaders Integrated Supply Chain Leaders Others appropriate to issues under discussion Latest financial view Review unresolved issues arising from Demand review & Supply review meetings Issues arising through this cycle & proposed resolution Agree issues to be raised at Exec-DSI meeting Financial Plan Issues to be taken to the Exec-DSI meeting
Output:
Risks & Opportunities documented Solution Scenarios, including new commercial/supply initiatives Recommendations 24
The DSI Process provides a forum for different functions to come together and make decisions that benefit the organization as a whole. This process will not work if turf protection is the order of the day! This process will work if participants seek first to understand, then to be understood.
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Habit #6 Synergize
So put it simply, synergy means "two heads are better than one." Synergize is the habit of creative cooperation. It is teamwork, open-mindedness, and the adventure of finding new solutions to old problems. But it doesn't just happen on its own. It's a process, and through that process, people bring all their personal experience and expertise to the table. Together, they can produce far better results that they could individually. Valuing differences is what really drives synergy.
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Synergize
For an effective DSI process, all the supporting processes have to be working
Resource Management
Sales Management
Supplier Management
Procurement Logistics
Portfolio Management
Demand Management Market Management
Each function brings critical insights to the process, and when each function values the insights of the others, the whole is greater than the sum of the parts.
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Sharpen the Saw means preserving and enhancing the greatest asset you have--you. It means having a balanced program for self-renewal.
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In this context, renewal means continuous enhancement of attitude, knowledge and skills through education and training on various elements of S&OP or Demand/Supply Integration Everyone involved in an S&OP process, from Demand Planners, to Sales, to Product Managers, to Supply Chain people, to Senior Executives, needs education on the goals, strategies, and tactics of the S&OP process.
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Level 4
Level 4
Level 3
Level 3
Level 2 - Practitioners
Level 2 - Practitioners
In Summary
Dr. Covey and his 7 Habits have helped millions of people move from dependence, to independence, to interdependence. There is wisdom there that can help you to think clearly about your S&OP or DSI processes, and to achieve the goals of Integrated Business Planning
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Improving Your Forecasting Process by Focusing on What Matters Most October 20, 2011 1:30 p.m. EDT Presented by James Berry, Forecast Pro Senior Consultant Visit www.forecastpro.com to sign up!
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