The Red Wing Shoe Company details the steps it took to improve S&OP processes, slash its

S&OP planning efforts by 50 percent, and align manufacturing with sales - all while growing its
business. Who owns your Sales and Operations Planning process? Is it the supply chain? Is it
sales and marketing? Is it manufacturing? Is it your executive team? Those were questions that
we struggled to answer at the Red Wing Shoe Company as we started our journey towards
S&OP success. After speaking to consultants and to other companies like ours at conferences,
we knew we were certainly not alone. Gartner, for instance, has reported that about 70 percent of
global organizations are only in Stage 1 or Stage 2 of the four stage S&OP Maturity Model. Most
organizations acknowledge the need for a step-change improvement to their S&OP process. At
the start of our journey, the S&OP process took six weeks to prepare. It was reactive, manual,
and primarily a backward looking exercise; much of our planning was based on historical data
that we updated by backing out our most recent sales figures from the total projection for the
year. The remainder at the bottom of the column became the figure we expected to sell for the
rest of the year. There was little collaboration with our suppliers or manufacturing team to
understand their capacities and constraints compared to our forecasts. We relied on voluminous
and complex spreadsheets and updating them was a manual, labor-intensive process that was
prone to error. More importantly, nobody in the organization really owned the process or the
results. Along the way, we brought in best practices to reform the way in which we created our
forecast and how we finalized our plans. We created new roles for the people involved in
demand forecasting and provided training to our team. Finally, we brought in new technology to
automate forecasting and reporting, and to enable supplier collaboration. There were trials and
errors, successes and failures. Through it all, however, a process that once took six weeks is
now completed in three weeks. Our forecasts and plans are shared collaboratively with our
suppliers and manufacturing group. More importantly, each of our functional teams is involved in
the creation of the plan, which is approved by our senior management and tweaked with input
and adjustments from all of our functional areas. We know who owns the process. The result is
that since full implementation in 2012, we are able to accurately forecast for eight manufacturing
plants around the world, and generate a forward-looking, 18-month rolling plan. We have
reduced inventory while simultaneously improving customer fill rates, entering new markets,
adding retail stores, and expanding our portfolio of products. Our supply chain is global and
complex. It begins with hides prepared at our own tannery and extends to our company owned
Red Wing Shoe retail stores as well as retail partners around the world. In addition to our
domestic footwear operations, we manufacture footwear in China and uppers in the Dominican
Republic. Garments and accessories are made in Mexico, Pakistan, Vietnam, China, and
Poland. We operate distribution centers in Red Wing, Minn., Salt Lake City, Houston, and Dubai,
and partner with 3PLs in the Netherlands and Japan. In addition, we direct ship from all of our
factories. We service a network of between 450 and 500 domestic retail locations, ranging from
our own corporate owned stores to big box retailers to mom and pop shops; six Heritage stores
in Europe and Asia, with more on the drawing board; 50 industrial trucks that deliver to job sites;
and 47 B2B showrooms around the world. The company continues to look at new markets and
new products, such as shoes and apparel to address stricter safety regulations for the gas and
oil industries in emerging markets. In 2010, we added fire protection gear to our portfolio. What’s
more, we are working to position our manufacturing and distribution points closer to the local
market to better serve our customers. As we add more customers and products in areas like
Africa and the Middle East, we are changing the processes in our warehouses. In some facilities,
for instance, customers will pick up full containers of product and transport those to their
distribution points. And, as with every other business, all of our customers want it yesterday.
Taken as a whole, we have more items to forecast; more factors that can influence a forecast
than in the past; and S&OP is more important than ever, especially as we try to do an effective
job of managing inventory while improving our fill rates. It’s still all about having the right product,
in the right amount, in the right place, and at the right time.