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
8.8 Capability Planning & Scheduling
+ Capacity Planning & Control Supplement
8.9 Executing the schedule (b,c,)
+ Production 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)
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] 8-20 Customer Service OTIF to Promise (95%) [3.5]
6.11 Process for multiple views [3.5] 8-21 Aggregate Supply Plan Performance [3.5]
6.13 Demand Manager [3.5] 8.22 Master Schedule Performance (95%) [3.5]
6.14 Sales plans [3.0] 8.23 Manufacturing Schedule Performance (95%)
6.16 Demand constraining [3.5] [3.5]
6.17 Customer promising/satisfaction [3.5] 8.24 Supplier Delivery Performance (95%) [3.5]
6.18 Demand management [3.5] 8.25 Item Master & Supporting Data Accuracy
(95%) [3.5]
6.19 Demand Controller [3.5]
8.26 Bill of Material Structure & Accuracy (98%) [3.5]
6.23 Aggregate Demand Plan Performance [3.5]
8.27 Routing Structure & Accuracy( 95%) [3.5]
8.28 Work Location Record Accuracy (95%) [3.5]
SUPPLY CHAIN MANAGEMENT (2)
8.29 Inventory Record Accuracy (95%) [3.5]
7.10 Distribution & Logistics Planning [3.0]
7.13 Data Mgmt (95%) [3.5]
MANAGING EXTERNAL SOURCING (2)
9.4 Supplier capability (ac) [3.5]
9.13 Supplier Relationships (acd) [3.0]
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] 55 definitions to score
8.17 Behavioural characteristics [3.0] 35 Drivers @ minimum score 3.5
8.18 Planning behaviour characteristics [3.5] 20 Support @ minimum score 3.0
8.19 Supplier Planning & Control (+ c*) [3.5]
* Signifies a supplementary topic
NB: Original is a controlled Slide
 Class ‘A’ Checklist
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]
© Oliver Wight D-W-L Notes 9
Sixth Edition Revision 1
MANAGING DEMAND (8)
6.9 Collaboration with customers (ade) [3.5] INTERNAL SUPPLY (11)
6.10 Unconstrained demand planning [3.5] 8.5 Master Supply Planning Process [3.5]
8.6 Capable People [3.5]
6.13 Demand Manager [3.5]
6.14 Sales plans [3.0] 8.7 Material Requirements Planning (abcd) [3.5]
8.8 Capability Planning & Scheduling (abde) [3.5]
6.16 Demand constraining [3.5]
8.9 Executing the schedule (bc) [3.5]
6.17 Customer promising/satisfaction [3.5]
8.14 Housekeeping & Organisation (d) [3.0]
6.18 Demand management [3.5]
8.17 Behavioural characteristics [3.0]
6.19 Demand Controller [3.5] 8.18 Planning behaviour characteristics [3.5]
8.19 Supplier Planning & Control [3.5]
SUPPLY CHAIN MANAGEMENT (14) 8.24 Supplier Delivery Performance (95%) [3.5]
7.3 Integration through Integrated Business 8.25 Item Master & Supporting Data Accuracy
Management [3.5] (95%) [3.5]
7.9 Inventory Accuracy Control (+d,e*) [4.0]
7.10 Distribution & Logistics Planning (+f*) [3.5] MANAGING EXTERNAL SOURCING (2)
7.13 Data Mgmt (95%) [3.5] 9.4 Supplier capability (ac) [3.5]
7.20 Inventory management process [3.5] 9.13 Supplier Relationships (acdf) [3.0]
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] 55 definitions to score
7.29 Total Delivered Cost [3.5] 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
 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
Oliver Wight 11
Wight
 Integrating the Business - Maturity

© Oliver Wight
 Integrating the Business - Prioritising

One agenda Working

and together to Consistent
set of solve problems working
numbers

Automation
Designing for and business Driving out
our processes integration defects in all
processes

Keeping to plan True cost Ownership and

across the Business of work improvement

With Education and Training at Every Step

© Oliver Wight 13 OWI 0171-02

 Integrating the Business - Prioritising

Team
Sales and working ISO 9000
Operations
ISO14000
Planning

Automation
and business Closed loop
DFM/DFC integration control of all
processes

Supply/Demand/ Activity 5S/TPM

Project Management costing

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 T121 1-0 OVE 11

© Oliver Wight 16
 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
SUPPLY
MANAGEMENT
REVIEW
REVIEW

DEMAND
REVIEW

SUPPLY CHAIN PORTFOLIO

MANAGEMENT MARKET MANAGEMENT
MANAGEMENT
SUPPLY POINT PROJECT
MANAGEMENT DEMAND MANAGEMENT
MANAGEMENT
SUPPLIER RESOURCE
MANAGEMENT SALES MANAGEMENT
MANAGEMENT
PROCUREMENT PROCUREMENT
MANAGEMENT MANAGEMENT

© Oliver Wight
 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
Oliver Wight 22
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

SUPPLY PRODUCT
MANAGEMENT
REVIEW 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
Total Number of Changes O/T Delivery Performance 1st Pass Test Percent
100

30 40 50 80
50
20 25 75
60 60
3 1 3 2 0 0 0
10 70 40
7 7 12 6 8 6 11 0 100
20

Current Last Project 0

Current Goal
#No. of Late Deliveries Weeks #N o. of On-Time Deliveries
Engineering DEMAND Margins

KPI Dashboard
PLAN
30 SUPPLY 20
25 35 15 25
BUDGET
20 40 ACTUAL 10 30
Current Last Project
ACTUAL
Other Revenue
30 150
25 35 125 175
RE SOURCE A
20 40 Customer's Rating P LANNED CAPACITY
100 200
(DE MONSTRATED OUTP UT)

Current Last Project A Current Plan FY9x

Business Review B
S TD
HRS
Project Cost to Date
OR
UNITS
RE QUIRE D CAPACITY
150
C 125 175

Summary by Family
W EEKS
-8 4- 0 +4 +8 Months
100 200
Plan Actual

Business Trends – Demand, Supply & NPI

SUMMARY BY FAMILY
SUMMARY BY FAMILY
SUMMARY BY FAMILY

Change

Key Assumptions
Demand Supply Inventory
Budget Current Plan Previous Plan Prior Year

Demand Supply Inventory

MAJOR Budget
CHANGES ________________
Current Plan Previous Plan Prior Year MAJOR ASSUMPTIONS
________________ Demand
________________
Supply Inventory
MAJOR Budget
CHANGES ________________
________________
Current Plan Previous Plan Prior Year MAJOR ASSUMPTIONS
________________
________________
________________ ________________
________________
MAJOR CHANGES________________
________________ MAJOR ASSUMPTIONS
________________
DECISIONS MADE ________________ ________________
________________ DECISIONS OUTSTANDING ________________
________________
________________
________________ ________________
________________

Vulnerabilities / Opportunities
DECISIONS MADE ________________
________________
________________ DECISIONS OUTSTANDING
________________
________________
________________
________________ ________________
________________
DECISIONS MADE ________________
________________ DECISIONS OUTSTANDING
________________
VULNERABILITIES ________________ ________________
________________ RECOMMENDATIONS________________
________________
________________
________________
________________ AND COSTS ________________
________________
VULNERABILITIES ________________
________________
________________ RECOMMENDATIONS________________
________________
________________
________________
________________ AND COSTS ________________
________________
VULNERABILITIES ________________
________________ RECOMMENDATIONS________________
________________
________________
________________ AND COSTS ________________
________________

Financial Impact
________________ ________________
________________ ________________

Recommendation

Alignment to Business Plans

Strategic Programme 1
Strategic Programme 2
Strategic Programme 3
Strategic Programme 4
Strategic Programme 5
Strategic Programme 6
Strategic Programme 7
Strategic Programme 8

Alignment to Strategy
Strategic Programme 9
Strategic Programme 10
Strategic Programme 11
Strategic Programme 12
Strategic Programme 13
Strategic Programme 14

© Oliver Wight 29
 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
Oliver Wight 31
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

Strategic
Strategic Horizon Time Fence Topic
Plan
Plan
Business
Business
Plan
Plan
Managing S&OP
S&OP
Director 1 – 5 Years 3-4 Months Strategy

Senior S&OP
S&OP
Management &
& SCM
SCM
1-5 Months 1 Month Tactics

Middle Demand
Demand && Operational
1-5 Weeks 1 Week
Management Supply Planning
Supply Mgmt
Mgmt

Team
Execution
Execution 1-5 Days - Scheduling
Leaders

© Oliver Wight 34
 Business Performance Improvements

Class A Companies
80%
68%
70%
60%
50%
40%
29% Class A
30% 24%
17% Companies
20%
9%
10%
0%
Customer

Activity
Improvement
Continuous
Performance

Performance
Service

Costs

Delivery
Inventory

Supplier

Source: Benchmark Research Limited. Nov 1997

© Oliver Wight 35
© Oliver Wight 36