Integrated Business Planning Bridging the Gap Between Budgets and Reality Deb Bene’, Emerson and Mark Gordon, Oracle © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 1 | October 2010 Key Takeaways • Value Chain Planning implementation is a journey, not a project – each phase has its own short time to value, but one should have a long term vision. • Start Anywhere – Focus on the highest bang for your buck within each BU/Region and don’t wait for ERP Implementation or upgrade • Pick your critical “green” KPIs – one cannot be perfect at all measures – which KPIs defines you as a company, and meet your strategy? • Create transparency between All departments, Sales, Marketing, Finance, and SC and align your Supply with your Opportunities © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 2 | October 2010 Business Planning Challenges Changing market demands Inefficient Operations • • • • • Increasing operating costs • Capacity constraints • Supply chain lead times Demanding customers Product proliferation Shorter product lifecycles Continuous innovation Sales Marketing Sales Data Marketing Data Operations Operations Data 1 Finance Operations Data N Finance Data 1 Finance Data N Deteriorating financial health Economic Downturn • • • • • • • • Eroding margins Cost volatility Lack of insight into profit drivers Loss of corporate value © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 3 | October 2010 Falling demand Lack of credit and capital Need to conserve cash Decreasing competitive position Manage a Unified Plan Across the Enterprise Many critical planning processes, too many spreadsheets Revenue Planning Profit Planning Excess & Obsolete Inventory Exposure Finance Working Capital Planning New Products Planning Marketing SKU Rationalization Product Forecasts Financial Planning & Goals Promotion Plans Strategic Planning Supply Chain New Product Launch Supply Chain Planning R&D Product Life Cycle Plans Demand Planning Operating Plan Sales & Operations Planning Business Plans Sales Forecasts Collaborative Planning Sales Design Collaboration Sales Forecasts Forecast Collaboration Market Requirements Product Requirements Suppliers Key Account Planning Product Allocation Partners © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 4 | October 2010 Customers Oracle Vision for Next Generation Sales & Operations Planning Today Demand-Driven S&OP Next Generation Execute and measure the plan Integrated Business Planning Solution Approve and publish the plan • Profitable response – • Supply and Demand balance opportunities and Risk balancing • Most decision making at • Achieve consensus distinct Demand, Supply and Executive Review meetings operational plan through continuous, interactive decision making and alignment with financial plans • Periodic and reactive • Financial scenarios Integrated Scenario Analysis Supply what-if Financial what-if Base supply plan Base financial plan Demand consensus Demand shaping what-if Base demand plan • Base financial plan Collect sales and market input • Financial what-if Next Generation S&OP © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | 5 Slide 5 | October 2010 Oracle’s Integrated Business Planning Process Provides critical link between operations, sales and finance Performance Management Sales and Operations Planning Financial Targets Sales Forecast Strategic Network Optimization Demand Management • • • • • • Supply Chain Planning Inventory Optimization Planning driven from key performance indicators to engage managers and planners Aggregate roll up for financial reconciliation; supports $ to units synchronization Workflow coordinates the process and drives consensus process to gather sales forecast, customer demand, financial plans and operational plans Works with Oracle ERP and legacy ERP applications What-if simulation scenarios to examine alternative plans Strategic supply chain analysis and inventory planning © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 6 | October 2010 Sales & Operations Planning Deb Bene’ Business Solutions Mgr. Emerson Program Management Office © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 7 | October 2010 Emerson At-A-Glance $20.9 Billion in sales (2009) NYSE: EMR Diversified global manufacturer and technology provider Approximately 129,000 employees worldwide Headquarters in St. Louis, Mo. Manufacturing and/or sales presence in more than 150 countries 255 manufacturing locations, 155 outside the U.S. No. 94 on 2009 FORTUNE 500 list of America’s largest corporations Founded in 1890 © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 8 | October 2010 2009 Emerson Summary 2009 Sales by Segment 2009 $20.9B Sales Employees 129K International Sales Have Exceeded 50% Since 2007 © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Process Management Consumer Climate Technologies Industrial Network Power Industrial Automation Electronics 2009 Sales by Geography Mfg Plants US & Canada Europe Asia ROW Total Appliance & Tools 100 70 46 39 255 Slide 9 | October 2010 ROW Asia Europe United States Emerson Is a Leader in Its Core Global Businesses & Markets #1 AC & DC Power Systems #1 OEM Embedded Power #1 Control Valves #1 Measurement Devices #1 Compressors #1 Controls #1 Ultrasonic Welding #1 Precision Cooling Systems #1 Garbage Disposers #1 Appliance Components #1 Alternators #1 Fluid Control #1 Fractional Motors #1 Storage Solutions #1 Plumbing Tools #1 Wet/Dry Vacuums #1 Pressing Tools/Jaws #1 CCTV Inspection Systems © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 10 | October 2010 Emerson’s Products and Brands Emerson Process Management Valves & Regulators Systems & Solutions Measurement Emerson Network Power Integrated DC Power Cabinets Transfer Switches Precision Cooling © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | UPS Slide 11 | October 2010 DC Power Systems High Density Precision Cooling Enterprise Monitoring RF Connectors Mobile Chargers OEM Power Emerson’s Products and Brands Emerson Industrial Automation Valve Controls Gearing Sheaves, Sprockets Bearings Generators Solenoid Valves Pneumatic Valves Variable Speed Drives Electric Motors Motion Controls Plastic & Metal Joining Emerson Appliance Motors and Tools Appliance Motor s Storage Solutions Thermal Sensors & Controls © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 12 | October 2010 Professional Tools PMO Scope of Services Applications Strategy for Standard Programs • Data and Configuration Standards • Process Design & Best Practices • Deployment Models & Roadmaps Application Services • Service Management • Implementation and Support Services • Subject Matter Expertise (Project Assistance) Corporate Applications Management • Strategy & Planning • Implementation Project Governance • • • • IT Project Lifecycle Process Risk Management (SOX Compliance) Service Model Project Metrics © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 13 | October 2010 Demand Planning and S&OP – Maturity and Technology Roadmap Maturity Levels Phase 1 Technology Enabler MS Excel and Other data consolidation tools Phase 2 Phase 3 Phase 4 Advanced (Optional) Demantra Demand Management Demantra Real Time S&OP Demantra Adv Forecasting Technology Manual Description collection of demand and Multi-source manually input collection and visibility of to Excel demand and Dissimilar supply data data formats Consolidates data into Excel or other Minimum data consolidation version tools with version control management Share drive and email coordination Consolidation of demand data Capability to perform “What if Scenarios” Integration ERP system(s) Use manual process for Consensus FC Component Forecasting (Planning BOM) Collaboration Use of Causal Use Work flows factors, for approvals econometrics Integration of Advanced Supply-data to statistical understand analysis (If supply impact of applicable) each plan Facilitate End-toEnd Demand Analysis Define Key Business Metrics Demantra introduced during Phase 3 level to build integration of demand driven value stream. © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 14 | October 2010 Vision: Integrated Supply Chain to Drive Enterprise Excellence S&OP Global Supply Chain Planner Marketing Demand Plan F/A & S/A SC Planner Build Plan Material Plan Global Supply Chain Purchasing (IPO) 5-Year End of Pipe Metrics Suppliers In Bound Logistics (Material Plan Execution) External Customer RDSL = PDSL = Distribution & Product Co. Customer Care Internal Operations ITO = Customer © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 15 | Buyers (IPO) October 2010 Final Assembly Sub-Assembly Out Bound Logistics (Build Plan Execution) Customer Established a Consistent, Actionable Consensus Planning Process: “One Plan” POR $ Plan SC Planners Planned Order (Supplier Forecast) Historical Demand Demand Plan WA Marketing Project Pursuit Team Upside Market Intelligence Unit ($ & Unit) Plan Build Plan Material Plan Firmed PO (Actual PO) Mega Project Input Supplier iSupplier Portal Demand Plan Build Plan Master Scheduling MRP • Model Family Volume & Mix • Weekly Production Plan by Production Line • Mix Percent • FDS • Weekly Material Plan to support Build Plan (option piece parts) • MOQ (monthly Model Family forecast) © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 16 | October 2010 • Safety Stock • Default PO LT etc 16 Key Messages : Sales & Operation Planning • Reduces operations cost by optimizing asset management through better planning • Is the key driver in managing and reducing complexity • Increases sales and customer loyalty by improving RDSL & PDSL © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 17 | October 2010 Reduces Operations Cost by Optimizing Asset Management through Better Planning • Demand Management Tool – Demantra › Demand Plan - Statistical Forecast Aligned with Country Planning › Hub Build Plan - Linkage with Demand Plan and Capacity › Primary Producer Build Plan - Linkage with Hub Build Plans › Material Plan - Improve Option forecast • Global Planning Organization © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 18 | October 2010 Established President Led Closed Loop Manual S&OP Process Week 1 Week 2 Week 3 Week 4 America Global World Area S&OP Review Global Product Marketing World Area Sales Plan World Area Slide 19 Primary Producer Build Plan S/A Material Plan/ Option Mix Historical Sales Data + Project Template In Demantra © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | World Area Factory Build Plan F/A Supplier Plan | October 2010 EMEA AP Our Complex Product Offerings of Model Family and Options has been a Challenge to Improve Part Forecast © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 20 | October 2010 Implemented Demantra Software to Improve Forecast Accuracy and Enable Plan Linkages Historical data • Bayesian Estimator Multiple causal factors Bayesian Optimizer Forecast Combined model Seasonality Promotion Events Statistical Forecasting › Bayesian-Markov Mixed Model › Causal Forecasting • Consensus Planning • Linkage Between Demand, Build, & Material Plan › Option Mix is Defined for Individual Model and Applied to its Respective Model Family Growth • Econometrics Results:  Causal Analysis Trend Outlier Detection Cyclical Patterns Result of 5 sites that are supported by Demantra (Global Planning) and IPO (Centralized Buying):  Business declined by 8.3%  Raw inventory reduced by 35%  Material Fill rate improved by 43% Closed Loop President Led Process © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 21 | October 2010 21 There is still significant risk in the S&OP Plan versus Pd10 POR, $Min Q4 *Includes 3 days sales accrual for September 28 - 30. ($1.4M / day Americas, $500k / day AP, $700k/day Europe) © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 22 | October 2010 Demantra then Links World Area Demand Plan to Hub Build Plan… 2. Smooth out large buckets of backlog 1. Demand Plan +/- Intracompany demands 3. Do not plan builds and material for finished goods © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 23 | October 2010 Hub Build Plans are further Linked to Production Lines, incorporating Capacity Max Capacity Min Capacity Build Plan Actual Build © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 24 | October 2010 Demantra Further Connects the Hub Build Plan to the Primary Producer Build Plan Primary Producer Plan is Tightly Linked to Hub Plans 30% 40% Primary Producer Plan is Independent of the Hub Plans Oracle ASCP F/A Forecast Planned Order to RTC Wessling MRP F/A Forecast RTC S&OP RTC Total WW Supply 15% 15% Wessling S&OP Planned Order to RTC Planned Order to RTC SMMC MRP F/A Forecast SMMC S&OP Beijing MRP F/A Forecast Beijing S&OP 5 % Global Supply Chain Planner Oracle ASCP Wessling MRP F/A Forecast F/A Forecast RTC S&OP RTC Planner F/A Forecast F/A Forecast Wessling S&OP SMMC S&OP Wessling Planner © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Beijing MRP SMMC MRP Slide 25 SMMC Planner | October 2010 After Demantra Beijing S&OP Before Demantra Option Forecast Based on Part Usage and Highest Usage Model Growth Rate (Before Demantra) Flange Mix Historical Usage 225 770 500 15% 52% 33% 1495 X (1+10%) =2173 326 + 1130 + 717 =2173 Historical Mix % Forecast based on Highest Usage Growth Rate Disconnect Forecast Growth Rate 500 20% 3051SC 1100 10% 3051C Rev 1 75 825% 300 7% 3051C Rev 5 3095 Forecast Mix does not Account for Different Model Growth Rates © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 26 | October 2010 Option Mix is Defined for Individual Model and Applied to its Respective Model Family Growth (After Demantra) Model Forecast Growth Rate 3051SC 3051C Rev 1 3051C Rev 5 500 20% 1100 10% 75 825% 3051SC Flange Mix Rev 1 Flange Mix Rev 5 Flange Mix 20% 45% 10% 15% 40% 20% 3095 Direct Connect 300 7% 3095 Flange Mix Model Family Mix % 10% 25% 40% 395 Flange Forecast + 1038 + 629 Forecast Mix Completely Accounts for Each Model Mix Change and Growth Rate © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 27 | October 2010 0% 30% 45% =2062 Key Messages : Sales & Operation Planning • Reduces operations cost by optimizing asset management through better planning • Is the key driver in managing and reducing complexity • Increases sales and customer loyalty by improving RDSL & PDSL © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 28 | October 2010 Managing the Complexity through Product Segmentation ATO On-Demand BTO (Fast Track) ETO Specials PTO Buyouts A#, T#, MA#, N#, R#, W#, K#, D#, P#, F#, V#… Service Level RDSL PDSL Business Driver Speed Availability Product Variety Premium Price © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 29 | October 2010 PDSL PDSL Customization Premium Price Vision: Integrated Supply Chain to Drive Enterprise Excellence Global Supply Chain Planner Marketing Demand Plan SC Planner F/A & S/A S&OP Build Plan Material Plan Global Supply Chain Purchasing (IPO) 5-Year End of Pipe Metrics Suppliers In Bound Logistics (Material Plan Execution) External Customer RDSL = PDSL = Distribution & Product Co. Customer Care Internal Operations ITO = Final Assembly Sub-Assembly Out Bound Logistics (Build Plan Execution) Customer Buyers © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 30 | October 2010 (IPO) Customer E-Global Supply Chain – Global Buying BMMC GTMC RTC Supplier Global Buyer SMMC Wessling BMMC Wessling © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 31 | October 2010 Portal Supplier SMMC ASCP GTMC Portal / CP RTC Implementing Systems to Enable Integrated Supply Chain Why is this critical to the   company? Improving the SPEED and SYNCHRONIZATION of our Supply Chain results in competitive advantage FY 12 Key Strategic Plan Measures it Improves – Service Level (RDSL and PDSL) – Inventory reduction (DOH) – Increased Profit (cost reduction) – Share Gain (customer satisfaction) © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 32 | October 2010 VCP Business Processes & Solutions Supply Chain Planning Inventory Management Inventory Optimization DRP Profitable Revenue Growth Inventory Reduction Deal Management TPM (CG) DSR Assortment Opti Price Management VCP Assets Optimization & Sales & Operation Planning Integrated Business Planning Manufacturing Insights © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 33 Utilization | October 2010 Sourcing Optimization Assets Optimization Network Optimization Plant Resource Management Production Scheduling SUCCESSIVE REFINEMENT Executive Dash Boarding Sales and Account Teams Executive S&OP Review “Where are my issues?” Imbalance COMMAND AND CONTROL Sync with Finance Demand Review “Can I impact the market demand?” SENSE AND CREATE DEMAND Demand Management Consensus Demand Cycle continues … 1 2 “Will network changes help me meet demand more profitably?” End to End VCP Command & Control Business as Usual “How do I schedule my plant to maximize ROA” Supply Review 5 3 DRIVE EFFICIENCY 4 (PLANT LEVEL) Plant Specific Plan MANAGE RISK PLAN NETWORK SET RULES Sourcing rules, etc Operational Supply Demand Balancing “Am I assured that I'm deploying and producing in alignment with my S&OP plan?” EXECUTE PLAN & MANAGE EXCEPTIONS (E2E) Manufacturing © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 34 | October 2010 Sourcing &Supply Chain Planning World Class Supply Chain Solutions Complete. Open. Integrated. Modular Optimization Optimize inventory holdings and deploy inventory networks Use advanced statistics and causal factors Real-Time Sales and Operations Planning Optimize networks and sourcing decisions Optimize networks and sourcing decisions Collaborate with customers Collaborate with customers Constraint based supply chain planning Constraint based supply chain planning Executive dashboards and reporting Executive dashboards and reporting Manage rolling forecasts Manage rolling forecasts Collaborate with all constituents on one number Collaborate with all constituents on one number Collaborate with all constituents on one number Use basic statistics, alerts, and seeded worksheets Use basic statistics, alerts, and seeded worksheets Use basic statistics, alerts, and seeded worksheets Deploy fast MRP across multiple ERP instances Deploy fast MRP across multiple ERP instances Deploy fast MRP across multiple ERP instances From less complex to best in class Competitive Necessity © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 35 | Competitive Advantage October 2010 Evolve at your own pace to a best in class solution Efficiency Manage rolling forecasts Effectiveness Focus on return on assets Incremental Value Eliminate spreadsheets Focus on return on assets Key Takeaways • Value Chain Planning implementation is a journey, not a project – each phase has its own short time to value, but one should have a long term vision. • Start Anywhere – Focus on the highest bang for your buck within each BU/Region and don’t wait for ERP Implementation or upgrade • Pick your critical “green” KPIs – one cannot be perfect at all measures – which KPIs defines you as a company, and meet your strategy? • Create transparency between All departments, Sales, Marketing, Finance, and SC and align your Supply with your Opportunities © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 36 | October 2010 Additional Information About Oracle Value Chain Planning visit www.oracle.com\goto\vcp Questions: [email protected] [email protected] Thank you! © 2010 Supply Chain Council. ALL RIGHTS RESERVED. | Slide 37 | October 2010