Maturity Levels

AMR/Gartner Maturity Grid

Key area

1. Goal

Key Sub-set

Key Question

Collaborating

Orchestrating

1.1 Process Goal

What is the Goal of the process and how are the

roles divided? (RACI)

The goal is to align cross-functional processes in support of the

operating strategy to maximize opportunity, customer satisfaction
whilst mitigating costs, by identifying risks and opportunities, value
and profitabilty.
Roles and responsibilities are clear at all levels of the organization and
there is seamless collaboration across the functions and teams.

The goal is to have the commercial plan built on End-to-End (and

cross-functionally aligned) insight of risks and opportunties. The
business anticipates on and plans for User and Shopper demand.
Capacity is based on these insights and are adapted as part of a
continuous process of making trade-offs between profitable growth
and utilization

1.2 Reward Organization

How is the necessary behavior been influenced by

measures

No clear measures of success are in place; neither individually nor as

a team

Individual measures are in place and people's performance is

measured against these

Shared measures and KPIs are aligned with the S&OP process,
however the individual performance system (PPM) is measured
against individual targets.

Every function and organization within the S&OP process has unique
KPI's which are be aligned with eachother. No common S&OP metrics
are in place.
- see questionnaire for examples
It is unclear to the organization what the results of the S&OP process
are

An common set of KPI's for the S&OP process has been agreed with
all participating functions; These are focused on (finished goods)
inventory management Sales Organization Service level and (SKU)
Forecast accuracy
Results of the S&OP process are visible to the (x-functional)
organiation as: Better Forecast, Lower inventories, higher customer

Shared targets, based on the business model, are in place which are
part of our annual appraisal. These are continuously reviewed as
part of the S&OP process
The targets are differentiated based on the business model
specifics and ranked according importance. Alignment, ownership
and reward against these targets is based on "End-to-End" defined
business processes
Alignment of the organization and supply chain through imporved
S&OP helps the business to leverage the opportunities

2.1 S&OP Meetings

What content is discussed in the S&OP meetings,

who are the participants and how are decisions
been made

Long and laborious meetings where key decision makers are often
absent and the focus is on volume for the next month

Short term (up to next 3 months) focussed meetings geared at

ensuring assets are aligned to meet the (ordered) volume and
value.

2.2 Process Alignment

To what extend are the involved functions aligned

in the decision-making?

S&OP is executed on factory and/or commercial (country) level.

Decisions are also made on this level.

S&OP is done across the entire supply chain: from commercial

organisations to Supply (GBU/RBU) units with a dominant focus on
achieving budget/AOP for each organization individually

Financial Alignment*

How are the operational view and financial view be S&OP-plan and Rolling Forecats (ROFO) are separate plans and
aligned?
processes to establish these not aligned

1.3 S&OP Metrics

What are the KPI's defined and target been set for
the the S&OP process?

1.4 S&OP Results

There is clear and wide understanding of the S&OP

process, value add and results

2.3 Decision Making

On what horizon is the planning based?

2.4 S&OP Interaction

What is the behavior been exposed in the S&OP

process?

2.5 Sales Interaction

What is the context of sales input in the S&OP

plan?

2.6 Operation Interaction

What is the context of Operations in the S&OP

plan?

3.1 Meeting Attendance

3.2 Meeting Frequency

3. Process
3.3 Demand Input

3.4 NPI Planning

Forecast focused only In the Month (ITM) or quarter

Decisions in meetings are made in an unbalanced way: "The most

vocal person in the room". The Supply team decides on the supply
How are decisions been made in the S&OP process?
volume per SKU to enter in the system and the decision making
depends on "how we are performing"

Supply Input

The meetings are organized "last minute", with limited preparation.

The meetings are merely an exchange of data and findings and
no/hectic decisions are taken.
Sales rarely participates in the S&OP process. Merely Supply and
Marketing

Goal of operations is to deliver at the lowest possible costs

How is capacity planning be executed?

Supply Management is integrated in the S&OP cycle and reviewed

monthly. Analysis is based on short term resource requirements by
product family , expected volumes on historic mix and inventory.
Primary focus is operational effectiveness

Who attends the S&OP meetings?

Attendance level is varying and invitees from both Demand and

Supply functions are depending on topics and issues on the agenda.
Primary attendance from middle management level

What is the meeting cycle like?

S&OP meetings are organized ad-hoc when there are issues in Xfunctional alignment or need to better match demand with assets.

The results of the S&OP process contribute to improveed new product

introduction (NPI), higher revenue and increased profitability.
Short, crisp and focussed meetings with clear agenda's in which
volume and value up to 12 months out are assessed together with the
risks and opportunities, based on market and customer insights.
Strategic decisions are made and participation of the required level is
high.

S&OP is executed on the level that is optimal (regional or global) for

S&OP is optimized across End-to-End value chains. Differentation
the business across commercial organisations and supply units with
takes place according to business-/operating model. Focus on
clear focus on integral profitability and cutomer service. Trade-offs are
creating value and profit in entire chain
made such that the results for total company are optimized.

Forecast on CY - no visibility on NY until CY Q3/Q4

S&OP is driving the rolling forecast (ROFO). Differences between the

plans are small, are understood and agreed with by all parties.
Financial targets are deployed and taken as tarting point for the S&OP
process.
Consistent 12 months rolling forecast

The commercial organization "owns" the forecast/demand plan in

volume and value; the operating units decide upon the production
and informs the commercial organisation

Based on the demand plan, a cross-functional team makes the

decision to correct the business plan with clear corrective actions
towards the KPIs.

S&OP is the basis for the rolling forecast (ROFO), however

adjustments are made afterwards to align with financial targets and
to mitigate risks

S&OP meetings are held, but with limited structure. A lot of confrontational- discussions, decisions are made in the end and
limited actions.
The combined (bottom account) input from Sales & Marketing to
define the go-to market strategies to drive sales revenue. There is a
tendency to overwrite the forecast because it is perceived to be
unreliable
Operations develops and delivers a plan to source, make, deliver at
the optimum level, including a finished goods strategy. A "one size
fits all model"
Supply Management is integrated in the S&OP cycle and reviewed
monthly. Analysis is based on short term resource requirements by
product family , expected volumes on historic mix and inventory.
Primary focus is operational effectiveness
RCCP is carried out for the next 6-12 months. Reviews of supplier
capacity
High level attendance of the periodic meetings and typically consists
of the following participants: The regional/category S&OP
handshake meeting is attended by (regional) supply planning mgr,
BG Supply Chain Mgr, IPSC/regional plant Mgr and (regional)
Purchasing Mgr. From Commercial side Regional Demand Planning
Mgr is attending weekly operational review meetings between
(Regional) supply & optionally IPSC component planners, Demand
planning mgr + channel planners

The S&OP meetings review the full profitability implications from

the value and volume demand plan End-to-Ene, based on up to 18
months horizon and make conscious trade offs from commercial
organizations to supply centers.

A structured cycle of meetings is in place that lead to a disciplined

consensus decisions by a cross-functional team. Actions are taken, by
whom to drive the business performance and what has been agreed
gets implemented.
The sales forecast in combination with the marketing input (including
market insights) is used to define the go-to market strategies to drive
profitable sales and maximize the business opportunities at outlined
by the business strategy.
Operations drives an optimized demand response (plan, make, deliver
and source) meeting perfect order requirements.

Integrated business planning is implemented (to be described)

All functions are equal partners in reaching consensus around

actions to improve sales and profit performance based on the latest
S&OP forecast, over a minimum of 12 months out ,including if
necessary capacity adjustments to match the market needs
S&OP is a continuous learning process in which all participants act
on the decisions been taken. S&OP is used to drive performance
improvement in our businesses and it is visible through the key
metrics
We use the customer and market requirements to build the correct
go-to-market strategy and adopt our S&OP process to maximise the
business opportunity.
Based on the business model the right trade-offs (plan, make,
deliver and source) are made to maximize profitable demand and
fulfilling the business strategy

Additional to process at Anticipating level:

Primary focus is on cost effectively achieving desired service levels
with minimal inventory.
RCCP carried out for 18 months of all critical resources.
Alternative supply plans are developed per demand scenario with
impact on constraining resources and requiring actions clearly

Additional to Anticipating level: Executive meetings are attended by

GM and CFO/controller of the BG/GBU, lean Ops mgr & Controller,
Purchasing Mgr and Supply Chain mgr.

A structured monthly process as described in anticipating level is in

place. A number of key people meet weekly to review business
deviations and make previously-agreed corrections.

Future forecasts are based on insight from Sales and Marketing

using market intelligence data and limited point of sales from
customers and in alignment with supply

Future forecasts are based on bottom up CPFR plans with key

customers ,with sell out and inventory data. They are also
Statistical forecasting or historical sales is used to make a base plan
supported with promotional plans and clear NPI plans , which have
and enriched with market input (s.a. insight from robust customer and
volume assumptions and a clear PDCA to track back on
market based plans that are update on the latest sell out information,
accountability and driving performance to targets. A formal review
promo's, new customers and products) to derive at the Sales Plan
process is in place to review the commercial plans for the business
Forecast
and the output is a fully aligned business forecast both short and
long term.

New Product Introductions are not part of the S&OP process. We wait
until the product is launched and then react to the demand from
customers

New products introductions are included in the S&OP process. A

rough-cut forecast from sales (ased on previous historical product)
is used to build the ramp up plan

New product forecasting is based on "alike" products, clear

assumptions on sales out , level of distribution and exposure and
market input, so that tracking and responding can be done. Product
portfolio management includes a phase out process

What is the quality of the market insight been used Forecasts are based on historical sales in data and high level
for the S&OP process?
input/guidance of the sales leader at a SKU- and category level.

How do we forecast in cases of new product

introductions?

KPIs and targets are cross-functionally aligned, as well as the bonusses

that are connected to these targets. This aligment drives a
collaborative approach towards shared goals.

Monthly, we have a structured agenda and a number of steps and

processes to orchestrate S&OP through the cycle. This culminates in
a strategic monthly meeting

Inventory mgt Finished Goods

How are the finished goods inventory levels been

managed?

Stock levels are defined using high level guidelines for all products.
Targets are typically reviewed annually.
Goods in Transit are not monitored or managed

Finished Goods Strategy is established , executed and monitored for

all Commercial products, defining stock policy (MTO/MTS), Stock
levels, oa. based on drivers like fast/slow moving,
Slow moving stock target levels are set and part of the KPI
dashboard.
Goods in Transit are monitored and managed via periodic review of
transportation methods and planning.

Finished Goods Strategy includes optimization of stocking points

based on insights on demand patterns and costs.
Stock is optimized across the value chain, including stock at
(wholesale) customers. Inventory targets levels are recalculated at
least quarterly, based on demand volume and variability and supply
process characteristics.
Goods in transit are monitored real-time and optimized mode of
transport

Inventory mgt components

How are the componentsinventory levels been

managed?

No component inventory strategy in place. Goods in Transit are not

monitored or managed

Inventory plans are based on set KPI and service levels. Basic VMI
may be used for key materials or supplier inventory targets are set.
Periodically demand orientations are shared with suppliers for key
components. Goods in Transit are monitored and managed via
periodic review of transportation methods and planning.

Tier 1 and Tier 2 suppliers are managed via Supply Network

Collaboration tools and processes. Collaborative approach to supply
optimisation with suppliers. Goods in transit are monitored real-time.
Goods in transit are monitored real-time and optimized mode of
transport

Working Capital
Management

4. Credits

Anticipating
The goal of the process is to balance Supply and Demand based on
the best volume forecast (iso value). Optimizing both component
and (semi-) finished inventory levels.
Roles and Responsibilities of the involved functions are clear and
each function owns their part of the process.

Planning horizon

2. Functional
alignment

Reacting
The process goal is to develop an operational plan to cover supply to
fulfill customer orders and forecast, whilts minimizing supply
disruptions and optimizing (finished goods) inventory levels.
Roles and responsibilities (RACI) in the S&OP process are unclear and
there is limited alignment

Advanced Forecasting techniques (like attribute based forecasting)

are enhanced with Market Intelligence to build the Demand and
Supply Plan
Category management and range management includes product
pruning which is performed periodically to optimize the product
portfolio. User/shopper quantitative analysis and market insights
are used to build a forecast in combination with clear assumptions .
Contingency plans and "what-if" plans are developed to ramp up or
-down, based on sell out within 1st 3 months of launch

Questions fom Gartner (see questionnaire)

Performance levels that lead to excellence (Note: need to be customised per business)
Outputs

Measurement
CSL

OSA
Forecast accuracy (ITM)

Forecast accuracy Mix (ITM)

Forecast accuracy M+3

Metrics

Consistency

Forecast accuracy Mix M+3

Why

Measure of the accuracy of our sales plan mix in

VOLUME at the beginning of the current month
Measure of the financial accuracy of the sales plan
created 3 months ago
Measure of the accuracy of our sales plan mix in
VOLUME created 3 months ago

World Class Benchmark - Gartner outside in TOP 10 Companies

Targets

Effective measure of process and key measure for

customers. Measures our ability to meet customers Below 88%
requirements On Time In Full (OTIF)
Measure of the store/product availability against an
agreed listing
Below 90%
Measure of the Financial Accuracy of our sales plan
Below 90%
at the beginning of the current month

88% to 90%

90% to 95%

95% to 100%-

90%-95%

95%-98%

98%+

90% to 95%

95% +

97%+

Below 60%

60% - 65%

65%- 75%

75% +

Below 90%

90% to 95%

95% +

Below 55%

55%-59%

60%-70%

70% +

5% +

3% to 5%

Under 3%

1%

We achieve this level of performance 90% + of the time

We achieve this level of performance 90% + of the time

Inventory Quality

Measure of the quality of the Commercial Stock on

hand in the Philips warehouses. This to indicate the
quality of the inventory and highlight potential
obsolescence risk (Excess&Aging stock)

Inventory DFS

To compare Total Stock with future Demand (on

CoS) and translate it into Days. To be compared with TBA - MVG
capability of Supply Chain on BG/Category Level.

Inventory Turns
Lead-time

How often the inventory is sold/used.

We want to measure our turnaround speed

TBA - MVG
We achieve this level of performance 90% + of the time

6 to 7
We achieve this level of performance 90% + of the time

Maturity Level
Key area

Key Sub-set

Topic

Reacting

Process

Collaborating

Process Goal

Goal/Raci

Reward Organization

Behaviour

We do not have clear measures of success individually or as a team

S&OP Metrics

Target and KPI

Every function has separate KPIS and measures of effectiveness/efficiency There is aligned KPIS x functionally but are focused on inventory
within S&OP
management primarily and Sku forecast reliability

S&OP Results

Understanding

The results from S&OP are declared seen as a balanced demand plan with The results of S&OP are seen as X functional and include CSL.Forecast
supply chain metrics
accuracy ,Inventory quality .DFS ,Cost and Lead time.

S&OP Meetings

Content

Process Alignment

Functional alignment

Decision Making

What decisions are taken

S&OP Interaction

Behaviour

Operation Interaction

What is the context of Ops in the S&OP plan

Sales Interaction

What is the context of sales input in the S&OP plan

Meeting Attendance

Who attends

Meeting Frequency

Planning horizon

Forecast focused only ITM or quarter

Forecast on CY - no visibility on NY until CY Q3/Q4

Demand Input

Quality of insight

Future forecasts are based on historical sales in data at a sku and

category level

Future forecasts are based on insight from Sales and Marketing using
market intelligence data and limited point of sales from customers

NPI Planning

How do we forecast

Goal

Functional
alignment

Anticipating

The goal of the process is aligned cross functional and we aim to maximize
The goal of the process is to match demand and supply so we populate
The process goal is to populate volume demand into the demand planning
profitability, opportunities and customer satisfaction while and mitigating
the system based on our best forecast and we try to fulfil with this the
systems and the demand team are told what to enter. There is no Clear
risks and costs . The roles and responsibilities are clear at all levels of the
customers orders. The roles and responsibilities of the team are clear
RACI
organization and there is seamless collaboration across the functions and
and each function owns their area of the process .
the teams.
We have individual measures and our performance managed against
these

Orchestrating

We have shared targets based on the business model which are within
We have shared measures and KPIS with S&OP but our PPM is measured
our annual appraisal. We review and continually assess as part of the
against individual targets still
S&OP process
The targets are differentiated based on the business model defined and
The Targets and KPIS are aligned and bonused cross functionally. The KPIS
ranked accordingly of importance. There is alignment ,ownership and
drive a collaborative approach and our in line with the overall business
reward against these targets on a E2E basis based on clear business
goals. People are bonused against these goals and targets
processes
The results of the S&OP plan lead to a clear plan of action on how to
enhance the profitability of the business E2E.

The S&OP process reviews the demand plan at volume and value up to 12 The S&OP meetings review the full profitability implications from the
The S&OP meeting reviews the demand plan in volume terms for the next The S&OP meeting review the demand plan both volume and value up
months out and assesses the risks and opportunities along this time
value and volume demand plan E2E based on up to 18 months and
month
to the next 3 months .
horizon based on market and customer insight
makes conscious trade offs from CO to supply centers.
Supply input numbers to drive the forecast for operation needs with
limited input from the commercial function

There is a formal review process on reviewing the commercial plan for the The Co leader /BG leader is provided with a aligned X functional view
The commercial function input the demand forecasts in alignment with
business and the output is a aligned business forecast both short and long of demand , both value and volume and the profit implications of the
supply .
term.
scenarios from a E2E perspective.

Based on the demand plan at volume and value the commercial team
The supply team decide on the amount of volume by sku to enter into the
then review exceptions versus target and adjust accordingly up to 3
planning system in the month
months out
The process is last minute and we do not take any decisions but merely
communicate the KPIS and discuss

We do a S&OP meeting but it has limited structure and there is too

much discussion and not enough actions,.

We develop a plan to optimize our costs in the supply chain, which is

feasible

We develop a plan to make ,deliver ,source and manufacture at the

optimum level - on a one size fits all model

We do not involve sales in our S&OP process only supply and marketing

We involve sales in the process by getting a bottom account input but

tend to ignore and overwrite the forecast because it is unreliable

Supply personnel only attend the meetings on S&OP consistently.

Marketing and Supply meet to review the S&OP plan that will be
entered into the planning systems

We wait until the product is launched and then react to the demand from
We do a rough forecast based on previous historical product sales in.
customers

Based on the demand plan , the X functional team make decisions to

correct the business plan from a value perspective with clear corrective
actions to drive the relevant KPIS

The Commercial leader takes decisions based on exceptions on

improving sales and profit performance based on the latest S&OP
forecast ,over a minimum of 12 months out ,including if necessary
capacity adjustments to match the market needs

We have a structured cycle of meetings that lead to a consensus decision We continually learn from the S&OP process and act on the decisions
on what actions need to be taken and by who to drive the business
we take . Hence we use the S&OP to drive performance improvement
performance
in our key metrics
Base on the business model we make the right trade offs based on
profitability . We understand that we need to differentiate the
operational metrics and business strategy
We use the customer and market requirements to build the right go to
We use the sales forecast in conjunction with the marketing view based
market strategy and adopt our S&OP process to maximise the business
on shopper and customer insight to come to a aligned forecast
opportunity.
Pre-X functional meetings take place between, Sales,Marketing,Finance
and supply to agree a S&OP forecast before final sign of on exception by
the Business leader
Consistent 12 months rolling forecast
Future forecasts are based on bottom up CPFR plans with key
customers ,with sell out and inventory data. They are also supported
Future forecast are based on insight from robust customer and market
with promotional plans and clear NPI plans , which have volume
based plans that are update on the latest sell out information
assumptions and a clear PDCA to track back on accountability and
driving performance to targets
We use shopper quantitative analysis and market insight to build a
We build a NPI forecast based on clear assumptions on sales out of rate of
forecast ,linked to clear assumptions . We also develop contingency
sale , level of distribution and exposure ,so that we can track and respond
and what if plans to ramp up or down based on sell out within 1st 3
accordingly
months of launch

Outputs
Measurement

CSL

OSA
Forecast accuracy (ITM)
Forecast accuracy Mix (ITM)
Forecast accuracy M+3
Metrics

Consistency

Forecast accuracy Mix M+3

Why
Effective measure of process and key measure for
customers. Measures our ability to meet customers
requirements On Time In Full (OTIF)
Measure of the store/product availability against an
agreed listing
Measure of the Financial Accuracy of our sales plan at
the beginning of the current month
Measure of the accuracy of our sales plan mix in
VOLUME at the beginning of the current month
Measure of the financial accuracy of the sales plan
created 3 months ago
Measure of the accuracy of our sales plan mix in
VOLUME created 3 months ago

Inventory Quality

Measure of the quality of the Commercial Stock on

hand in the Philips warehouses. This to indicate the
quality of the inventory and highlight potential
obsolescence risk (Excess&Aging stock)

Inventory DFS

To compare Total Stock with future Demand (on CoS)

and translate it into Days. To be compared with
capability of Supply Chain on BG/Category Level.

Inventory Turns
Lead-time

How often the inventory is sold/used.

We want to measure our turnaround speed

Targets

Performance - Leading to World Class benchmark

World Class Benchmark - Gartner outside in TOP 10 Companies

Below 88%

88% to 90%

90% to 95%

95% to 100%-

Below 90%

90%-95%

95%-98%

98%+

Below 90%

90% to 95%

95% +

97%+

Below 60%

60% - 65%

65%- 75%

75% +

Below 90%

90% to 95%

95% +

Below 55%

55%-59%

60%-70%

70% +

5% +

3% to 5%

Under 3%

1%

We achieve this level of performance 90% + of the time

We achieve this level of performance 90% + of the time

TBA - MVG
TBA - MVG
We achieve this level of performance 90% + of the time

6 to 7
We achieve this level of performance 90% + of the time

Maturity Level
Key area

Lighting Catagories

Gartner categories

1. S&OP process
goal

1. S&OP process goal

CL Category

Declared Process Goal

Reacting

Anticipating

Collaborating

Orchestrating

The process goal is to develop an operational

plan to cover supply for customer orders &
forecast and minimize supply disruptions and
optimize (finished goods) stock levels
Roles and responsibilities in the S&OP process
are unclear however and there is little
alignment

Goal of the process is to balance Supply and Demand based

on volume, rather than value. Optimizing both component
and finished good stock levels.
Roles and Responsibilities of the participating functions are
clear and each function owns their part of the process.

Our goal is to align cross-functional processes to enable the operating

strategy to maximize opportunity and mitigate costs, by identifying
risks and opportunities, value and profitabilty.
Roles and responsibilities are clear at all levels of the organization and
there is seamless collaboration across the functions and teams.

The process goal is to have a commercial plan build on E2E insight of

risks and opportunties ,driven via CPFR and aligned X functionally.
The business anticipates and plans for User and Shopper demand. It
also shapes capcity based on this insight as a continous process.
Based on this insight the business makes concious trade off ,in
regard to facilitating profitable growth versus low utilization

Goal
2. Reward
Organization

2. Reward
Organization

3. S&OP Metrics

3. S&OP Metrics

4. S&OP Results

4. S&OP Results

Target and KPI

S&OP meetings

S&OP meetings

Process structure

Meeting Frequency

meeting Frequency

Frequency

Every function and organization has their own KPI's for the S&OP process are agreed with all participating
Targets and KPI are aligned and bonusses are x-function determined.
KPI's which may not be aligned. No agreed
functions; primarily these are finished goods inventory levels, This aligment ensures collaborative approach towards shared goals.
Improved Forecast, reduced inventories and increased DRM
I am not sure what the results are of the S&OP
Improvement in NPI , increased margin and revenue.
Improved Forecast, reduced inventories and increased DRM
process
Better alignment of the organization and supply chain to seize
opportunities
long and laborious meetings, key decision
Short term focussed to make sure we know how to align
short,focussed meetings with clear agenda's to make strategic
makers are often absent
assets to meet demand (orders)
decisions, Participation level is high.
We have a structured monthly process as described in anticipating
S&OP meetings are organized ad-hoc when
Monthly, we have a structured agenda and a number of steps
level.
there are issues in X-functional alignment or and processes to orchestrate S&OP through the cycle. This
In addition, we have a few people to meet weekly to review business
culminates in a strategic monthly meeting
need to better match demand with assets.
deviations and make previously-agreed corrections.

5. S&OP meetings

Meeting attendance

Process alignement
Functional
alignment

Attendance level is varying and invitees from

both Demand and Supply functions are
depending on topics and issues on the
agenda, but are primarily from middle
management.

meeting attendance

S&OP is done on factory or country level.

Decisions are also made on this level.

process alignement

6. Process alignment
S&OP and ROFO are 2 separate plans and
processes and not aligned

Financial Alignment

7. S&OP interaction &

Decision making

S&OP interaction

S&OP interaction

Decision making

Decision making

Data and insights

Decision making process

Data and insights

9. Commercial
Interaction

Sales Interaction

10. Supply interaction

Operations
interaction

Inventory mgt Finished

Goods
11. Working Capital
Mgt

Functional alignment

13. NPI Planning

NPI Planning

NPI process

14. Supply input

NEW

15. Decision horizon

Decision horizon

S&OP is done on the level that is optimal (can be regional or global)

S&OP is done across supply chain: GBU/RBU and commercial
across supply and commercial organisations with clear focus on
organisations with with major focus on achieving
integral profitability and service. Trade-offs are made that optimize
budget/AOP for each organization
results for total company
S&OP is driving the ROFO. Differences are small, understood and
S&OP is basis for ROFO, but adjustments are made due to
accepted by all parties. Financial targets are deployed within the S&OP
financial targets and risks.
process.
The decision making process is confrontational and
contentious, but decisions are made in the end.

Structured, disciplined and well-orchestrated cross-functionally. What

we agree to gets implemented.

Decisions in meetings are made by:

"the most vocal person in the room"
"the Supply Chain leader always has the final
say"
"It changes on how we are performing"

Commercial organization owns the forecast; operations

decides what to make and communicates this back to
commercial organisation

Multiple functions but not entire organization

Data from Commercial Organizations and GBU like Order

Information on CSO service level, historic sales
book, Forecast, NPI planning, component & Finished goods
and inventory are used to determine actions
Inventory, CSO Service Level, IPSC loading are input to the
to match supply to anticipated demand.
S&OP process to resolve issues and capture opportunities.

S&OP is optimized across E2E value chains. Differentation takes

place according to business/operation model. Focus on creating
value and profit in total chain
Integrated business planning is taking place (to be described)

All functions are equal partners in reaching consensus around

strategy.

Demand and supply planning business processes are S&OP cycle

Key information, including Demand Plan, Component & Finished Goods
time is reduced to increase responsiveness IT infrastructure allows
Inventory, GMR, supply flexibility and profitability are combined to
all relevant information to be updated weekly and available across
determine and agree with all functions on the optimal S&OP plan.
all functions.

Sales rarely participates in the S&OP process

the combined input from Sales & Marketing to define the go-to market
the combined input from Sales & Marketing to define the gostrategies to drive profitable sales and maximize the business
to market strategies to drive sales revenue
opportunities at outlined by the business strategy

Goal of operations is to deliver at lowest costs

Goal of operations is to make feasible manufacturing & FG

sourcing plan (plan, make, source) to satisfy demand

Goal of operations is to have a optimized demand response (plan,

make, deliver and source) meeting perfect order requirements

Finished Goods Strategy is established , executed and

monitored for all Commercial products, defining stock policy
(MTO/MTS), Stock levels, oa. based on drivers like fast/slow
moving,
Slow moving stock target levels are set and part of the KPI
dashboard.
Goods in Transit are monitored and managed via periodic
Inventory plans are based on set KPI and service levels. Basic
VMI may be used for key materials or supplier inventory
targets are set.
Periodically demand orientations are shared with suppliers
for key components. Goods in Transit are monitored and
managed via periodic review of transportation methods and
planning.

Finished Goods Strategy includes optimization of stocking points based

on insights on demand patterns and costs.
Stock is optimized across the value chain, including stock at (wholesale)
customers. Inventory targets levels are recalculated at least quarterly, See level 3
based on demand volume and variability and supply process
characteristics.
Goods in transit are monitored real-time and optimized mode of

Stock levels are defined using high level

guidelines for all products. Targets are
typically reviewed annually.
Goods in Transit are not monitored or
managed

No component inventory strategy in place.

Inventory mgt components Goods in Transit are not monitored or
managed

Demand input

Additional to Anticipating level:

Executive meetings are attended by GM and CFO/controller of the
BG/GBU, lean Ops mgr & Controller, Purchasing Mgr and Supply Chain
mgr.

Last minute , rushed and hectic decision

making,

NEW

12. Demand input

Attendance of the periodic meetings is at high level and

typically consists of the following participants:
the regional/Category S&OP Handsake meeting is attended
by (regional) supply planning mgr, BG Supply Chain Mgr,
IPSC/regional plant Mgr and (regional) Purchasing Mgr.
From Commercial side Regional Demand Planning Mgr is
attending
weekly operational review meetings between (Regional)
supply & optionally IPSC component planners, Demand
planning mgr + channel planners

The targets are differentiated based on the business model defined

and ranked accordingly of importance. There is alignment

Forecast is based on Historical Sales data and

high level input/guidance of the sales leader

Tier 1 and Tier 2 suppliers are managed via Supply Network

Collaboration tools and processes. Collaborative approach to supply
optimisation with suppliers. Goods in transit are monitored real-time.
Goods in transit are monitored real-time and optimized mode of
transport

Statistical forecasting or historical sales is used to make a

Collaborative planning process with Key customers, including sell out
base plan and enriched with market input (like promo's, new and stock info are used to improve the Demand plan, next to the S&M
customers and products) to derive at the Sales Plan Forecast. input, economic info and market share.

Process
New products introductions are included in the S&OP
New Product Introductions are not part of the
process. A rough-cut forecast from sales is used to build the
S&OP process.
ramp up plan.

New product forecasting based on like products and market input.

Product portfolio mgt including phase out process in place.

Capacity Planning

Supply Management is integrated in the S&OP

cycle and reviewed monthly. Analysis is based
on short term resource requirements by
product family , expected volumes on historic
mix and inventory. Primary focus is
operational effectiveness

Supply Management is integrated in the S&OP cycle and

reviewed monthly. Analysis is based on short term resource
requirements by product family , expected volumes on
historic mix and inventory. Primary focus is operational
effectiveness
RCCP is carried out for the next 6-12 months. Reviews of

Additional to process at Anticipating level:

Primary focus is on cost effectively achieving desired service levels with
minimal inventory.
RCCP carried out for 18 months of all critical resources.
Alternative supply plans are developed per demand scenario with
impact on constraining resources and requiring actions clearly

Planning horizon

S&OP process focussed on short-term; 1-13

weeks and solving burning issues

S&OP is maily focussed on running year. Only in Q3/Q4 next Long term planning for brand/family level for 18 months, Short term
year is taken into account for long term planning on
planning (3 months) (pro-rated) to SKU level. Focus is on significant
family/12 NC level. Focus is on significant changes from
changes from previous months and deviations from agreed plans and
previous months and deviations from agreed plans and
reviewing the KPI dashboard.
reviewing the KPI dashboard
Alternative volume scenarios are developed and reviewed.

competency mgt: ie: training should be in; in functional alignment we can

SP & DP planners ?
combine maybe something in 678

Making the right trade-offs and aligning supply (plan, make, deliver
and source) to maximize the profitable demand response based on
the business strategy

See level 3

Input from the Collaborative Planning Process with Key Customers is

used to shape future demand planning , including building of
scenarios to calculate and choose the optimal profitability decisions
for the business.
Advanced Forecasting techniques (like attribute based forecasting)
are enhanced with Market Intelligence to build the Demand and
Supply Plan
Category management and range management includes Product
pruning is performed periodically to optimize the product portfolio.

Long term planning for brand/family level for 18 months, Short term
planning (3 months) (pro-rated) to SKU level. Focus is on significant
changes from previous months and deviations from agreed plans
and reviewing the KPI dashboard.
Alternative scenarios are developed and reviewed including costs,
profitability and risks analysis. Decision making is focussed on
ensuring the tactial and operational plan are aligned with the
strategic business plan

Overview

Question Details
Goal

Functional Alignment

Process

Decision Horizon

Collaborating

S&OP Process Goal

10
8
6

NPI Planning

Anticipating

Overall

Reward Organization

Collaborating
S&OP Metrics

Anticipating

0
-2
Demand Input

S&OP Results

-4
-6

Goal
1) What is the goal of your S&OP process?
-5
a) The goal of a good S&OP process is to meet or exceed the financial budget numbers.
||||||||||||||||||||||||||||||||||| -5
b) Our goal is to match expected demand with supply.
| -5
c) Our goal changes frequently. We keep our eye on a moving target. We pride ourselves on being flexible and adapting to change.
|||||||| 10
d) Our goal is to align cross-functional processes to enable the operating strategy to maximize opportunity and mitigate costs.
| 0
e) Our goal is to maximize asset utilization and to have a feasible production schedule for our facilities.
||| -10
f) A and E

Orchestrating

4
2

Reacting

Reacting

-8
-10
Meeting Frequency

S&OP Meetings

Meeting Attendance

Process Alignment

2) How do you reward the organization?

|||||||||||||| -5
a) Each function has its own metrics. They are measured outside the S&OP process
|||||||||||||||||||| 10
b) We have commonly held metrics that are measured and reviewed as part of the S&OP process.
||||||||||| -5
c) We reward the organization for making their budget numbers.
||| -5
d) People are rewarded through their annual appraisals, with limited alignment to overall company goals
3) Which metrics best represent S&OP effectiveness?
||||||||||||| 10
a) Perfect order, working capital, forecast accuracy, bias and value add, profitability (margin) and revenue (market share or meeting revenue targets)
| -5
b) Asset utilization, inventory and manufacturing costs
|||||||||||||||||||||| 5
c) Customer service (perfect order), inventory (days of inventory outstanding or inventory turns), forecast accuracy and total supply chain costs
|||||||||| 0
d) Customer service (order fill rate), inventory (obsolescence) and total supply chain costs
|| -10
e) We pride ourselves on measurement. We have about 50 measures that we use that represent key cross-functional measures.
4) What results have you achieved from your S&OP processes?
|||||||||||||| -5
a) Not sure yet
|||||||||||| 0
b) A more reliable operating plan
||||||||| 5
c) Reduced inventories, a better forecast and improved customer service
| 5
d) Higher revenues, an increase in margin and an improvement in new product launch success
|||||| 5
e) A greater understanding of market options and alignment of the organization to better seize market opportunities as they happen
|||||| 10
f) B, C, D and E

Functional Alignment
Operations Interaction

Decision Making
Sales Interaction

S&OP Interaction

1) How would you characterize your S&OP meetings?

||||| -5
a) Long and laborious meetings, with frequent absences of key decision makers
|||||| 5
b) Focused and strategic. These meetings are decision making forums that no one wants to miss
||||||||||||||| 0
c) Short-term focused. We want to be sure that we focus on how to align assets to best meet demand (orders)
||||||||| 5
d) Short monthly meetings, with clear agendas to make key decisions
|||||||| -10
e) A and C
||||| 10
f) B and D
2) How are your processes aligned?
||| -5
a)
|||| 10
b)
|||||||| 0
c)
||| 5
d)
|||||||||||||||||||||||||||||| 10
e)
3) How are decisions made?
|||||||||||| 10
||| -5
-5
|||||||||||||||||| 5
|||||||||||||| 0
| -10

By manufacturing assets. We focus on manufacturing plants and alignment of demand to each factory center.
By profit center. We align decisions based on profit centers.
By geography. Decision making is based on each region.
By budget center. We want to be sure that we are properly aligned to make our budget numbers.
We have a multitiered process that includes one or more of the above options.

a) All functions are equal partners in reaching consensus around strategy.

b) It changes based on how we are performing.
c) The leader of supply chain has the final say.
d) Multiple functions, but not the entire organization.
e) Marketing and sales own the forecast; manufacturing decides what to make.
f) The most vocal person in the room, otherwise we would never get anything done.

4) How would you characterize S&OP interaction?

|||||||||||||||||||| 10
a) Structured, disciplined and well-orchestrated cross-functionally. What we agree to gets implemented.
||||||| -5
b) Last-minute, rushed and hectic
|||||||||| 0
c) Confrontational and contentious, yet decisions are made
|||||| -5
d) Lots of talk, but no decisions; they are taken offline.
|||| 0
e) We plan, but we rarely execute what we plan.
5) When you think of the word sales in sales and operations planning (S&OP), this term best describes?
|||| 0
a) The sales organization
|||||||||||||||||| 5
b) Combined input from sales and marketing
||||| -5
c) A group that never participates in our S&OP process
|| 0
d) The right go-to-market strategies to drive sales revenue
||| 5
e) The right go-to-market strategies to drive profitable sales
|||||||||||||||| 10
f) The right go-to-market strategies to maximize the business opportunity as outlined by the business strategy
6) When you think of the word operations in sales and operations planning (S&OP), this term best describes?
||||| 0
a) The manufacturing organization
||||| 0
b) A feasible operating plan
||||||||||| 5
c) The optimized demand response: plan, make, source and deliver
-10
d) The operating plant that delivers the lowest costs
||||||| 5
e) Optimizing the response to have the right product, right place and right time
|||||||||||||||||||| 10
f) Making the right trade-offs and aligning supply (plan, make, deliver and source) to maximize the profitable demand response based on the business strategy

Process
1) Who attends your S&OP meetings?
||||| -5
a) Leaders from manufacturing operations. We want to be sure that we are ready to meet the needs of the business.
||||||||||||||||||||||||||||||| 5
b) Operational leaders from sales, marketing, finance, operations and supply chain. We want to make the right decisions to maximize revenue.
|||||||||||| 10
c) A small cross-functional group, with senior representation from finance, sales, operations, marketing, R&D and supply chain orchestrate the meeting with a fixed agenda for the profit centers. We want to maximize opportunity and minimize risk.
2) What is the frequency of your meetings?
|| -10
a) Perpetual. We are constantly reacting to supply and demand mismatches.
-10
b) Ad hoc. We call the S&OP meeting when we have trouble in cross-functional alignment or need to better match demand with assets in a manufacturing strategy.
||||||||||||||||||| 5
c) Monthly. We have a structured agenda. There are a series of steps and processes that we take to orchestrate S&OP throughout the cycle. This culminates in a strategic monthly meeting.
| 0
d) Weekly. We review our operating plan to the demand plan weekly.
||||||||| 5
e) We have a structured monthly process. In addition, we have a few people to meet weekly to review business deviations and make previosly-agreed corrections.
||||||||||||||||| 10
f) C and E
3) Demand input into the S&OP process includes:
||||||||||||||| 5
a) Market data, sales forecast and orders
|| 0
b) The financial budget
|||||||||||||||||||||||||| 0
c) Sales forecast and orders
-5
d) Whatever the sales director provides us with
-10
e) We dont involve sales, we can forecast better than they can
| 5
f) What-if analysis to determine the best demand plan
|||| 10
g) A and F
4) How do you plan for new product introductions?
||||||||||||||||||||||||||| 0
a) We use a rough-cut sales forecast from sales or marketing.
|||| -5
b) We wait until the new product is through ramp-up before we include it in the S&OP process.
|||| 10
c) We use advanced attribute-based forecasting techniques along with market intelligence.
||||||||||||| -10
d) New product launch is a separate process.
5) How far out in the future do you look to make decisions?
||||||| -5
a) Our business is so unpredictable that we can only make decisions for one to three months in the future.
|||||||||||||| -10
b) It changes regularly based on business conditions.
| -10
c) We are lucky when decisions can stick one week out.
|||||||||||||||||||||||||| 10
d) We have established clear planning time horizons aligned to the processes

Credits
Which of the following applies to your organization's S&OP process?
|||||||||||||||||||||
a) Has S&OP processes reporting to a profit-center manager (GM, president, etc.)
||||||||||||||||||||||
b) Sees S&OP as a continuous business planning process instead of a series of supply chain meetings
|||||||||||||||||
c) Has a continuous improvement initiative, led through a central group (COE) that focuses on and supports S&OP
||||||||
d) Has clear governance between new product launch and S&OP processes
||||||||||||||||
e) Had clear alignment between finance and the S&OP team, with clarity on the financial impact of decisions
|||||||||
f) Redefines and adapts supply and demand networks quarterly (or biannually) to improve results
|
g) Analyzes cost-to-serve for customers and product profitability, and includes these plans in the S&OP decision-making process
|||||||||
h) Values S&OP as an important strategic process; in fact, we call it our business planning process