Sanjiv Sharma - Rolls Royce

Having worked in the industry, we all know that Sales & Operations Planning (S&OP) is all about mega decisions being made by executives about issues such as building factories, authorizing inventory or hiring people for major projects. We also know that executive decisions are made with limited information and, especially in the world of S&OP, with uncertain information as well. In a well functioning S&OP process, the consequences of decision making are made clear. However, with all of the weight that hinges on these things, information, decisions, and consequences provide an excellent opportunity to identify your organization’s top level business risks..

At Rolls-Royce, risk management and S&OP are very closely linked together. In fact it is firmly said and widely believed that if we did not have a S&OP process in place, Rolls-Royce will be at risk to be blindsided by major risks. For instance, we discovered first hand that a drop in demand for a particular product, could put a few of our key suppliers in financial distress even though overall demand was growing. We looked to S&OP to provide us with information that allowed us to developed and implement a risk mitigation process as well. We also found that building up our inventory in anticipation of an increase in orders from a major customer was ineffective thus causing Rolls-Royce to rethink how we design our products so as to minimize inventory exposure in future.

I firmly believe that S&OP is the pivotal point in capturing and managing risks provided your organization has implemented a proper risk management process. In fact, an active Risk Manager is an integral part of the S&OP team at Rolls-Royce. Obviously, not all risks are created equal. Some selective risks are reported to the company Board of Directors. This helps to get the executive help needed to mitigate these risks. Managing risks allows us to learn and develop new ways to escape the same risks in the future.

I very much look forward to being able to share some insights into Rolls-Royce’s “S&OP Journey.” More importantly I look forward to being able to learn from a large group of Professionals at the IBF & APICS Best of the Best S&OP Conference

Sanjiv Sharma
Head of Sales and Operations Planning
Rolls-Royce

Hear Sanjiv Speak at:

Judy Nolan - Rolls Royce

We all know that you should measure processes.  There is a lot of literature written on this subject, and most companies now have some sort of Lean or Six Sigma program and quality management system that requires processes to be measured for evaluation and improvement purposes.  Control is another big aspect of metrics.  One of the things that I believe companies commonly miss is that they do not focus on the way performance measures motivate their staff.

Where I live, there are two bus companies.  From the behavior of the bus drivers, one can easily guess how performance measures motivate them.  .  Buses from Company A will not stop unless you are standing right next to an official bus stop and vigorously signal that you want the bus to stop – usually by jumping up and down in front of the bus.  The amount of effort required to stop the bus is not only quite high but risky as well.    Buses from Company B will stop if you are vaguely near a bus stop and look like you may like to have a ride on a bus.  You can quite easily stop a bus that you never had any intention of catching.  The metrics may be that Bus Company A is focused on it’s adherence to a timetable and Bus Company B is focused on the number of passengers it services.  This would explain how the different drivers are motivated to behave in different ways.

The evaluation, improvement and control focus of performance measures usually results in one of two types of measures.  These are measures within a department and measures across two or more competing departments.  This is what motivates people to be insular in their thinking causing a lack of focus on the customer.

I think that an additional type of metric is required that focuses on the customer rather than how a particular department can best benefit.  This creates “White Space,” which is the area between boxes or functions on an organizational chart.  And primary processes cross these white spaces.  To see how to measure the white space and see an example of what Rolls-Royce has done in this area, come and see me at the IBF conference in Orlando.

Hear Judy, Forecasting Process Manager
Rolls Royce
Speak At IBF’s