Maria Simos CEO e-forecasting.com

Teamwork, collaboration, transparency and increased profitability. Sounds like some Disney Magic, right?

Well based on the experiences shared from the panel at the Institute of Business Forecasting & Planning’s kickoff event on Sunday dubbed the ‘Advanced S&OP Practices Forum’ it’s in fact real and achievable.  The panel, which was an opening to IBF’s Supply Chain Planning & Forecasting: Best Practices Conference, spoke to an eager room of over 100 demand planners ready to listen and learn about how to take their own company’s S&OP to the next level.

Tom Wallace who was the MC for the afternoon session, gave us all a history lesson, sharing with us how the real founder of S&OP was not only ahead of his time and changed the way businesses operate, but was also sitting right in the room with us.  Dick Lang created Sales & Operations Planning, also known as S&OP, in the 70’s and sat just three rows ahead of me during the forum.  How lucky of a group was this to have the opportunity to attend this conference with Dick Ling who also would be leading a workshop the next morning called ‘How to Align Sales & Operations Planning with Strategic Intent.’  This elevated the excitement in the room and put the rest of the discussions into a greater context.

Before having the panelists take over, Tom shared some slides as a warm up.  He went over the four fundamentals of demand planning which are demand, supply, volume and mix.  He stressed the importance of looking at demand as being the driver. He went on to explain that if we do so  that demand and supply will become balanced, either by our own actions or external factors whether we like it or not.

There are a few key themes that resonating in all the panelists:

• S&OP will increase collaboration, communication and teamwork
• Top management needs to be involved so needs to be implemented top-down
• S&OP runs your business and needs to be part of your culture

Highlights from the panelist discussion, who Tom dubbed as ‘true innovators:’

Chase Winsam of Whirlpool Corporation – Chase took the mic but said that rather than speak about S&OP, he wanted to sing some karaoke. Instead of breaking into song however, he shared with us how Whirlpool was able to reduce forecast bias from 16% to 2% by implementing stronger S&OP practices, while also decreasing inventory dollars. This was all accomplished while maintaining 90% service levels.  An easy idiom he used during his presentation while showing us some outputs was “Get it graphical then think practical.” It is important to rationally think about the numbers and what they are telling you.

Grant Hoffman from Motorola – Grant got our attention quickly when he started his talk with the fact that Motorola had been losing $400 million a quarter during the recession.  The company’s focus turned to their relationships with their suppliers hoping to reduce shortages. This became a process they now call supplier S&OP.  His words of advice were that you need to start at the top, keep confidentiality when working externally, find the proper decision makers, do not be afraid to commit and to have immediate communication on late breaking news.  It may take up to six months to build a relationship with a supplier, but there is a lot of value in these relationships and they are well worth the effort.

Jay Nearnberg from Pfizer – Jay started his presentation by saying that innovation is so important in a stagnant economy like today (and like in the future as I know we are forecasting very low growth domestically and globally overall).  For Pfizer’s business, there is a strong push towards real-time.  Their dashboard as well as their forecast is updated every day.  Most of these overrides come from key customers, the knowledge of a promotional shift or new product information.  The ways that S&OP add value are manifold: cross functional engagement, the engagement of all  management levels, transparency of assumptions, shifts caused by situations, all departments get on the same page, and scenarios and trade offs are discussed along with pre and post-tracing.

Alan Milliekn from BASF – To round out the panel, Alan’s lively presentation shared how BASF uses S&OP to maximize gross profits globally.  Some benefits they have seen include a shift from local volume orientation (‘just keep running my plant’) to global value orientation (‘let’s make money, let’s make money!’).  Also, there is built in transparency and improved communication as well as improved teamwork and of course, increased profitability.

Wrapping up the presentation, the Q&A session brought about some key points:

• Technology is pushing companies to find competitive edge
• Processes do not necessarily change too much, but people do, most basic thing you can do is continually educate people (like attending IBF events like this)
• First you need to get the basics of S&OP then the enhancements will come, first need to balance demand and supply
• Takes just an average of one and a half hours of executives time each month to be involved

The afternoon forum was a real eye opener and sure got my attention. Especially in the difficult economic times that we are still in, it almost sounds like achieving successful S&OP can be a bit of Disney Magic when it comes to your bottom line.  The lineup of upcoming presentations over the next two days will help showcase case studies and insights on how to demystify some of this and take it back to our companies.

Maria Simos CEO e-forecasting.com

When the Institute of Business Forecasting & Planning (IBF) was formed, I was still in diapers. Around the same time that Dr. Jain had the novel idea of bringing business practitioners together to learn and grow together I was only crawling over my father’s journal article notes. I didn’t know it at the time, but early in the lifespan of the IBF my father, Dr. Evangelos Simos, was already in the midst of what has become a long and fruitful relationship between him and the organization. After attending his first IBF conference he was hooked, and has since worked to help solidify this professional group by providing advice and contributing an international outlook piece for the Journal of Business Forecasting (JBF). Now 30 years later I couldn’t help but smile when I opened my mail to find that same JBF I have known my whole life with all of its outstanding articles only it had a wonderful sleek new look.

Today the IBF is as strong as ever and I now work alongside my father doing economic research and consulting for our company e-forecasting.com. We work closely with the IBF regarding the organization as an important ally in the field of business forecasting and a real educational pioneer.  With our company, I do my best to follow the lead of the IBF in their cutting edge use of social media constantly staying ahead of the crowd when it comes to embracing new technologies. Over the last two years I’ve watched the LinkedIn groups, Facebook fan page and Twitter page help snowball their popularity and reach of the IBF, helping to build what is now a global brand.

It’s great to see that along with this digital adoption of social media, the IBF is not neglecting good old print.  This summer, the beloved JBF definitely received an ultimate makeover.

The new JBF continues to bring you the latest in research and trends as it always has. With each issue it brings in new case studies and methods from a variety of contributors from the business and academic side of the field. There are also ongoing contributions sprinkled in as well. My father’s piece on the global economic outlook made the cut and is still there.

Additionally, in what I call a “what-a-small world” coincidence,  Dr. Larry Lapide, who I was classmates with his daughter at Carnegie Mellon, also writes a recurring article for the journal. In the latest issue of the JBF Dr. Lapide, an affiliate at MIT and a professor at UMASS-Boston, shares a bit of research on predictive metrics which one of his MIT grad students completed.

What else can you find in the revamped JBF? The lead article, authored by Dr. Jain and Mark Covas gives us Six Rules for Effective Demand Planning in a Volatile Economy. That should come in pretty handy, especially if we see a double dip. Steve Keifer, VP of GXS, champions the use of some forward-looking demand signals, rather than hailing POS data as the all-mighty. Rounding out the JBF Summer 2010 issue, Sara Brumbaugh, the founder of Ceres Analytics, gives a very in depth view on how to use marketing data to strengthen forecasts. It is a must read. The final piece, by Jack Malehorn takes a look at the domestic economic outlook, sharing forecast figures from top US economists on GDP, inflation and other key macroeconomic variables which are key forecast drivers.

It sounds pretty much like the same solid publication you’ve seen all these years, right? Well where the cutting edge educational content is concerned it is, and then it isn’t. It’s actually pretty. Smart and pretty, a killer combo. The new design and color layout help make the journal a bit livelier and easier to read. Even I can admit that reading through concepts like regression analysis, MAPE and inventory levels can be dry at times. My favorite update is the expanded Executive Summary at the beginning of each major article. It gives a nice high-level view of what’s in store so you can bookmark the article for later. There’s also info on upcoming events and online training with reminders to stay connected with social media and get involved.

IBF continues to be a leader. Not just in demand planning and forecasting, but as seen with the updated JBF and social media efforts, it is now serving as a true role model for organizations that strive to adapt and stay relevant. I look forward to continuing watching the IBF grow and help me grow professionally as well. What will the next 30 years of IBF look like? I can’t wait to find out.

Maria E Simos
CEO
e-forecasting.com

View A Preview of the JBF With It’s New Face Lift