Sales & Operations Planning

1 S & OP @ Nike / Eindhoven University / 17 November 2010

Sales & Operations Planning
Paolo Polla / Lisa Cavaliere
November 17
th
Video 1
2 S & OP @ Nike / Eindhoven University / 17 November 2010
1971.from a van
Product design/development in World
Headquarters: Beaverton, Oregon, USA
$19.4b vs. $27b in 2015
Worldwide Employees: +/- 34.400
Geographies:
North America
Western Europe
CEE
China
Japan
Emerging Markets
1971.from a van
Product design/development in World
Headquarters: Beaverton, Oregon, USA
$19.4b vs. $27b in 2015
Worldwide Employees: +/- 34.400
Geographies:
North America
Western Europe
CEE
China
Japan
Emerging Markets
3 S & OP @ Nike / Eindhoven University / 17 November 2010
Sales/Marketing offices across
Europe and Middle East
European Headquarter in Hilversum
Hilversum Employees: 1400
Sales/Marketing offices across
Europe and Middle East
European Headquarter in Hilversum
Hilversum Employees: 1400
Nike Europe at a glance
$5 billion Net Revenues (combined Product Engines)
Three Dimensions
3 Product Engines: Footwear, Apparel, Equipment
8 Categories: Football, Running, Nike Sportswear, Womens
Training, Kids, Action Outdoor, Basketball, Athletic Training
13 Territories
4 S & OP @ Nike / Eindhoven University / 17 November 2010
1 Distribution Center
3 Satellite DCs
One supply chain / two GEOs
Product life cycle 3-6 months (4 seasons)
S&OP at Nike
5 S & OP @ Nike / Eindhoven University / 17 November 2010
S&OP at Nike
Global S&OP Meeting Structure
SER
SENIOR S&OP
GEO
decision making
GLOBAL
decision making
SUPPORTING S&OP
High Level Structure
6 S & OP @ Nike / Eindhoven University / 17 November 2010
GEO
preparation
FUNCTIONAL MEETINGS
S&OP PREMEETINGS
SUPPORTING S&OP
Product
Engine
Category Territory
Leveraging Value Chain Thinking
Product
Mgt
LEG 1
Forecast
Sell & Buy
LEG 2
Source &
Make
LEG 3
Deliver &
Order Mgt
LEG 4
Retail &
Consumer
LEG 5
Flow of product, information & cash starting when a new product is conceived & ending
when the consumer buys at retail (& season cleaned up).
Seasonal
Clean-up
LEG 6
7 S & OP @ Nike / Eindhoven University / 17 November 2010
Traditional Supply Chain
Value Chain
AVAILABLE
PROFITABLE
WINNING AT THE MOMENT OF
TRUTH when & where the consumer
shops
S&OP in Europe
8 S & OP @ Nike / Eindhoven University / 17 November 2010
S&OP in Europe
S&OP within Nike
Nike
Product Engine
(Prod. Creation,
Demand Plan)
Finance
Retail, Sales &
Marketing
Participants
Customer
Operations
Goods Flow
Planning
S
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EMEA
S&OP
9 S & OP @ Nike / Eindhoven University / 17 November 2010
Performanc
e metrics
Nike
Strategy
& (Ops / Finance)
Targets
Demand &
Forecasting
Coverage
Inventory
position/
capacity
Objectives
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S&OP Meeting Structure Europe
S&OP S&OP S&OP S&OP
Senior S&OP
Western
Europe
Senior S&OP
Central & Eastern
Europe
Corporate SER
(Seasonal Execution
Review)
S&OP
10 S & OP @ Nike / Eindhoven University / 17 November 2010
Pre
Meeting
Demand &
Supply
P
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Pre
Meeting
Demand &
Supply
Pre
Meeting
Deliver
Pre
Meeting
FY Alignment
Pre
Meeting
Retail FOS
Apparel
S&OP
Footwear
S&OP
Equipment
S&OP
Category
S&OP
Territory
S&OP
S&OP Pre-meeting Decision
Pre
Meeting
Demand &
Supply
Pre
Meeting
Deliver
Confirm operational
capability (short, mid and
long range)
Confirm inbound and
outbound flows
Decide direct ship targets
and minimums
Identify SKU clean up actions
Buy risk
Alignment on growth %
Alignment on buy
assumptions
Align at once and close
out forecast with projected
supply
Decide A/F strategy
11 S & OP @ Nike / Eindhoven University / 17 November 2010
Pre
Meeting
FY
Alignment
Pre
Meeting
Retail FOS
Identify channels for close
out liquidation
Decide Retail FOS specific
buys
Agree discounts
Identify early price reduction
Agree contract cancellations
and clean up
Identify FY risks/opportunities
Alignment country financial
submission with S&OP plan
S&OP Example Agenda
PRODUCT MANAGEMENT
FA11 SKU growth, productivity and ASP assumptions
Agree product offering - spread over season
Global product allocation
FORECAST, SELL & BUY
SU11 S&OP number aligned on supply and demand
SU11 Align on Buy Risk for Season
FA10 Mid Range capacity planning based on projections
SU11 Review Negative Sales Actuals and align on forecast for future seasons
SOURCE & MAKE
HO10 & SU11 A/F strategy
FY11-FY13 factory capacity vs. growth
DELIVERY AND ORDER MANAGEMENT
HO10 holds and contract management
Forecast, Sell
& Buy
LEG 2
Source &
Make
LEG 3
Delivery &
Order
Product Mgt
LEG 1
12 S & OP @ Nike / Eindhoven University / 17 November 2010
Follows cadence of working from future decision making back into operational decisions
Agenda points reflect decision points needing to be reviewed within calendar month agenda
Inclusion of decision making on future seasons will require close contact with global PE
HO10 holds and contract management
Inventory Re-alloaction for FA10
IB/OB flow planning: sign off on SP11 assumptions. Highlight risks & actions
RETAIL AND CONSUMER
Review FA10 G2N performance and create action plan
HO10 inventory account cover: issues &opportunities
SEASONAL CLEAN UP
SU10 (and prior) inventory review and liquidation strategy
FA10 Dynamic life cycle
Order
management
LEG 4
Retail and
Consumer
LEG 5
Seasonal
Clean up
LEG 6
Industry S&OP: The Benefits
36%
38%
42%
50%
56%
56%
Determining procurement requirements
Determining outsourced manufacturing
Improving asset utilization
Reduction of Inventory
Improving forecast accuracy
Increasing revenue
13 S & OP @ Nike / Eindhoven University / 17 November 2010
26%
30%
30%
32%
32%
34%
Developing & executing demand shaping programs
Improvements in the perfect order
Improving logistics planning
Transportation & warehouse management
Capital planning & asset management
Improving new product launch
Source: AMR Research Source: AMR Research
Additional Benefits
Improved (financial) forecast accuracy
Cross functional support towards one goal
Clear escalation path and proactive issue resolution
Responsive to address issues
14 S & OP @ Nike / Eindhoven University / 17 November 2010
Improved customer satisfaction
Improved delivery performance
FY10 Achievements
Global
X-Geo Platform
(collaborate)
Geo 2 Geo support
(China/Japan/Europe)
Global S&OP summit X-
Geo alignment on
decision matrix, KPI
Europe
Evolved PE S&OP
forums (incl. EQ)
Senior S&OP forums
reflecting Geo focus
Maturity assessment
for Europe conducted
S&OP pre-meetings
Process Excellence
Merchandizing inclusion
in S&OP expanded
horizon
S&OP tools revised to
support Cyclical
alignment and
improvements
15 S & OP @ Nike / Eindhoven University / 17 November 2010
decision matrix, KPI
sets and definitions (6
legs)
Best practice sharing
forum
Establish escalation
path to Global S&OP
(SER)
S&OP pre-meetings
implemented
Category S&OP
(Football)
Reflection of category
lens in S&OP processes
FACE implementation
in ELC
improvements
Successful Year-End
planning & execution
Knowledge library
established
FFP to CPM requirements
mapping
External benchmarking
Maturity Assessment Example:
Decision making
Decision making average ranking no reply
What is the main focus in your meeting? 3.9 Info sharing Decision making 0
How effective is the S&OP forum with regards
to decision making?
3.6 Not effective Very effective 0
How structured is your current meeting
framework in supporting decision making?
3.9 Ad hoc
Structured in line with dates
and gates
0
Is the right audience present for decision
making?
4.4
Audience varies and
not structured
Right audience defined for
each meeting
0
Do you use 'what-if scenarios' to facilitate
decision making?
3.0 Not at all All the time 0
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0
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3
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7
3
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3
6
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6
9
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9
6
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0
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3
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1
1
4
3 4
8
+
Decision making average no reply ranking
1 2 3 4 5 6
16 S & OP @ Nike / Eindhoven University / 17 November 2010
3.9 Info sharing Decision making 0
3.6 Not effective Very effective 0
3.9 Ad hoc
Structured in line with dates
and gates
0
4.4
Audience varies and
not structured
Right audience defined for
each meeting
0
3.0 Not at all All the time 0
Overall rating - Decision making
3.8
Is the right audience present for decision
making?
Do you use 'what-if scenarios' to facilitate
decision making?
What is the main focus in your meeting?
How effective is the S&OP forum with regards
to decision making?
How structured is your current meeting
framework in supporting decision making?
IB NE F
IT
UK AGS
IT IB
N
F UK AGS
IB NE F UK AGS
IT
UK AGS / F
IB
IT
NE
AGS
IB
F IT UK NE
1 2 3 4 5 6
IT
NE
F
UK AGS IB
Video 2
17 S & OP @ Nike / Eindhoven University / 17 November 2010
Questions?
18 S & OP @ Nike / Eindhoven University / 17 November 2010
Questions?