Bridging tactical S&OP and

operational execution
Sales & Operations Execution: Bridging tactical S&OP and operational execution

Contents

Introduction 03
Our approach to S&OE implementation 05
> Fundamentals 05
> Process design 07
> Enabling tools 08
> Process deployment 09
Our company & qualifications 11

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Sales & Operations Execution: Bridging tactical S&OP and operational execution

Is your Sales and Operations Planning (S&OP) process

mature and thorough enough to generate a solid
tactical plan? Or, are short-term issues and
operational details forcing you dedicate precious time
and energy to fighting “fires” and resolving problems
caused by deviations between the S&OP plan and
what should be executed?
The concept of “Sales and Operations Execution” or “S&OE” is not new; it was introduced
several years ago by Gartner, the global research and advisory firm. It came about since
many companies that have implemented an S&OP process for planning and decision-
making at a tactical level still struggle to make those plans meaningful and drive
operational planning within a shorter horizon (i.e., the horizon that falls between tactical/
operational planning and execution). The struggle stems from neither S&OP nor
operational planning being designed to process relevant information, manage issues, or
take required actions in this in-between horizon.

The purpose of S&OE is to eliminate this disconnect. S&OE complements the existing
planning process structure and brings discipline to information exchange and decision-
making to bridge S&OP and operations. Similarly to how S&OP is implemented, putting
S&OE into action requires you to run an initiative for additions and changes to planning
processes, the data model, meeting cadence, and IT systems. A good amount of change
management also is necessary to adopt S&OE, while simultaneously adjusting your S&OP
process to abandon decisions and tasks that should no longer fall under it.

By introducing S&OE, you will remove the chains from S&OP and allow the process to
concentrate on its primary task—providing a tactical plan of quality that bridges tactical
and operational levels with a process specifically designed for that purpose.

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Sales & Operations Execution: Bridging tactical S&OP and operational execution

Figure 1. The relationship between S&OP, S&OE, and Operational Planning & Execution

Operational S&OE S&OP

planning and
execution

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Sales & Operations Execution: Bridging tactical S&OP and operational execution

Our approach to S&OE

implementation
As with S&OP process design, you should begin designing your
S&OE process with the fundamentals needed to create an end-to-
end workflow before proceeding into the details of each sub-
process, data model, or logic of data processing.

S&OE fundamentals
Within Chainalytics’ approach, Fundamentals are the core building blocks tying the end-to
-end S&OE process together and connecting it to surrounding processes—mainly S&OP
and operational planning and execution (as depicted in Figure 1).

Design of the core S&OE Fundamentals defines answers to the following questions:

 What are the decisions required from S&OE? S&OE is the process used to distribute the
latest monthly S&OP plan down to a weekly plan to identify and act on deviations between the
latest S&OP plan and operational details. These decisions help define the business logics
needed to make the S&OP plan actionable by bringing it down to more granular level and,
more importantly, defining business rules for criteria and thresholds for spotting significant plan
vs. actual deviations and the resulting actions you should take.

 What are the S&OE inputs and outputs? Outputs (i.e. plans and decisions from S&OE) can
be actions and alerts to be looked into and executed on by human organization as well as data
that is fed into other processes and related IT systems. Each output requires a definition to
make it actionable by its receiver. Input definitions including input sources are created based
on requirements by outputs.

 What is the S&OE horizon? Being a tactical planning process, the decisions made within
S&OP are implemented during the tactical planning horizon. Where the S&OP horizon begins,
that is where the S&OE horizon ends (as shown in Figure 2). The exact timing of your S&OE
horizon should be determined by your business needs. It can begin immediately or, using
many manufacturing businesses as an example, the end of the frozen production period.

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Sales & Operations Execution: Bridging tactical S&OP and operational execution

Figure 2. Typical planning horizons and time buckets

Operational
planning and
execution S&OE S&OP

Horizon Days Up to 3-4 months Up to 12-18 months

Time Bucket Day/shift Week Month

 How should the data hierarchies be set? For S&OP, a design already exists for planning
hierarchies that enables users to access the right level of detail of planning data for their
purpose. Typically it is the various levels of customer, company organization, and product data
that are organized into the hierarchical structure. In S&OP design, these levels and their
content were defined to serve the needs of tactical planning. Since S&OE provides a more
detailed planning result, the definitions of planning hierarchies from S&OP design need to be
revisited and complemented to ensure the needed level of granularity as shown below in
Figure 3.

Figure 3. Example planning hierarchies

Year Company All Products

Business Unit
Channel
Quarter
Product Area
Region
Month Product Family
Sub-Region
Product Group
Week
Country Product Code
Day Customer Material Code

Time Customer/Geography Product

S&OP S&OE Operational Planning & Execution

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Sales & Operations Execution: Bridging tactical S&OP and operational execution

S&OE process design

Having defined the S&OE fundamentals, the next step is to create the design for the
S&OE process. Given the planning horizon, S&OE reads the S&OP plan in monthly
buckets, mixes it with operational data and comes up with the best possible S&OE plan
when considering the resource reservations set by S&OP.

S&OE process design helps answer the following questions:

 How do we design the weekly process to maintain S&OE plan? To cover the S&OE
horizon at a weekly level, there is a need for a reoccurring, weekly S&OE process to review,
decide and perform actions that convert the tactical plan into the model serving as the basis for
decision on the S&OE plan. The S&OE process workflow defines the steps to providing visibility
at the right level, assembling the right people, and utilizing the appropriate IT systems for data
processing and decision-making. The S&OE Calendar is defined for timely execution of process
tasks.

 Which deviations should trigger event-based process? To complement the weekly S&OE
process, event-based triggering actions should be identified in order to react to such deviations
that cannot wait for the next S&OE cycle but require immediate actions once discovered. For
example, an unexpected close delivery date of a large sales order can trigger the transfer of
material stock from one factory to the delivery facility within the supply network or setup of
additional shifts at the production line. These actions take time to complete and thus must be
initiated without delay. An event-based S&OE process requires definitions for criteria and
thresholds which determine when the process should be triggered as “event-based.”

 Who needs to participate in S&OE? Process design requires identifying and defining who is
responsible for what, also known as S&OE process roles. While S&OP involves people from
mid-management and those in the VP level for tactical decision-making, S&OE is typically
conducted by the planning teams and operational managers involved in sales and supply
functions. These individuals are mandated to make quick and informed decisions. Only when
issues of a greater significance arise is escalation made to higher management.

 How do we transform plans from S&OP to S&OE? S&OE requires more granularity in data
hierarchies than S&OP. Additional hierarchy levels create a need for additional data logics to
map the S&OP plan to the transactional data coming from operations to understand if supply
chain operations are achieving the levels planned for by S&OP, and if not, how significant the
deviations are and where they occur.

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Sales & Operations Execution: Bridging tactical S&OP and operational execution

S&OE enabling tools

Implementation of S&OE to accompany S&OP will create new requirements for IT tools.
However, selection of a tool to run S&OE operationally is not a top priority of the to-do
list as long as you have not completed the validation of the S&OE Fundamentals and
Process Design, resulting in clearly stated requirements for IT.

 What tools do I need to support the S&OE process design? The S&OE design and
development phases call for agility and flexibility from IT. From the very beginning, there is a
need for a tool to conduct data modeling, and Excel often works well for this purpose.
However, to organize data imported from operational, S&OP and potentially other
complementary sources, the need for a proper data management, data processing and
visualization systems may emerge. Such systems, i.e. a modeling system, may have already
been implemented for S&OP. A modeling system should enable agility for iterative
development of an S&OE model. Recommended IT tools include database software, workflow
tools for automated data processing and business intelligence software for analytics and
visualization.

 Do I need an application specifically designed for S&OE? Together with the growth in
deployment scale and level of S&OE maturity needs for collaboration and integration across
business functions emerge. There are S&OP software suites in the market that are based on a
single data model and have the functionality for S&OP and operational planning integration. If
your organization uses such software, it would be logical to assess its capabilities to support
your S&OE process. In case your S&OP software does not have what your S&OE process
requires, you may also explore the possibilities by making use of the modeling system through
an extension of its functionality to support operational S&OE process.

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Sales & Operations Execution: Bridging tactical S&OP and operational execution

S&OE process deployment

Figure 4. Chainalytics S&OE deployment methodology

Assess current Design Design S&OE Deploy S&OE

Develop solution
end-to-end planning fundamentals process

Interview Define changes Define detailed Develop

processes Deploy pilot
stakeholders to S&OP supporting IT tools

Review Define S&OE Define roles and

responsibilities Educate people Deploy globally
performance fundamentals

Conduct data Define data

analysis requirements

Project and change management

A high-level overview of Chainalytics’ S&OE deployment methodology is depicted in

Figure 4 above. Specific considerations include:

 How do we set the scene for an S&OE implementation project—i.e., what should be put
into a project charter? A project charter consisting of project definition, objectives, in-scope
and out-of-scope items, stakeholders, timeline, budget etc. typically reflects the current state of
the S&OP in a company. In the event today’s S&OP process truly exists for the sake of tactical
planning for visibility and decision-making in the S&OP horizon (illustrated in Figure 2), the
mission of an S&OE implementation project will be placing the S&OE process neatly into its slot
between S&OP and operational planning and execution to bridge these two (refer to Figure 1).
Unfortunately, this project scenario is not very common.

In a more likely implementation scenario, the starting point is essentially the ultimate reason for
the existence of S&OE. S&OP has mainly come to focus on near-term horizon, plans and
decisions that are mostly related to current issues instead of operating as the tactical process
originally intended. Furthermore, operational firefighting and ad-hoc activities outweigh the
originally designed objectives and process structure. An S&OE implementation project charter
will consist of scope items and tasks that are needed, not only to integrate S&OE to
surrounding processes, but also redesign the entire integrated planning process from tactical to
operational planning, including injection of execution details back in the process.

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Sales & Operations Execution: Bridging tactical S&OP and operational execution

Successful deployment of S&OP and S&OE calls for a strong emphasis on change
management. These processes exist to provide uniform structure for fact-based decision-
making and actions taken thereof that require alignment globally across business
functions. It goes without saying that sustainable deployment, as well as an abandonment
of old ways of working, entail a great deal of support and sponsorship after the initial
implementation. This support and supervision needs to be included in project charter.

Chainalytics’ experts have helped companies implement integrated planning processes

for over 20 years. That experience, together with a solid implementation methodology,
covers all phases of getting S&OP and S&OE up and operational. Chainalytics’ experts
can help in all phases of a project, from the initial value and maturity assessment to
process design, solution implementation and continuous support.

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Sales & Operations Execution: Bridging tactical S&OP and operational execution

Our company &

S&OP qualifications
bright minds
better methods
best outcomes
Maximizing the value of supply chain to the enterprise through fact-based
transformation using the brightest minds and a combination of innovative
and proven methods.
Chainalytics is a recognized global leader Our specialties include supply chain
in supply chain consulting, analytics, and design, sales and operations planning
market intelligence. (S&OP), logistics operations,
transportation, service supply chains, and
Our mission is simple: To help companies packaging optimization.
capture the maximum value from their
supply chain. With end-to-end supply With locations in North America, Europe,
chain expertise, we support supply chain and Asia-Pacific, we help companies
transformation at every planning horizon – around the globe accelerate fact-based
strategic, tactical, and operational – and transformations in a borderless fashion.
across multiple domains.

Our approach is unique: We combine

decades of experience with leading-edge
analytics and market intelligence to
provide proven methods and the
actionable insight necessary to help
organizations stay at the forefront of
changing trends and practices across all
areas of the supply chain.

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Sales & Operations Execution: Bridging tactical S&OP and operational execution

Our services

Analytics is at the core of everything Diagnostics &

Roadmapping
Cost-to-Serve/
Product & Customer

Chainalytics does; it’s in our DNA.

Profitability

Strategic
Supply Chain
Our services include the categories of Alignment
Network
Design
strategy and transformation, process Analytics

excellence, and enabling technology,

Integrated
Demand & Packaging
Supply Optimization
spanning all major supply chain domains Planning

— from strategic alignment and customer Transportation

Sourcing &
segmentation to packaging optimization Supplier Management

and reverse logistics.

Logistics Operations

Three delivery models are available:

(1) consulting, (2) managed analytics, and
(3) market & performance intelligence.

Expertise behind supply chain headlines

Dunkin’ Donuts saves $114 million Kimberly-Clark’s journey to

thanks to SCM cooperative” logistics procurement excellence”
— Supply Chain Digital — Logistics Viewpoints

Coca-Cola consolidates U.S. Energizer Holdings’ new blister

bottlers” brings benefits throughout supply
— Atlanta Business Chronicle chain”
— Packaging World
Kellogg Co. outlines plans for
financial savings from D.S.D. exit”
— Food Business News

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Sales & Operations Execution: Bridging tactical S&OP and operational execution

Our unique qualifications

Chainalytics is uniquely qualified to support your organization in your S&OP and S&OE
journeys. Our team combines the right blend of required experience, seniority, and
technical skills, and our global network of experts provide a deep bench of local/region
specific knowledge as well as subject matter expertise.

In addition to top talent, our company is distinct in the following ways:

Real-life planning experience Proven methodologies

1 Chainalytics has strong supply chain
4 Our proprietary segmentation
planning experience with a thorough approach and deep expertise in
understanding of planning concepts advanced analytics and
and processes. It gives us both an benchmarking ensures the right level
“inside out” and “outside in” of planning detail is applied to the
perspective. right segments of demand.

Deep manufacturing Blended capabilities

2 experience 5 Our overall expertise blends the best
Our company has world-class of process excellence, data-driven
industry knowledge and experience analytics, and systems
assisting CPG, Food & Beverage, and implementation to drive
other manufacturing clients with end- improvement and value.
to-end supply chain transformations.

Speed to value Global presence

3 Our team can leverage proven
6 Highly-qualified, dedicated teams
experience, frameworks, and wide range of experts with global
methodologies, and standards to coverage including offshore data
help clients make the right decisions analytics and solution support in
in a shorter amount of time. India.

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About Chainalytics Bright minds. Better methods. Best outcomes.

Chainalytics accelerates fact-based transformation spanning the entire planning horizon for supply chain
leaders around the globe, including 18 of Gartner’s Top 25 supply chains. Our peer-to-peer collaboration
and market intelligence platforms enable our clients to achieve industry-specific insights quickly. Our
mission is simple: To help companies reveal the maximum value from their supply chains. With locations in
North America, Europe, and Asia-Pacific, Chainalytics serves companies globally in a borderless fashion.

NORTH AMERICA EUROPE ASIA-PACIFIC

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