Sales procedures in operational plan for construction industry

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okay so as I talked about two things the others Sales and Operations planning did everybody know what sales operations planning S&OP in fact raise your hand if you not sure what it is well that's excellent okay so I finished Rob they all know what it is I've got three minutes, alright. have a read so apart from the chuckle factor again from our experience in helping organizations there are lots and say they have S&OP there are very few they have a good S&OP process so perhaps I give you some hints on what a good S&OP process needs to include by way of analogy if you are going to conduct the Sydney Symphony Orchestra tonight what things would you need to do a successful job of it sorry you need a conductor yes it needs somebody up the front us hints are always in the slides right what else would you need sorry okay so let's take you've got musicians so we've got you're all my musicians you're all here today oh I'm here conducting what else do I need I'm gonna need some sheet music and you know what I'm gonna need the same sheet music for every one of you what happens if I give you different sheet music it's gonna be a disaster right I can't tell you the number of times we walk into businesses where people are working from a different set of numbers. You're laughing, it happens right? right I've got my own little spreadsheet over here that I trust and I like it's not part of the mainframe it's not but I trust that I'm going to use these numbers I can't tell you how many times you walk into businesses and the procurement managers looking at the sales forecasts saying what they can't do that they're not gonna sell I'm not gonna buy that they're not gonna sell it is that different sheet music yes different sheet music the fundamentals of an orchestra are no different to a business you've got to have a sheet music and everybody works off and while you'd be tired anybody that wants to play with their own sheet of music and you've got to have it why do you have to have a conductor you guys know how to play you're all professional musicians why can you just do your own thing sorry why do you need someone steering the ship you know how to play just go and play you've got the music hmm it's like herding cats yeah alright so some of you may want to play a little louder than the rest and it may not be the right blend than the right mix but you need somebody at the front to say that listen you play andante and you play fortissimo and and the blend you've got to have somebody making the ultimate decision about where you want the journey to go and of course in your business that's your your senior executive so there are various approaches components of S&OP I want to skip past that but this is the essence you concur yeah the red key it's a simple version I'm not sure that Tim's 100% right because it's a single version of what we think might happen which is not always the truth because what we forecast and what happens there's sometimes a big difference so Kay perhaps finish up with this this is the the process as we see it the only steps are essential so first of all S&OP is a cyclic process it starts at the beginning of a month you've got to have a statistical forecast you've got to have a demand plan as a starting point honor about working day two of each month that that needs to be produced the stat forecast is always going to be always going to be better than the manual forecast and better than a spreadsheet so you need some proper tools to be able to do that but that's just a stat forecast what a statistical forecast based on the rearview mirror it's what happened yesterday it's not a bad predictor of the future but it's not in isolation adequate so we have to add to that for example then what we suggest the companies is is go and check with your customers go and check with the retailers, during those meetings you may get told they're opening three new stores that you didn't know anything about were you being deranged or d-lister or are they're adding you need to get that IP you need to gather intelligence from your biggest customer so this is Pareto so you're not going to do this across every customer but you're absolutely going to do it for your big customers so you get that IP and overlay it against over your step forecast you then you then need to understand what your sales team are aware of in the marketplace that's the next level of input to creating this forecast and then understanding what's happening in the product space what new products you are launching what life cycle changes you're making all of that aggregates to around about day 11 with this critical meeting called the business demand review meeting there's purpose is what it's definitely to me consensus to meet consensus on sorry the phrase that we use is unconstrained demand so we just want the sales and marketing side of the business to tell us what they're gonna sell irregardless of whether we've got it or whether we have it if we had it can you sell it it's an unconstrained demand so this is like a relay race we're handing over a baton sales now hand over the baton to the operational side of the business so this side is all demand this side is all supply so they give it to us and they say we want this product in this quantity in this location for this customer can you do it what's our job get it done if if we can so our job is yes we can do it sleep easy you sell it we'll deliver it or Houston we've got a problem we can't get it in the quantity in the whatever and therefore it's our obligation to then say but here are the alternatives I cannae Ephrata can we substitute this product can we do and here's the cost associated with that let's make it then a decision on which way we go okay so that's the supply chain component that thing goes to the CFO because we need to know that financially it's the right plan it matches the budget we have the financial resources are not breaking banking covenants etc etc and then ran about day 20 or at the end of the month we then send that to the final review meeting which is where the conductor CEO and the exec team are able to say yes we're happy with this plan the future go and execute it and it's the only plan that you're authorized to execute or let's tweak the plan I'm not quite comfortable with it let's make some changes and then that tweaked plan is then the one that becomes one of the business drives here so in three minutes or less that's an S&OP summary then come down just want a question on that last diagram how often would you sort of go through that process see any 12-month period oh I know it's recycling but 12 monthly every month every month the only the only part of that that you wouldn't in some businesses go through monthly is the marketing plan because it may not be not dynamic enough to warrant it but most businesses it's every month okay the others so that questions mean you didn't understand a word of it but it was also plain and obvious you got lots out of it well then you're not happy No thank you very much I know you're extremely busy thank you