Goodyear Makes a Case for Demand-Driven S&OP
The implementation of demand-driven S&OP is often a daunting task for even the most capable organizations. During a Web event on Jan. 19, 2010, executives from AMR Research and Goodyear gathered to talk about the benefits of becoming demand-driven and extending that philosophy to the S&OP process. Specifically, Ken Fletcher, director of Supply Chain Transformational Projects, shared Goodyear's story of its self-proclaimed "Advantaged Supply Chain" and their demand driven S&OP initiative. Despite an extremely turbulent market with the added pressure of a major tariff on imports, and the bankruptcy of two major customers, Goodyear has still been able to:
-Improve continued positive cash flow
-Reduce inventory by more than $1 billion
-Introduce 57 new products in the nine months YTD
-Increase market share and operating income over 2008
Also, Jane Barrett, AMR's Research Director, Value Chain Strategies, revealed how supply chain leaders have delivered "break-through" results by becoming demand-driven. Plus, Robert Burrows of the On-Point Group, defined demand-driven S&OP and the "how to's" of implementation for fast, highly effective achievement of benefits. Here are some more highlights from the Web event:
--AMR's Jane Barrett started the event by presenting findings from a 2009 S&OP study. The results indicate that S&OP is gaining steam as the recession closes, yet there are growing performance gaps, metrics remain a stumbling block and data accuracy and timeliness issues are causing pain. "The more a company does demand shaping, the more variability of demand this brings in. So, what kind of capabilities do you need to build on the backend to be agile or responsive to meet those demand variabilities?" asked Barrett, who stressed that there is a need for balance in the supply chain while sales people are out shaping demand and promoting. Barrett also covered the business benefits of S&OP, process definition changes, industry drivers and S&OP maturity, among other topics.
--"'Advantaged supply chain' is a strategic initiative here at Goodyear, and because it is a strategic initiative, it is clearly a top-down driven transformation. What I want to do today is speak to the role of the S&OP as it relates to our advantaged supply chain," Fletcher said in his opening comments during the Web event. Goodyear started its transformation by determining that S&OP would be the framework for how it improves business and makes tires efficiently. The company decided it didn't just want a traditional S&OP framework, but wanted what Goodyear calls a "Class A S&OP". This means "Moving into the arena to be able to describe how to connect our business strategy to execution and reinforce the behaviors in regard to closed-loop thinking. Then, clearly bringing in risk management from the standpoint of what could happen, along with a very formal rapid way of being able to identify issues and get them escalated to the right levels," explained Fletcher.
--Rounding out the Web event, Robert Burrows of the On-Point Group gave his point of view on implementing a demand driven S&OP process for success. Burrows revealed five steps that can help during the change management process including: set up a team (establish a team vision); map "as is" (how many do you have?); discover "to be" (moving out of the box); plan transition (help us help you); and manage implementation (working the plan). Burrows also defined the tools needed to accomplish each step of the change management process. "The benefits of going to a demand-driven S&OP are great. The task can be made less daunting by using several key tools," he said.
To listen to this event in its entirety, click here.
-Improve continued positive cash flow
-Reduce inventory by more than $1 billion
-Introduce 57 new products in the nine months YTD
-Increase market share and operating income over 2008
Also, Jane Barrett, AMR's Research Director, Value Chain Strategies, revealed how supply chain leaders have delivered "break-through" results by becoming demand-driven. Plus, Robert Burrows of the On-Point Group, defined demand-driven S&OP and the "how to's" of implementation for fast, highly effective achievement of benefits. Here are some more highlights from the Web event:
--AMR's Jane Barrett started the event by presenting findings from a 2009 S&OP study. The results indicate that S&OP is gaining steam as the recession closes, yet there are growing performance gaps, metrics remain a stumbling block and data accuracy and timeliness issues are causing pain. "The more a company does demand shaping, the more variability of demand this brings in. So, what kind of capabilities do you need to build on the backend to be agile or responsive to meet those demand variabilities?" asked Barrett, who stressed that there is a need for balance in the supply chain while sales people are out shaping demand and promoting. Barrett also covered the business benefits of S&OP, process definition changes, industry drivers and S&OP maturity, among other topics.
--"'Advantaged supply chain' is a strategic initiative here at Goodyear, and because it is a strategic initiative, it is clearly a top-down driven transformation. What I want to do today is speak to the role of the S&OP as it relates to our advantaged supply chain," Fletcher said in his opening comments during the Web event. Goodyear started its transformation by determining that S&OP would be the framework for how it improves business and makes tires efficiently. The company decided it didn't just want a traditional S&OP framework, but wanted what Goodyear calls a "Class A S&OP". This means "Moving into the arena to be able to describe how to connect our business strategy to execution and reinforce the behaviors in regard to closed-loop thinking. Then, clearly bringing in risk management from the standpoint of what could happen, along with a very formal rapid way of being able to identify issues and get them escalated to the right levels," explained Fletcher.
--Rounding out the Web event, Robert Burrows of the On-Point Group gave his point of view on implementing a demand driven S&OP process for success. Burrows revealed five steps that can help during the change management process including: set up a team (establish a team vision); map "as is" (how many do you have?); discover "to be" (moving out of the box); plan transition (help us help you); and manage implementation (working the plan). Burrows also defined the tools needed to accomplish each step of the change management process. "The benefits of going to a demand-driven S&OP are great. The task can be made less daunting by using several key tools," he said.
To listen to this event in its entirety, click here.