The Journey to World Class S&OP at Heineken - Supply Chain ...
The Journey to World Class S&OP at Heineken - Supply Chain ...
The Journey to World Class S&OP at Heineken - Supply Chain ...
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© 2010 <strong>Supply</strong> <strong>Chain</strong> Council. ALL RIGHTS RESERVED. | <strong>Heineken</strong> S&<strong>OP</strong> | Slide 1 | 28 Oc<strong>to</strong>ber 2011<br />
<strong>The</strong> <strong>Journey</strong> <strong>to</strong> <strong>World</strong> <strong>Class</strong> S&<strong>OP</strong> <strong>at</strong><br />
<strong>Heineken</strong><br />
Johan Smits (<strong>Heineken</strong>) and Michael English (Deloitte)
Introductions<br />
Johan Smits<br />
Global S&<strong>OP</strong><br />
Program Manager<br />
<strong>Heineken</strong><br />
Michael English<br />
Senior Manager<br />
Deloitte<br />
• 2010 – Led the Group Purchasing NPR<br />
change programme for WER<br />
• 2006 - Head of <strong>Supply</strong> <strong>Chain</strong><br />
Management and Planning for the<br />
<strong>Heineken</strong> Netherlands <strong>Supply</strong><br />
organiz<strong>at</strong>ion<br />
• 2000 - Led the <strong>Heineken</strong> Group<br />
Programme office mand<strong>at</strong>ed <strong>to</strong> drive<br />
company wide change programmes<br />
• Pre-2000 - Consulting FMCG<br />
experience<br />
• Focused on delivering Global<br />
transform<strong>at</strong>ion programs in the<br />
Consumer Packaged Goods industry<br />
• Extensive <strong>Supply</strong> <strong>Chain</strong> Str<strong>at</strong>egy and<br />
Planning experience<br />
• Areas of experience include:<br />
• Sales and oper<strong>at</strong>ions planning<br />
• Trade Promotion Optimiz<strong>at</strong>ion<br />
• <strong>Supply</strong> chain str<strong>at</strong>egy<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> Council. ALL RIGHTS RESERVED. | <strong>Heineken</strong> S&<strong>OP</strong> | Slide 2 | 28 Oc<strong>to</strong>ber 2011
Objective<br />
• About <strong>Heineken</strong><br />
• <strong>The</strong> Challenge<br />
• <strong>The</strong> Opportunity<br />
• <strong>The</strong> Solution<br />
• <strong>The</strong> Change Management Risks<br />
• <strong>The</strong> Results<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> Council. ALL RIGHTS RESERVED. | <strong>Heineken</strong> S&<strong>OP</strong> | Slide 3 | 28 Oc<strong>to</strong>ber 2011
About <strong>Heineken</strong><br />
• #1 European Brewer<br />
• #2 Global Brewer from a revenue perspective<br />
• #3 Global Brewer from a volume perspective<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> Council. ALL RIGHTS RESERVED. | <strong>Heineken</strong> S&<strong>OP</strong> | Slide 4 | 28 Oc<strong>to</strong>ber 2011
About <strong>Heineken</strong><br />
140 breweries in > 70 countries<br />
> 75,000 employees<br />
Group Beer Volume*: 192 million hl (2010)<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> Council. ALL RIGHTS RESERVED. | <strong>Heineken</strong> S&<strong>OP</strong> | Slide 5 | 28 Oc<strong>to</strong>ber 2011
<strong>The</strong> Challenge: Changing Market Dynamics<br />
Market<br />
• Western European and US markets are<br />
stabilizing with limited <strong>to</strong> neg<strong>at</strong>ive organic<br />
growth<br />
• Emerging markets have growth potential<br />
based on increased popul<strong>at</strong>ion wealth<br />
Competition<br />
• Top 4 brewers are not using economies of<br />
scale from acquisitions <strong>to</strong> reduce prices but <strong>to</strong><br />
increase margins<br />
• Acquisitions mainly take place in emerging<br />
markets with several candid<strong>at</strong>es still available<br />
• Str<strong>at</strong>egic differenti<strong>at</strong>ion <strong>at</strong> competi<strong>to</strong>rs<br />
continues <strong>to</strong> focus on new products and<br />
premium brands<br />
Consumer<br />
• Changing consumer preferences with<br />
increased focus on:<br />
‒ Health & wellness with low calorie drinks<br />
‒ Sustainable products (and development)<br />
‒ Increased <strong>at</strong> home consumption<br />
‒ Price (conscious consumers)<br />
‒ (Personalized) marketing<br />
Products and Channels<br />
• Consolid<strong>at</strong>ion and globaliz<strong>at</strong>ion of retailers<br />
results in increased price pressure for brewers<br />
• Increased convergence, or blending of<br />
industries, is observed in the beverage sec<strong>to</strong>r<br />
• Consolid<strong>at</strong>ion of brewers has increased<br />
their bargaining power and lowered their<br />
overall costs<br />
Source: Deloitte Consumer 2020 Research<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> Council. ALL RIGHTS RESERVED. | <strong>Heineken</strong> S&<strong>OP</strong> | Slide 6 | 28 Oc<strong>to</strong>ber 2011
<strong>The</strong> Opportunity: Business Synchroniz<strong>at</strong>ion<br />
Str<strong>at</strong>egic Business<br />
Plan<br />
Financial<br />
Business Plan<br />
€<br />
€<br />
<strong>Supply</strong> <strong>Chain</strong> Plan<br />
Sales Business Plan<br />
#<br />
#<br />
€<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> Council. ALL RIGHTS RESERVED. | <strong>Heineken</strong> S&<strong>OP</strong> | Slide 7 | 28 Oc<strong>to</strong>ber 2011
<strong>The</strong> Solution: S&<strong>OP</strong> Overview<br />
3 Year<br />
Str<strong>at</strong>egic Plan<br />
Monthly S&<strong>OP</strong> Cycle<br />
Weekly Planning Cycle<br />
Annual Plan<br />
(<strong>OP</strong>) and LEprocess<br />
Committed<br />
Demand Plan<br />
Step 2: <strong>Supply</strong><br />
Review<br />
Unresolved<br />
Issues<br />
Draft S&<strong>OP</strong> Plan:<br />
Demand, <strong>Supply</strong><br />
and Inven<strong>to</strong>ry Plans<br />
Montly S&<strong>OP</strong><br />
Cycle<br />
Step 1: Demand<br />
Review<br />
Gap Analysis<br />
Resources<br />
KPI Dashboards<br />
Step 3:<br />
Alignment<br />
Meeting<br />
Demand &<br />
<strong>Supply</strong> Meeting<br />
Scenarios<br />
Weekly<br />
Planning Cycle<br />
Revised marketing<br />
programs or changes <strong>to</strong><br />
any other demand<br />
drivers<br />
Unresolved Issues<br />
and Scenarios for<br />
resolution<br />
Proposed S&<strong>OP</strong><br />
Plan<br />
Daily<br />
Scheduling<br />
Committed S&<strong>OP</strong><br />
Plan<br />
Step 4: S&<strong>OP</strong><br />
Mgt Review<br />
Meeting<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> Council. ALL RIGHTS RESERVED. | <strong>Heineken</strong> S&<strong>OP</strong> | Slide 8 | 28 Oc<strong>to</strong>ber 2011
<strong>The</strong> Solution: Objectives<br />
• Establish full collabor<strong>at</strong>ion between sales, marketing,<br />
finance and supply chain<br />
• Ensure long term process sustainability<br />
• Focus on achieving bot<strong>to</strong>m line benefits<br />
• Simplify <strong>to</strong>day‟s process as opposed <strong>to</strong> add complexity<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> Council. ALL RIGHTS RESERVED. | <strong>Heineken</strong> S&<strong>OP</strong> | Slide 9 | 28 Oc<strong>to</strong>ber 2011
Systems<br />
Building Commercial<br />
Forecast<br />
NPI management<br />
and delistings<br />
Building St<strong>at</strong>istical<br />
forecast<br />
Performance<br />
Measurement<br />
Alignment with<br />
cus<strong>to</strong>mer<br />
Cus<strong>to</strong>mer / product<br />
insight<br />
Demand review process<br />
<strong>Supply</strong> review process<br />
Alignment demand and supply<br />
S&<strong>OP</strong> Management review meeting<br />
Alignment weekly process<br />
Systems<br />
Tactical Production<br />
planning<br />
Inven<strong>to</strong>ry<br />
management<br />
Capacity Planning<br />
Purchasing and<br />
Suppliers<br />
Planning with<br />
brewery<br />
Raw and packaging<br />
m<strong>at</strong>erial planning<br />
Quaility and visibility<br />
of s<strong>to</strong>ck<br />
<strong>The</strong> Change Management Risks<br />
Change Management Risks<br />
Mitig<strong>at</strong>ion Str<strong>at</strong>egy<br />
• Knowledge transfer from Consultants <strong>to</strong><br />
<strong>Heineken</strong><br />
• “Collabor<strong>at</strong>ive” project<br />
organiz<strong>at</strong>ion structure<br />
• Required investment<br />
• Tailored project approach<br />
based on M<strong>at</strong>urity Check<br />
• Development of “accelera<strong>to</strong>rs”<br />
Demand Process S&<strong>OP</strong> Process <strong>Supply</strong> Process<br />
• Local process acceptance<br />
• Decentralized investment<br />
responsibility<br />
• “Skin in the<br />
game”<br />
• Focus on simplific<strong>at</strong>ion<br />
• Expect<strong>at</strong>ion management risk: the Silver<br />
Bullet<br />
• Develop formal continuous improvement<br />
“Pillar”<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> Council. ALL RIGHTS RESERVED. | <strong>Heineken</strong> S&<strong>OP</strong> | Slide 10 | 28 Oc<strong>to</strong>ber 2011
<strong>The</strong> Results<br />
• Our <strong>Heineken</strong> / Deloitte collabor<strong>at</strong>ive, results-driven<br />
process works<br />
• More efficient decision making process<br />
• Gre<strong>at</strong>er focus on longer term horizon has reduced “fire<br />
fighting”<br />
• Proven bot<strong>to</strong>m line savings<br />
• „„Attractiveness” in the S&<strong>OP</strong> roles!<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> Council. ALL RIGHTS RESERVED. | <strong>Heineken</strong> S&<strong>OP</strong> | Slide 11 | 28 Oc<strong>to</strong>ber 2011
Examples<br />
Agenda Alignment Meeting<br />
S&<strong>OP</strong> Plan<br />
2011 S&<strong>OP</strong> Meeting Calendar<br />
JANUARY FEBRUARY MARCH<br />
M T W T F S S M T W T F S S M T W T F S S<br />
1 2 5 1 2 3 4 5 6 9 1 2 3 4 5 6<br />
3 4 5 6 7 8 9 6 7 8 9 10 11 12 13 10 7 8 9 10 11 12 13<br />
1<br />
2 10 11 12 13 14 15 16 7 14 15 16 17 18 19 20 11 14 15 16 17 18 19 20<br />
3 17 18 19 20 21 22 23 8 21 22 23 24 25 26 27 12 21 22 23 24 25 26 27<br />
4 24 25 26 27 28 29 30 28 13 28 29 30 31<br />
31<br />
APRIL MAY JUNE<br />
M T W T F S S M T W T F S S M T W T F S S<br />
1 2 3 1 22 1 2 3 4 5<br />
4 5 6 7 8 9 10 2 3 4 5 6 7 8 23 6 7 8 9 10 11 12<br />
14 18<br />
15 11 12 13 14 15 16 17 19 9 10 11 12 13 14 15 24 13 14 15 16 17 18 19<br />
16 18 19 20 21 22 23 24 20 16 17 18 19 20 21 22 25 20 21 22 23 24 25 26<br />
17 25 26 27 28 29 30 21 23 24 25 26 27 28 29 26 27 28 29 30<br />
30 31<br />
Summary of major issues<br />
JULY AUGUST SEPTEMBER<br />
M T W T F S S M T W T F S S M T W T F S S<br />
1 2 3 31 1 2 3 4 5 6 7 1 2 3 4<br />
27 4 5 6 7 8 9 10 32 8 9 10 11 12 13 14 36 5 6 7 8 9 10 11<br />
28 11 12 13 14 15 16 17 33 15 16 17 18 19 20 21 37 12 13 14 15 16 17 18<br />
29 18 19 20 21 22 23 24 34 22 23 24 25 26 27 28 38 19 20 21 22 23 24 25<br />
30 25 26 27 28 29 30 31 35 29 30 31 39 26 27 28 29 30<br />
Planning performance<br />
OCTOBER NOVEMBER DECEMBER<br />
M T W T F S S M T W T F S S M T W T F S S<br />
1 2 44 1 2 3 4 5 6 1 2 3 4<br />
3 4 5 6 7 8 9 45 7 8 9 10 11 12 13 5 6 7 8 9 10 11<br />
40 49<br />
41 10 11 12 13 14 15 16 46 14 15 16 17 18 19 20 50 12 13 14 15 16 17 18<br />
42 17 18 19 20 21 22 23 47 21 22 23 24 25 26 27 51 19 20 21 22 23 24 25<br />
43 24 25 26 27 28 29 30 48 28 29 30 52 26 27 28 29 30 31<br />
31<br />
Demand Review Meeting <strong>Supply</strong> Review Meeting S&<strong>OP</strong> Alignment Meeting<br />
S&<strong>OP</strong> Mgt Review Meeting Public Holiday<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> Council. ALL RIGHTS RESERVED. | <strong>Heineken</strong> S&<strong>OP</strong> | Slide 12 | 28 Oc<strong>to</strong>ber 2011
Johan Smits<br />
Global S&<strong>OP</strong><br />
Program Manager<br />
<strong>Heineken</strong><br />
Michael English<br />
Senior Manager<br />
Deloitte<br />
QUESTIONS?<br />
© 2010 <strong>Supply</strong> <strong>Chain</strong> Council. ALL RIGHTS RESERVED. | <strong>Heineken</strong> S&<strong>OP</strong> | Slide 13 | 28 Oc<strong>to</strong>ber 2011
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