Michael Ryan, Carlisle Brake & Friction

IBF Business Planning & Forecasting, Orlando, FL

October 29, 2014

Implementing a Demand Planning

System from the Ground Up

Copyright © 2014 Carlisle Brake & Friction

2IBF: DP from the Ground Up ● October 29, 2014

CARLISLE INTERCONNECT

TECHNOLOGIESCARLISLE FOOD

SERVICESC A R L I S L E B R A K E

& F R I C T I O N

CARLISLE CONSTRUCTION

MATERIALS

Carlisle Companies (NYSE:CSL)

Overview

Diversified Manufacturing Conglomerate

Headquartered in Charlotte, NC

2013 Revenues: $2.9B

Public Company (CSL on NYSE)

3IBF: DP from the Ground Up ● October 29, 2014

Markets & Applications

4IBF: DP from the Ground Up ● October 29, 2014

Carlisle Brake & Friction

“Carlisle Brake & Friction is the first choice in innovative braking

and friction solutions for the world’s top manufacturers. Our

global manufacturing, sales and support networks ensure we

are there to serve and support our customer base, wherever

they may be.”Matt Dietrich, President CBF

5IBF: DP from the Ground Up ● October 29, 2014

Implementing Demand Planning from the Ground UpMapping the Path Forward

TechnologyPeople Process

6IBF: DP from the Ground Up ● October 29, 2014

What’s the Problem We’re Trying To Solve? Why?

Demand Planning as the Foundation of S&OP

S&OP Implementation Challenges

Choosing a Demand Planning Software Provider

Lessons Learned

The Path Forward with S&OP

Implementing Demand Planning from the Ground UpAgenda

7IBF: DP from the Ground Up ● October 29, 2014

S&OP will become “The Way We Work” at Carlisle Brake & Friction

Why “Do” S&OP?

Sales Perspective:

• Improved Supply

• Improved OTD

• Results in Sales Revenue

What’s In It For Me? (WIIFM)

Quantitative: It Can be Measured

The WIIFM of S&OPWhat’s in It For Me? Carlisle Brake & Friction?

Manufacturing Perspective:

• Improved Forecasts

• Improved Communication

• Results in Better Execution

From a Business Perspective:

• Support Reaching Our 2014 Global Sales Goal

• Demonstrate Capability to Customers as a Reliable and On Time Supplier

• More Efficient Use of Capital by Linking Production, Shipments and Inventory

8IBF: DP from the Ground Up ● October 29, 2014 8

Businesses utilizing S&OP realize measurable benefits

Supply Chain Insights LLC, Copyright © 2013

Cross-Industry Survey Linking S&OP to Business Results

What Benefits Can We Expect From S&OP?Benefits Received from an Effective S&OP Process

9IBF: DP from the Ground Up ● October 29, 2014

Why did we start an S&OP process?

• Wanted to add value to the business

• Be better suppliers for our customers

S&OP is…

• A Business Process

• Market based and customer driven

• Collaborative and cross-functional

• Metrics tracked; performance driven

• Tied to execution of strategic plans

• Process of continuous improvement

Why Did We Start an S&OP Process? What Motivated the Business?

Executive

S&OP

Product

Review

Demand

Review

Demand / Supply

Balance

Supply

Review

Integrated

Reconciliation

Closed Loop

Process

10IBF: DP from the Ground Up ● October 29, 2014

S&OP Implementation ChallengesRecognizing Barriers to Success

Challenges: People, Process, Technology

People

• Develop organizational resources to support S&OP implementation

• Drive change management for buy in and support

• Execute on quick wins while implementing broader process

Process

• Formalize expectations and timing on S&OP process deliverables

• Shift from a dollar based to a unit based forecast

• Leverage segmentation to define MTS/ATO/MTO and lead times

Technology

• Select, purchase and implement Demand Planning Software

• Load historical demand and configure system to support process

• Link forecast to Rough Cut Capacity Planning to assist Supply Planning

11IBF: DP from the Ground Up ● October 29, 2014

Demand Planning as the Foundation of S&OPThe Important Role of “Sales” in Sales & Operations Planning

DEMAND PLANNING

S&OPP

roduct R

evie

w

Dem

and R

evie

w

Supply

Revie

w

Dem

and/S

upp

ly

Ba

lan

cin

g

Inte

gra

ted

Reconcili

ation

Executive S

&O

P

12IBF: DP from the Ground Up ● October 29, 2014

Starting Point:

Forecasting was done within existing instance of QAD.

• It is an item-based forecast; limited to one forecast line per item.

• No visibility to individual customer forecasts.

• Forecast changes are not trackable in the system.

• Cannot “blow down” changes from the top level down to items

Desired Functionality:

Defining requirements for Demand Planning software

• Forecast by Customer/Item

• Apply changes at any level of the Customer or Product hierarchy

• Systematically identify forecast outliers (oversold/undersold)

• Locate items with forecast without sales (exception reporting)

• Integrate with existing MRP system

Value Proposition of Demand Planning SoftwareMaking the Business Case

13IBF: DP from the Ground Up ● October 29, 2014

Demand Planning Software Implementation PlanJohn Galt Project Plan

Scope and Initiation

Conceptual Design and

Plan

Detailed Design

Configure and Build

Test and Train

Deploy and Hyper Care

Gap Analysis

Project SoW

To-Be Process Maps

Design Signoff

Data Mapping / Rules

Finalize Consensus Forecast

Interface Build

Data Mapping

User Acceptance Test

Process Based Training

Go Live!

Hypercare

Implementation %

14IBF: DP from the Ground Up ● October 29, 2014

Forecast Characteristics

• Forecast in Units, monthly buckets

• Aggregate Level, by

Product, Market or Customer

• 12-18 month view

• Updated monthly

14

Forecast captures the information needed to drive execution

Questions Answered

• What product will be shipped?

• When will it be shipped?

• How many will be shipped?

• Who is buying it?

• Where is it going?

Same Data, Different Perspectives Forecasting is a Closed Loop

Fe

ed

ba

ck

Lo

op

External Input (Qualitative)

History

Statistical Forecast

Customer Input

Marketing Input

Market Segment Mgr.

Sales Leadership

Consensus

Official SIOP Fcst.

Forecasting Process

• Closed Loop Process

Level of Detail

• Item to Aggregate

Item

Aggregate

Demand

Planner

Leadership

Team

Sales &

Marketing

Discussions

• Cross Functional

529

MRP12046

MRP1173

90002245

342-116-1

VTS2

SALES

MARKETING FINANCE

MANUFACTURINGSUPPLY

CHAIN

CUSTOMER

SERVICE

LEADERSHIP

• New Products

• Product Support

• Product Lifecycle

• OTD

• Lead Time

• MTS/MTO/MTA

• Sales $

• Margin $

• EBIT %

• Customer

• OE / Aftermarket

• Market Segment

• AOP

• Source Facility

• Process

• Interplant

• Product Family /

Line

• Shipments

• Intercompany

• Direct Ship

• Material

• Projected

Inventory

• Business Results

• Internal Reporting

• External Reporting

What’s In A Forecast?Deliverables from John Galt’s Demand Management Engine

15IBF: DP from the Ground Up ● October 29, 2014 15

Demand

Planning

Supply

Planning

Finance

Consensus

Process

Parallel

Views

Internal Views

External Views

(Actual)

(Plan)

Demand & Supply Plan Flow

Control

Document

Sales Forecast Manufacturing Execution

Financial Performance

• S&OP process links Sales, Manufacturing, Finance and Supply Chain

• Sales forecast signals Manufacturing; Manufacturing supply plan signals Sourcing

• Sourcing utilizes forward forecast to schedule material buys

• Revenue forecast created by Finance; applying customer margins to sales forecast

• Forecast is a closed loop process; feedback incorporated from prior cycle

• Performance to plan is measured and tracked

How The Forecast Feeds the ProcessWhat Will the Forecast Be Used For

16IBF: DP from the Ground Up ● October 29, 2014

Setting the Path for Success

• Plenty of Opportunity!

– Some coming from existing broken processes / awkward practices

• S&OP Shows us the “Rocks” in the Water

The Path Forward with S&OPWhere We Were, Are, Are Going

We Were… We Are… We Are Going…

• Communication by exception

• Improved Forecast Accuracy

• Plan for every part

• Align inventory to demand

Order

Management

Supply

Planning

Inventory

Management

• Daily interaction w/ plants

• No Demand Planning Org

• No Forecasting software

• Near term (<30 days) focused

• Reactive inventory mgmt.

Where…

• Moving to standard lead times

• Staffed

• Implementing Software

• Rough Cut Capacity Planning

• Calculating inventory entitlement

Demand

Planning

17IBF: DP from the Ground Up ● October 29, 2014

Focus on Metrics That Matter

• Customer Facing Metrics

– On Time Delivery

– Backorders

– Customer Forecast Accuracy

• Internal Metrics

– Forecast Accuracy

– Schedule Attainment

– Inventory Turns

Understand Interrelationship between Metrics

– Aligned & complementary goals

Make It MeasurableGet A Baseline, Drive Continuous Improvement

Maximum Service

Maximum Profit

Reduced

Service

Undersold

Plan

Reduced

Service

Oversold

Plan

• Lost Sales

• Backorders

• Overtime

• Expediting

• Cash

• Inventory

• Capacity

• Utilization

Profit

“One Goal, One Plan”

18IBF: DP from the Ground Up ● October 29, 2014

Sales & Operations Planning (S&OP)Moving Forward on Our Journey

19IBF: DP from the Ground Up ● October 29, 2014

For More Information

Mryan@CarlisleCBF.com

www.Linkedin.com/in/isolveproblems