accelerating data-driven demand planning...• enhance animal well-being and help animals live...

Accelerating data-driven

demand planning

How to kick-start a CoE at Elanco

Dylan Lilienfeld (Elanco Animal Health) &

Edward Versteijnen (EyeOn)

14 November 2019

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Centers of Excellence are changing

Why centralizing analytics?

From recent DP & big data benchmark: 21% of companies have centralized analytics function

Centralization Analytics Function

Centralized Decentralized

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Business benefits

•Economies of scale by grouping analyst function

•Not biased by local successes / failures

Attract and retain talent

•Career path for analysts

•Easy to grow competences & standardize process

•Opportunity for challenging projects

•Data Ninjas

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How to kick-start centralized data-driven demand planning?

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BUILD OPERATE TRANSFER

Service Transfer PlanOptimization & reporting handover

Training/Coaching

Build – Operate – Transfer approach

Train data-driven capabilitiesSet-up E2E process

Set-up Engine & reports

Optimization as-a-serviceDedicated reporting as-a-service

Support & Coaching Continuous improvement

Accelerating data-driven benefits and capabilities

Build – Operate – Transfer approach

businessbenefits

planning capability

BUILD OPERATE TRANSFER

%

time

YOUR COMPANY

MANAGED SERVICES

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at Elanco Animal Health

Kick-starting a CoE

Elanco and the diagonal bar logo are trademarks of Elanco or its affiliates

©2019 Elanco

Elanco – our portfolio

Food and companionship enriching lives – we offer products that• Improve animal disease management• Help pets live longer and healthier lives• Reduce the environmental impact of livestock production and increase nutrient digestibility through continued focus on

improved health, enzymes, probiotics, and prebiotics• Enhance animal well-being and help animals live quality lives

Healthy Livestock Animals Healthy PetsWe provide a wide range of products and services to ensure pets live well and live long, including:• Parasiticides• Vaccines• Therapeutics

Our antibacterials, anticoccidials, vaccines, and other products improve animal health and make food safer by preventing and controlling disease. We provide access to products for: • Aqua • Cattle• Dairy cows

If you want to learn more about Elanco pls. visit us under:

NYSE: ELAN

• Poultry• Pigs• Sheep

www.elanco.com


©2019 Elanco

Why creating a CoE (forecasting)

2. Strategic enabler

Data integrity and consistency in complex

supply networks(LT, MOQs)

Consistently respond to changing and fluctuating levels of complexity

Use deep understanding of metrics and

processes along the value network for

improvements. “Make the link”

Expand CoEto SC analytics

Pool of experts on tools, data sources, metrics

Regulatory differences by species and by regions

1. Sense of urgency

Network dedecisions

Net sales through higher customer service

Manufacturing capabilities and capacities

Capital influences Net Operating Profit influence

Inventory & Net working capital by reduced inventory risks

3. CompetitivenessQuote pwc AH strategy book (2015)

AH Business model characteristics:1. Innovation2. Portfolio Advantage & Com Excellence3. Competitive Forces4. Operational Excellence 5. Regulation

Animal Health, 30 bln market, Elanco approx. 10% MS


©2019 Elanco

Analysis of current state

▪ Is the data right and at the required level of granularity?

▪ Reports correct▪ Rules and applied filters correct (LCM activities)

▪ Does the S&OP process fit the purpose? ▪ Main focus Local level▪ Right people involved, required data available ▪ Financial planning vs. volume forecasting ▪ Purpose of Forecasting. Not to build inventory ▪ Guidance and governance (e.g. managed supply, safety stocks)

▪ Is the process trained and understood in all affiliates?▪ Accountabilities (e.g. demand / supply in affiliate) ▪ Which metric are we measuring, is it the right one?

▪ Lagging (post event) vs. leading indicators (predictive)▪ Behaviors in the organization?

How to start: CoE or Decentralized Forecasting?Reflection on the Elanco project

Elanco’s choice

Early decision to partner and get external expertise on Forecasting ➔Eyeon

Based on multiple factors ➔ Choice to create forecasting CoE


©2019 Elanco

Planning of the Project

▪ Define scope, deliverables and milestones. “What should be achieved”

▪ Obtain expectations from Sr. level. “What do they think”▪ Consult external partner to assess data and provide recommendation▪ Assess resources and capabilities inside the organization (HR, IT, process, statistics)▪ Identification of stakeholders▪ Consultation of high performing affiliates ▪ Early decision: Create CoE in India, co-located with Lilly capability center

▪ Put project organization in place

▪ Define Project lead and core team (4 people)

▪ Sr. leaders and LT, make it a top corporation project if it is not already one▪ Project calendar, PJ meetings, StC, ▪ Plan travels if appropriate▪ Support by company PMO, about 130 steps maintained

How to start – Planning

Go-live

03-201801-2018

On-boardingBusiness Case

08-2017

Hiring

10-2017

Reflection on the Elanco project

Elanco’s choice

To not run pilot –confident that we were adopting the best forecasting approach.


©2019 Elanco

▪ This is big and communication is key. All affiliates are directly impacted. Sites and hubs need to be involved as well. Don’t underestimate informal channels

▪ Strong involvement of the Regional Supply Chain Leaders as advocates for the affiliates. and SC CoE

▪ Collection, clustering and prioritization of all input, concerns, questions. E.g. technical, process, behavior

▪ Channels used for communication: Q&A document, blog, global SC newsletter, online townhall webcasts. Moved to top corporation project list

Change ManagementReflection on the Elanco project


©2019 Elanco

Impact on people

▪ Roles and responsibilities in affiliates▪ The people suddenly come on stage▪ Segmentation of products allows better assignment of forecasting method. Less volatile products can be

forecasted by statistics→ So do less and achieve more.▪ Expected relief should be invested in difficult to forecast products, underlying assumptions and the

S&OP process▪ Adequately manage different levels of expertise and change agility ▪ Mindset change: Listen to data and not only to M&S

▪ Roles and responsibilities in new Demand Analyst team▪ New role, highly visible, risk to fail▪ Raise awareness of sensitivity about “Do you tell me that you in India can forecast my market better

than I do since years ?”▪ Drive for excellence to proof the concept and to gain the trust

▪ Regional Supply Chain Leaders▪ To support and provide additional training to the affiliates

Change Management – people managementReflection on the Elanco project


©2019 Elanco

The hiring process

Job Description

Elanco:

• Business case presentation in August

• Prepare a small hiring team

• JD drafted, leveled approved in September

Aug

Physical interviews

Elanco

• Ability to drive

• Technical and process expertise and skills

• Complementary skills in team

• Communication skills

• Team fit

• Talent

Oct

Selection

Elanco

• Decision

• Offers

• Contracts

• Transition periods

Oct

Onboarding

Elanco:

• Company onboarding

• Job onboarding, guided by Eyeon and RSCL

• Prepare team for the role

• Sr. Leaders & global calls

• March start new process

Jan

Analysis

Elanco:

• Collect waves of CVs• Assess and Define

selection criteria • Consider team fit• and complementary skills

in team

Aug

Telephone interviews

Elanco:

• 3 regions involved (NA, EU, AP)

• Formal process

• Decision for final interview

• Negotiate C&B

Sep

Search

Elanco

• Local HR at Lilly center + ext. search firm

• Fine-tuning of criteria

• Preparing for interviews

• Define selection criteria

Aug

Event



©2019 Elanco

Training of new team

Time from new hire to go-live: 8 weeks despite “some” open items:

▪ Onboarding to the company, IT equipment, trainings, get to know at the location (1 week) at the Bangalore location

▪ Train on the process, statistics, tools, interactions (1 week)

▪ Sensitive: Allocation of affiliates to DA, consider time differences, personal preferences

▪ Introduce to organization in the affiliates and in the regions, Global SC LT call

▪ Prepare the team for the first calls with their partners ww

▪ Simulation of data exchange. ▪ Improve Excel template▪ Adjustments to analytical tool (Tableau)▪ Creation of the assumption tracker▪ SAP changes in APO DP

▪ Processing data from BO reports to tableau / Excel to affiliate and reverse

▪ Fine-tuning of hand-over packages between central team and affiliates

▪ Integration of Eyeon in the monthly planning cycle for some months



©2019 Elanco

Training of affiliate S&OP members

Training package included ▪ Basis of the approach using statistical methods ▪ Statistical part of the process: Data cleansing, outlier correction, seasonality determination,

method selection▪ S&OP process (re-emphasis on existing process)▪ New communication tools (CollabSite, Excel) ▪ Particular role of an supply chain associate▪ Things which are kept unchanged▪ Planning calendar▪ Material about our products from M&S

Training performed by Regional Supply Chain Leaders▪ Owners of the process, deep understanding of the markets▪ First line of support ▪ Articulate feedback from the affiliates



©2019 Elanco

Summary - tools

- Exchange forecasts and assumptions with affiliates as part of the monthly process

- Manage initiatives and team calendar

Elanco’s choice

Communication MS SharePoint

Repository - Holding historical data for reporting and visualization purposes. Extension of existing data

SQL DB →OutsourcedMicrosoft Excel

Reporting- Compare stat fc. vs. affiliate fc- Identify areas of improvement- Provide access to broader community

Tableau Excel (ad hoc)

Forecasting- Time series forecasting (not event based)- Outlier correction- Seasonality analysis

SAP APO

Productivity - Facilitate easy data up- and download to SAP APO- Reduce redundancies, review DB structure

APO Excel Add-on

Depending on your existing IT landscape, the objective and the resources you may choose more or less or different tools, e.g. if you are able to integrate the S&OP process into your ERP you may not need some of the listed tools

R


©2019 Elanco

Go-Live (March 1st)

▪ All systems and resources ready

▪ Hyper care modus, some partners only then realize what’s happening

▪ Daily wrap up in the first week, classification of feedback, action plans, options

▪ Q1: Spend time with the new team!▪ 50% on site with the team▪ Build trust into the new environment▪ Create relationship amongst the team and with partners ▪ Train and provide guidance▪ See their skills and obtain their inputs and proposals

▪ Plan for that particular day – finished after 16h, exhausted and happy

▪ Short-term adjustments, e.g. Excel template

▪ Start measuring statistical forecast accuracy

Go-liveReflection on the Elanco project


©2019 Elanco

Post Go-Live phase▪ Post go-live: Addressed all feedback from affiliates, adding filters, graphs and aggregation

levels to handover-packages ▪ Starting Phase 2: Optimization and user experience

1. Simplification by consolidating multiple forecasting areas into a single forecasting area

2. Productivity: 1. Easy identification of SKUs performing better by stat or by affiliate 2. APO Excel Add-On to allow easy down- and uploads by the affiliates3. Continuous revisit of forecasting models 4. Starting on causal modelling

3. Synergy: Use of new CoE to support other processes 1. E.g. MTO business2. Support of business planning3. Increasing engagement in other global SC relevant projects

▪ Insourcing of activities hosted at Eyeon. Now completely independent from IT ▪ DB, data handling, data enrichment and reporting

What happened next?Reflection on the Elanco project


©2019 Elanco

Learnings

▪ High priority in company

▪ Sr. Leadership support

▪ Clear goals

▪ Capabilities internal and/or external

▪ Strong project team

▪ Precise communication

▪ Fast decision making

▪ Diversity in project team

1. Let the data tell the story – be fact based

2. The best data doesn’t help if people don’t change their behaviors

3. Some quick fixes are possible but moving to statistical forecasting is like putting a car on auto-pilot. Need to gain trust. Outlier correction!

4. Define achievable goals considering actual performance, the volatility of the market, the complexity. Use the diversity in the team

5. Understand the use of different sales channels and customer structures to improve the approach and the model

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The result: an effective ánd happy data-driven CoE!

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Q&A

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EyeOn. years ahead

Let’s invest in the future together

www.forecastservices.com

Eindhoven

Amsterdam

Antwerp

Geneva

DublinEdward VersteijnenT: +31 (0)6 53 53 96 15 [email protected]

Dylan [email protected]

accelerating data-driven demand planning...• enhance animal well-being and help animals live...

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