Forecast and S&OP – Integrated Demand Management

SBN Conference
Stavanger, October 22nd 2015

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Agenda  

•  Introduction

•  Background for Forecast and S&OP project

•  Key learnings and Design focus points

•  High level processes and structures

•  System solutions

2
Intro  –  Takeda  in  short  
Takeda in Numbers:

Revenue: 1.778 billion Yen FY2014 ~

12.8 billion EUR

Market presence in 70 countries

22 production sites

App. 31.000 Employees

Based  on  the  corporate  philosophy  of  

"Takeda-­‐ism"  (Integrity:  Fairness,  Honesty  
and  Perseverance)  developed  over  its  long  
corporate  history  of  more  than  230  years,  
Takeda  conducts  acEviEes  according  to  the  
corporate  mission  to  "strive  towards  beHer  
health  for  people  worldwide  through  
leading  innovaEon  in  medicine."  

3
Agenda  

•  Introduction

•  Background for Forecast and S&OP project

•  Key learnings and Design focus points

•  High level processes and structures

•  System solutions

4
Symptoms  of  poor  performance  in  Forecas9ng  and  S&OP  
processes  
•  Low forecast performance
•  Accuracy low
•  Bias high

•  Low Trust
•  Lack of cross functional understanding
•  Silo thinking

•  Detect our issues too Late

•  Constraints in capacity
•  Constraints in supply

•  Reactive firefighting rather then proactive decisions

•  Non optimal production sequences
•  Misalignment on priorities

•  Missing business opportunities

•  Lack of cross functional alignment and transparency

•  High Inventories
•  Compensation to lack of planning capability

This  is  some  of  the  reasons  why  we  started    

Forecast  and  S&OP  project  in  TAKEDA  

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Small  white  board  drawing  anima9on  

Link:
http://collab-int.takeda.com/ws/For4/Project%20Roll%20Out/Forms/AllItems.aspx?RootFolder=%2Fws
%2FFor4%2FProject%20Roll%20Out
%2FTemplates&FolderCTID=0x0120005BCF7F1B12EA5244B9B0EAF6573211CD&View={618AC8EF-206F-4
240-835A-A0AC839CDD75}

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Benefits

Benefits  in  following  areas:  

Better outlook and alignment on plans between

operations, commercial and finance

Better product availability – higher CSL

Working capital - Lower warehousing cost

Better Foundation for Decisions and Investments

Reduction of operating cost

Less scrapping

Slide 7
Project Plan – Forecast and S&OP –
High Level Project Plan
The project is conducted in a phased approach:

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Agenda  

•  Introduction

•  Background for Forecast and S&OP project

•  Key learnings and Design focus points

•  High level processes and structures

•  System solutions

9
No standard process for local forecasting across
Takeda meaning no best practice or benchmarking

Current process
Generate FC Consolidation of FC in
Local DP generates forecast Central APO
together with local Local DP update forecast in
stakeholders APO and forecast is
immediately available for
Supply Planning
S&OP Meeting
Forecast is reviewed in S&OP
meeting together with
performance and known supply
issues

Key takeaways from current state:

•  APO stat FC doesn’t do the job on its own – manual dedicated competence is needed
•  Difficult for Takeda to build specialised stat. forecasting capability locally
•  Change of forecast behaviour is key to succeed
•  Cross functional understanding is key
•  Secure focus on the important and difficult products
•  Align different functional structures to secure transparency
•  Focus on securing information for fact based decision making

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Key Design Focus Areas and Change

Forecast centralization vs. decentralization

•  Secure good statistical forecast
•  Secure local business intelligence

Integrate Monthly Operational and Quarterly Financial Planning

•  Secure transparency
•  Respect different purpose of the two different planning
processes

Decision focus in S&OP

•  Secure fact based decisions
•  Secure efficiency in bringing facts to the table

Build trust and Change of behaviour

•  Cross functional awareness
•  Transparency across the business

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Agenda  

•  Introduction

•  Background for Forecast and S&OP project

•  Key learnings and Design focus points

•  High level processes and structures

•  System solutions

12
What we are set out to do and high level future state

Statistical
Non Constrained Forecast
Forecast Accuracy/ Accuracy/Err.
Stability of Statistical Forecast
Err. and Bias and Bias
Demand Accuracy/Err. and Bias

Global Value
Adding Local Value Adding S&OP Value Adding

Adding local
Statistical S&OP Review -
Secure Historical market Forecast Review
forecasting Balance Demand
Data intelligence – and Local Sign off
Basis FC & Supply
Events

GSC – Global DP Affiliate/Cluster – Local Demand Planner

GSC Coor.

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 Global Planning Cycle

Monthly  cycle  to  secure  alignment  across  value  chain    

Activities:
1.  Statistical baseline
2.  Local Demand FC
3.  Supply Plan
4.  S&OP Alignment
Work week phased

Slide 14
Managing differentiation through segmentation
Managing attention through segmentation
Forecast  Segmenta.on  
A  

Turnover  and  Business  

B  
Cri9cality  

C  

X   Y   Z  
Variability  /  Accuracy  

PorJolio  SegmentaEon  as  foundaEon:  

•  StaEsEcs  useful  in  X  and  Y  segment  
Main  Focus  of  Local  Demand  Planners   •  Manual  forecast  needed  in  Z  -­‐  Very  
Dependent  of  market  intelligence  

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Training  -­‐  Process,  planning  principles  /  behavioural  
guidelines  and  system   Principles  and  Behaviours:  

Business  Processes:  

Systems:  

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Agenda  

•  Introduction

•  Background for Forecast and S&OP project

•  Key learnings and Design focus points

•  High level processes and structures

•  System solutions

17
Representa9on  of  organiza9onal  split    
Global  demand  planner  

Together  with  the  local  

Demand  Planner  he/she  
will  decide  which  
stat.forecast  should  be  
populated  to  the  baseline.    
The  Global  Demand  planner  will  only  have  the  Global    
planning  books.  His/her  objecEve  is  to  provide  the  staEsEcal    
baseline.  

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Representa9on  of  organiza9onal  split    
Local  demand  planner  

The local demand planner has another set of planning books. The starting
point is the statistical baseline.
The LDP works on the Events. Potential misbehavior will become transparent.

The sales affiliates are generally driven by the their sales targets. Therefore it
was also important to incorporate these targets:
-  LBE (last best estimate)
-  Forecast value vs LBE value

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Global  demand  planner:  
Providing  a  sta9s9cal  baseline  
The global demand planner will typically review the
demand pattern graphically and work on the
forecast profiles.

Here we have two forecast key-figures:

-  One on internal sales
-  One based on external sales

The planner can review the data on Brand level ,

Brand + strength or down at SKU level.

Drill-­‐down  to  SKU  level  

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Final  process  step  in  Demand  planning  process:  
Demand  Review  

Objective:
•  Get the management approval on the forecast
in the sales affiliate
•  Secure commitment to demand forecast

An efficient demand review requires some more

fancy tools than the SAPGUI… Therefore a set of
reports and dashboard have been developed to
support this process.

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SAP  BI  Analysis  Excel  
Forecast  change  report  
 

I.e. possible to high-light changes using Conditional formatting.

Here, review here on Brand level.

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Forecast  review  dashboard  

Key elements:
•  Flexible drill-down (Brand, strength, SKU)
•  Several dashboard tabs (forecast evolution, Statistical vs Final forecast, FA&BIAS)
•  Quantity and Value

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 Supply  Review  as  part  of  the  overall  S&OP  cycle  

Released  
Signed  off  
forecast  

2.3     Constraint  
Constrained  
2.2  Un-­‐   solved  
Supply  /   without  
Produc.on  
Constrained  
Planning  
Planning  -­‐  
Review  and   implica.ons  ?   Yes  
Planner   Un-­‐constrained  Planning:   solve  Alerts  
The  planning  run  in  PPDS  runs  today.  The  planning  run  will    create    planned  orders  infinitely  in  the  
produc9on  plants.    
No  
 
Constrained  
2.1  Update  Planning   Planning  (in  the  mid-­‐term  horizon):  
parameters     2.6  Supply  
Evalua9on  of  the  supply  situa9on  both  from  a  material  -­‐  and  capacity  availability   Review  Mee.ngperspec9ve.  
   
  Signed  off  Supply  
2.5  Analysis  of  
The  planning  evalua9on  is  based  on  currently  available  tools  like  …   Solu.on    &   Plan  
Implica.on  
-­‐  Alert  monitor  as  main  tool   for  the  material  availability  assessment
Cross  Plant  Implica.ons  
evalua9on    

-­‐  Capacity:  
GSCC   -­‐  Short  term  
2.4  Ch orizon:  
ross   Detailed  
market  alloca.on     scheduling  
analysis  and  implica.on  
-­‐  Product  planning   assessment table  
 

-­‐  Order  and  resource  repor9ng  

-­‐  …  
Plant   New:  
Management   -­‐  New  set  of  tools  for  capacity  evalua9on  (SNP  capa  book,  several    BI  reports)  
-­‐  New    classifica9on  of  resources  to  enable  aggregated  views  on  capaci9es  
D+10     D+11   D+12   D+13   D+15   D+16  
-­‐  Early  warning  report  

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Supply  Review  
Capacity  evalua9on  –  SNP  book  

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Supply  review  
Capacity  evalua9on  -­‐  Capacity  hours  report  
 

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Supply  Review  

Aggregation for the dashboards and also the reports:

•  Usage of the APO planner = Capacity Planner in ERP
•  Hierarchy based on the values:
•  Solids
•  Semi-solids
•  Liquids with drill-down:

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Supply  Review  /  S&OP  
Capacity  dashboard  -­‐  Aggregated  

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 Appendix

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Mar9n  Kruse  

Martin Kruse We  can’t  solve  the  

M.Sc. Supply Chain Management problems  by  using  the  
same  kind  of  thinking  we  
Global Supply Chain Manager
Global Supply Chain Process Excellence used  when  we  created  
them.  
E-mail: martin.kruse@takeda.com
 -­‐  Albert  Einstein  (1879-­‐1955)  
Phone: +4530100483

Responsibilities in Takeda since 2011: Previous Companies:

•  Strategic Project Management Carlsberg Group
•  Forecast and S&OP
•  Planning Excellence GN Netcom
•  Integration Projects
•  Performance Management
NNIT
•  Cross functional projects
•  Process Governance
Novo Nordisk

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 31

Eivind  Kolderup  

Profile
Eivind has worked more than 18 years within consulting and his experience covers:

Ø  Process improvement and system implementations within the following areas
•  Demand Planning and Forecasting
•  Production planning and –execution, including integration to process control - and
manufacturing execution systems
•  Quality control and Quality assurance
•  Batch management

Ø  ERP and SCM implementations

Ø  Project and integration management

Eivind Kolderup Ø  Test management and validation in the Pharmaceutical industry

Diploma in Business and Eivind has significant experience from pharmaceutical, food & beverage and general
Computer Science
(“Wirtschaftsinformatik”)
manufacturing industries.

Born in 1968
Norwegian citizen
Main Industries Main Clients Languages
+47 473 72 339 Ø  Takeda Nycomed Ø  Rieber & Søn
Ø  Life sciences Ø  Mother tongue – Norwegian
eivind.kolderup@akselera.com
Ø  CB manufacturing Ø  Orion Pharma Ø  Bayer Pharma Ø  Excellent – German, English
Ø  Process industries Ø  Orkla Foods Norge