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Tom Wallace

Tom Wallace

No I’m not talking about the Chicago Cubs or deep dish pizza.

Rather, I’m talking about our third Best of the Best S&OP Conference, co-sponsored by APICS and IBF last month. It was quite a success with a very nice turnout, particularly when one considers the state of the economy. And the speakers – if you’ll pardon my language – did a damn fine job.

One of the pearls that I managed to pick up during the proceedings came from Adam Szczepanski, VP of Strategic Planning with Forum Oil Technologies in Houston and a former CFO in another oil patch company, talked about projecting cash flow 18 or more months into the future, as an integral part of their Executive S&OP process.

Why do this? Why bother? Well, it turns out there are some very good reasons, one being the stockholders. Adam gave the example of a company that made dividend payments on its stock once every six months. Well, four months ahead of time, the Executive S&OP cash flow projection showed that they’d be unable to meet that dividend payment. This was due to a large inventory build-up planned to cover a temporary plant shutdown for major maintenance and upgrades. The cash flow projection in Executive S&OP went negative.

This led them to modify their plans for the plant shutdown. They were able to meet the dividend payment by changing the plans for the plant shutdown and still accomplish what needed to be done. It was S&OP that gave them the “heads-up.”

Another first-rate speaker was Bob Hirschey, VP of Strategy for Weyerhauser’s Cellulose Fiber business. One of Bob’s statements just knocked my socks off: “S&OP has made our strategic planning process come alive.” He went on to say that they don’t rework their strategic plans each month, but rather they check during their monthly S&OP cycle to insure that the sales and operations plans and the strategic plans are in sync, and when they are not, take corrective action.

Last and certainly not least was Ross Bushman, who actually went first as he gave the opening Keynote talk. Ross, the COO at Cast-Fab Technologies, talked about how his company’ wind power business virtually evaporated in the last half of 2008; this was caused by the credit markets drying up and thus virtually no financing available to wind farm developers. Ross’s message was that Executive S&OP enabled them to cope far better than they could have without it.

Do you have a story to tell about how Sales & Operations Planning is helping you to manage during these turbulent times a la Cast-Fab? Or how you’re using it for advanced financial planning as they do at Forum Oil Technologies? Or how it’s helped to make your strategic planning processes more effective, as it has at Weyerhauser? If so, I’d love to hear from you.  We welcome your comments.

Tom Wallace
tom @ tfwallace.com