Best Practices vs Business Objectives in Planning and Inventory

Jonathan Morgan

Senior Director, Demand, Inventory & Spares Planning at Palo Alto Networks

Learning Objectives

When designing business processes for supply chain, we often start by planning to implement best practices. What can be easily overlooked is the actual needs of the business, both now and in the future. Sometimes a less mature or simplified version of a best practice may be the right solution to achieve business excellence, with a roadmap for process maturity as the business changes. In this presentation I will discuss aligning best practices with business needs for Planning and Inventory based processes.

Key Takeaways:

  • Business maturity should align with process maturity

  • Don't always aim for the top in process maturity

  • Capture alignment on short and long term business needs

"Don't be afraid to suggest changes prior to things being a critical need. "

Jonathan Morgan

Senior Director, Demand, Inventory & Spares Planning at Palo Alto Networks


Hi, welcome to my presentation on Best Practices for Business Objectives, Planning, and Inventory. My name is Jonathan Morgan, and I’m the Senior Director of Demand, Inventory, and Spares Planning at Palo Alto Networks. The agenda today is an introduction of myself, a quick note on Supply Chain planning. What is SOP? Why SOP? Alignment to business needs, and the journey I’ve had with SOP at Alto Networks.

My name is Jonathan Morgan. I’ve been at Palo Alto Networks for 9 years. Alto Networks is an enterprise security company. At a high level, we offer products and services for next gen firewall, SD-WAN, cloud, endpoint analytics, and incident response. At the company, I run SOP, demand planning, supply planning, spares parts planning, inventory management, and analytics for Supply Chain. Prior to Palo Alto Networks, I have about 12 years of experience in high tech storage, consumer product goods, and telecom.

Quick note on Supply Chain planning. Are you in a situation like this, where each function in the company has their own views and plans working independently? If so, once you recognize this isn’t going to work, you’ll want to implement a process to create synergy and alignment that may lead you to SOP. So, what is this SOP? Stands for Sales and Operations Planning. My intent here is to give a high level view of the SOP process.

Here’s a definition from Apex. I’ll give you a few seconds to read this but feel free to pause the video—I won’t be offended. Simply put, a true SOP process is pretty much the dream of everyone in the business collaborating and working off the same plans. This is an example of a generic SOP cycle from Gartner. Step one is a product review. Step two is a demand review and GAAP reconciliation. Step three is a supply plan creation and GAAP reconciliation against the demand plan. Step four is the executive review of the gaps in decision making to resolve them. Within all of this, and through each step, you should maintain financial alignment. I should also note this is typically a monthly process—occurs every month.

Now, you know what it is at a high level. But why explore SOP is a solution to the just jointed planning process we saw earlier? SOP can have significant impact in multiple areas of the business. This is a summary of four categories that Gartner highlights. However, this is also where the implementation plans for SOP can get tricky. These are all very positive areas of improvement. So, let’s go for it.

Now, we need to pause and understand where our business needs versus what is the highest form of a best practice. Let’s look at this slide again, but ask some new questions. What’s important to your business now? What will be important in the future? The answers can vary widely based on size and industry. As possible, you and your executive team will say that these are still important. These are all important both now and in the future. However, as the saying goes, don’t try to boil the ocean.

There are various models of the maturity stages of SOP. This one is from Gartner. You can do a bit of reading and assess where you fall, or you can engage with external partners to have them help assess your process and assign a maturity level. The end result is that you want to gain an understanding of where you are to help you decide where you need to need or want to be and over what period of time.

To help with the previous slides into a more real world context, I’ll share my story with SOP and Palo Alto Networks. The starting point, a very simple model. We didn’t even start with all the stages, just the consensus planning, supply planning, and we did an overview of that with the executives snowpine team. The main driver for the simplified model was that we were experiencing hyper growth shortly after we went public in 2012. The business needs dictated how we ran the process.

Our goal was to try and stay in front of the growing demand and drive inventory to cover high variability. We were in a loading chase mode with supply. Profitability, inventory turns were not priorities. We had a light MPI roadmap and had minimal products approaching QL end of life.

Evolution one, as hardware growth slowed, Arjun became more of a focus and a dollars involved got larger. We needed to evolve our process maturity. We added a supply and demand review step to understand the cost risk and trade offs versus pure loading chase. We were still very focused on inventory coverage and flexibility to support demand variations, but added focus on inventory management to be more strategic and analytic driven rather than one size fits all and the ever useful, buy more sort of direction.

We also had to increase our collaboration with suppliers to ensure capacity In material alignment as volumes grew. What really helped us evolve the process quickly was that we had regular check ins with our Supply Chain partners, and kept a roadmap for SOP development.

I recommend is not to sit idle waiting for things to change, and then figure out how to go support the changing needs. Use the maturity curves and process steps to have a game plan ready when the need arises. Don’t be afraid to suggest changes prior to things being a critical need. If there’s not yet an appetite for the change, you can still build relationships and knowledge across the enterprise. Create SOP champions and changes to help move things forward at the right time and pace.

Evolution two at Palo Alto Networks. As we continue to grow, our overall hardware portfolio through both R&D and M&A and volumes continue to rise. As we see more frequent and impactful constraints in the Supply Chain, we’re evolving again. We’ve now added a product review meeting to extend the horizon for initial planning discussions on new products to enable Supply Chain to place orders for parts that now have lead times up to an exceeding 52 weeks. This will also help with planning transitions of those products and mitigating [inaudible], ideally having overall improvement margins.

Within the process, steps are also changes in engagement as a company as more strategy owners can go to market and to drive growth. We have spent a lot of time a lot of time over the last year doing road shows of the current and future SMB processes across the business.

I hope this information is helpful to you in your journey to improve planning processes. Some key takeaways are the process framework, you can follow a template, but process must be customized to your business to succeed. Understand what is important to your business and leadership, and highlight that in meetings. Have regular check-ins with leadership and be prepared when the need arises. Thank you for your time. Please leave questions and comments below.

Get full Q/N Access

Sign up to Q/N with a few details to watch this presentation.

  • Hidden
  • Hidden