Cummins Supplier Conference | August 4 Priscila Mendes Indirect Purchasing Leader Cummins Supplier Conference | August 4

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In order to achieve this goal, Cummins must be the BEST in everything we do: Provide the BEST shareholder returns Design and build the BEST products Provide the BEST customer support Be the BEST place to work Hire the BEST employees Partner with the BEST Suppliers

SRM Category Partner VoS To partner with the BEST suppliers, we must be the BEST customer to our suppliers… SRM Supplier Relationship Management Category Partner VoS Voice of Supplier Survey

VoS – Voice of Supplier The survey is hosted by the Corporate Executive Board (Gartner) The standard survey allows Cummins to benchmark Supplier and Cummins respondents rate 26 key attributes of the Procurement function across six categories in a scale from 1 to 5: Cost of doing Business, Delivery and Support, Flexibility and Ease of Doing Business, Quality, Partnership, Competitiveness.

Voice of Supplier Survey – A journey that started 4 years ago… 2014 The initial feedback was used for Cummins to review our process and define a baseline. 2015 Focus on connecting with Individual Suppliers to go deeper on their feedback and improve those specific partnerships. Start sharing results with CLT. 2016 – S1 Focus still on Individual Suppliers focusing on the evolution of their feedback and joint efforts to improve it. Category Partner Introduction. 2016 – S2 Individual work continues but a new layer is added reviewing combined negative feedback to define actions. 2017 - S1 In process… Sharing broadly the overall results

Flexibility and Ease of Doing Business Cummins supplier average response is very similar to benchmark at 3.82 ... Cost of Doing Business Delivery and Support Flexibility and Ease of Doing Business Quality Partnership Competitiveness Source: CEB (Gartner) for Cummins

Cummins internal response average at 3.66 slightly above benchmark… Cost of Doing Business Delivery and Support Flexibility and Ease of Doing Business Quality Competitiveness Partnership Source: CEB (Gartner) for Cummins

In general our internal perception of ourselves is close to our suppliers view…

This process allows Cummins to work with individual suppliers to improve the partnership…

1 – Sharing of future plans Based on 2016 feedback from our suppliers we have identified three key focus: 1 – Sharing of future plans KJ 3 – Cummins is not treating suppliers as partners 2 – Cummins needs to improve capability to answer supplier payment questions

1 – Sharing of future plans Re-instate supplier conferences in 2017 Earlier engagement of category partners in new product development and projects Strategic Supplier Meetings (SRM process)

2 – Cummins needs to improve capability to answer supplier payment questions Focus on improving on time payment. From 75% in Jan 2016 to an average of 85% now. Supplier Portal with payment information for easy access. Go to > supplier.cummins.com

3 – Cummins is not treating suppliers as partners Introduced Category Partner Program Reinforce SRM with Strategic Partners and adjust joint work plan to address supplier’s key concerns Continue VoS surveys and actions

The journey is not over… We will continue to assess and improve our SRM process with strategic partners 25% of our suppliers still perceive that we are not improving. There is more work to do. If you have suggestions or comments please let us know…Next Survey in Q4 2017.