Overview Presentation Supply Chain Operations Reference-model (SCOR) April 2005

The SCC is an independent, not-for-profit, global corporation with membership open to all companies and organizations interested in applying and advancing state-of-the-art supply chain management systems and practices. Over 800 Company Members Cross-industry representation Chapters in Australia/New Zealand, Brazil, Europe, Japan, North America, Southern Africa, and South East Asia with petitions for additional chapters pending. The Supply-Chain Council (SCC) has developed and endorsed the Supply Chain Operations Reference-model (SCOR) as the cross-industry standard for supply chain management

SCC Organization - Chapters and Staffing SCC Global Headquarters Washington D. C. Japan Chapter Tokyo, Japan NEC Europe Brussels, Belgium Modus Media North America Chapter Washington D.C. Disney South East Asia Chapter Singapore Venture Inc. Brazil Chapter Southern Africa Johannesburg, South Africa UTi Australia/New Zealand Chapter Sydney, Australia

SCC Leadership Teams Europe Board of Directors South East Asia Diversey Lever– C Siemens AG – VC Euro-Chain Bomardier Tansportation BASF AG Borealis SAP AG Oracle EMEA Rhodia Swiss Federal Institute of Technology EDS UK and SA Board of Directors Disney - C Eaton - VC DaimlerChrysler MOPAR Business Process Training Center Europe PeopleSoft I2 Technologies Georgia Institute of Technology IBM SCE Limited ICI Supply Chain Phillips Lighting PRTM McCormick & Company, Inc. HP South East Asia Vemture Corporation – C Phillips CFT – VC Modus Media Deloitte Singapore Institute of Mfg. Technology SCM Institute Autoscan Technology Polyolefin Company Asia Pacific Breweries I2 Technologies iPerintis Sdn Bhd Australia/New Zealand Owens Global Logistics – C Health Purchasing Victoria – VC Oracle RMIT University MI Services BHP EAN Australia North America Toys R Us - C Raytheon IBM Adjoined Consulting Avicon Bayer Chemicals The Boeing Company Center for Supply Chain Research / Penn State Air Products and Chemicals SAP Japan NEC – C JBC Create – VC Mitsui Global Strategic Studies Olympus Optical EXA Chubu Electric Power J.D. Edwards Nihon Unisys Hitachi Hokkaido University Matsushita Electric Industrial Yamaha Toray Systems Center Elections Pending South Africa Brazil China

Membership Member by Type Members by Region 800+ SCC members, Composition 40%: Practitioners 25%: Enabling Technology Providers 20%: Consultants 15%: Universities, Associations, Government Organizations

Current Technical Projects C – Paul Schiller – BP Chemicals SCOR Technical Development Steering Committee Best Practice Returns C- Paul Janke (Nokia) C- Lt Col Scott Koster (USMC) Metrics MRO Returns C- Michael Memmel - Siemens C- Joe Burak (Boeing)

Supply Chain Operations Reference-Model (SCOR) Overview

What is a process reference model? Process reference models integrate the well-known concepts of business process reengineering, benchmarking, and process measurement into a cross-functional framework Business Process Reengineering Best Practices Analysis Process Reference Model Benchmarking Capture the “as-is” state of a process and derive the desired “to-be” future state Quantify the operational performance of similar companies and establish internal targets based on “best-in- class” results Characterize the management practices and software solutions that result in “best- in-class” performance Capture the “as-is” state of a process and derive the desired “to-be” future state Quantify the operational performance of similar companies and establish internal targets based on “best-in-class” results Characterize the management practices and software solutions that result in “best-in- class” performance 34

SCOR is structured around five distinct management processes Plan Source Deliver Make Deliver Deliver Source Make Source Make Deliver Source Return Return Return Return Return Return Return Return Customer’s Customer Suppliers’ Supplier Supplier Your Company Customer Internal or External Internal or External SCOR Model Building block approach Source connects to supplier Deliver connects to customer Not all companies have make We can model as far up or down the supply chain as we view important (not limited to two tiers) Customers and / or suppliers can be internal or external Building Block Approach Processes Metrics Best Practice Technology 21 4

Supply-Chain Operations Reference-model (SCOR) 7.0 - Processes Plan P1 Plan Supply Chain P2 Plan Source P3 Plan Make P4 Plan Deliver P5 Plan Returns Source Make Deliver S1 Source Stocked Products M1 Make-to-Stock D1 Deliver Stocked Products Suppliers S2 Source MTO Products M2 Make-to-Order D2 Deliver MTO Products Customers S3 Source ETO Products M3 Engineer-to-Order D3 Deliver ETO Products D4 Deliver Retail Products Return Deliver Return Source Enable

SCOR Boundaries SCOR Spans: All supplier / customer interactions Order entry through paid invoice All physical material transactions From your supplier’s supplier to your customer’s customer, including equipment, supplies, spare parts, bulk product, software, etc. All market interactions From the understanding of aggregate demand to the fulfillment of each order Returns

SCOR Boundaries (cont’d) SCOR does not include: Sales administration processes Technology development processes Product and process design and development processes Some post-delivery technical support processes SCOR assumes but does not explicitly address Training Quality Information Technology (IT) administration (non-SCM)

SCOR Project Roadmap SCOR Level 1 SCOR Level 2 SCOR Level 3 Analyze Basis of Competition Competitive Performance Requirements Performance Metrics Supply Chain Scorecard Scorecard Gap Analysis Project Plan Operations Strategy SCOR Level 1 AS IS Geographic Map AS IS Thread Diagram Design Specifications TO BE Thread Diagram TO BE Geographic Map Configure supply chain Material Flow SCOR Level 2 Align Performance Levels, Practices, and Systems AS IS Level 2, 3, and 4 Maps Disconnects Design Specifications TO BE Level 2, 3, and 4 Maps Information and Work Flow SCOR Level 3 Point 1 SCOR is applied in 4 steps...Analyze Basis of Competition defines performance needs, Configure Supply Chain maps the high level material flow, Align Performance, Practices, and Systems maps the general transaction flow, and Implement Design organizes the list of projects to improve SC performance. Point2 This should also be drawn on POST IT POSTER and displayed on the wall OR have one drawn up in advance using VISIO. Implement supply chain Processes and Systems Develop, Test, and Roll Out Organization Technology Process People

Mapping material flow Manufacturing (S1, D1) (SR1,DR1,DR3) Warehouse European Supplier (S1, S2, M1, D1) (SR1,,DR1) Warehouse Warehouse (S1) (SR1,SR3) (S1) (SR1,SR3) (D2) (DR1) (S1, D1) (SR1,DR1,DR3) Latin American Suppliers Other Suppliers (S1, D1) (SR1, DR3) (D1) (D1) Warehouse (S1) (SR1,SR3) (S1) (SR1,SR3) (S1, D1) (SR1,DR1,DR3)

Mapping the execution processes Americas Distributors S1 SR1 European RM Supplier S2 M2 D2 SR3 S2 M1 D1 S1 D1 S1 DR1 SR1 DR1 SR1 DR1 SR1 DR3 SR3 DR3 SR3 Point1 Spend the time in the Model Binder, finding a good cheat sheet AND articulating what each element means...Note also that we are NOT including Suppliers Supplier and Customer's Customer for th NEW example. Point2 Be sure to articulate that ALPHA is comprised of both M and D. Point3 Use a WHITE BOARD and model the actual activity of drawing before putting the diagram on the screen. S1 Key Other RM Suppliers S1 M1 D1 Alpha Regional Warehouses RM Suppliers ALPHA Distributors

Identifying Plan Activities European RM Supplier S2 M2 D2 S1 M1 S2 M1 D1 S1 D1 S1 Key Other RM Suppliers D1 S1 Alpha Regional Warehouses Consumer RM Suppliers ALPHA Distributors 28 45

Linking Supply Chain Performance Attributes and Level 1 Metrics

Supply Chain Scorecard & Gap Analysis NEW Product Line - Representative of All Scorecards Supply Chain SCORcard v. 7.0 Performance Versus Competitive Population Overview Metrics SCOR Level 1 Metrics Actual Parity Advantage Superior Value from Improvements Supply Chain Reliability Perfect Order Fulfillment 0% 80% 85% 90% $30M Revenue EXTERNAL Responsiveness Order Fulfillment Cycle Time 35 days 7 days 5 days 3 days $30M Revenue Upside Supply Chain Flexibility 97 days Key enabler to cost and asset improvements 82 days 55 days 13 days Flexibility Upside Supply Chain Adaptability 0% Downside Supply Chain Adaptability 50% A quick assessment of Level 1 metrics revealed that the supply chain was a significant contributor to the overall profit loss Alpha was experiencing. In all cases, Alpha’s performance was below the average for its industry. Cost Total SCM Management Cost 19% 13% 8% 3% $30M Indirect Cost INTERNAL Cost of Good Sold 54% Cash-to-Cash Cycle Time 196 days 80 days 46 days 28 days $7 M Capital Charge Assets N/A Return on SC Fixed Assets

Decomposing Metrics Revenue Accounts Receivable Cash Flow Perfect Order Fulfillment Cycle Time Supplier on time delivery Schedule Achievement Perfect Order Fulfillment On Time On Time Delivery Performance In Full In Full Docs Docs European RM Supplier S2 M2 D2 Damage Damage Supplier on time delivery Perfect Order Fulfillment S2 Key Other RM Suppliers S1 M1 D1 M1 D1 S1 D1 S1 S1 Alpha Regional Warehouses Consumer RM Suppliers ALPHA Consumer

Performance Measurement Revenue Accounts Receivable Cash Flow Perfect Order Fulfillment Perfect Order Fulfillment Goal – 95% Cycle Time Inventory Metrics Conflict Supplier on time delivery Schedule Achievement Perfect Order Fulfillment Supplier on time delivery Actual – 85% Schedule Achievement Actual – 95% Perfect Order Fulfillment Actual – 90% Perfect Order Fulfillment Actual - 85% On Time On Time Delivery Performance Delivery Performance Actual – 99% In Full In Full Docs Docs Under-performance Process Systems European RM Supplier S2 M2 D2 Damage Damage Supplier on time delivery Perfect Order Fulfillment S2 Under-performance Process Systems Key Other RM Suppliers S1 M1 D1 M1 D1 S1 D1 S1 S1 Alpha Regional Warehouses Consumer RM Suppliers Consumer RM Suppliers ALPHA Consumer

Implementation Issues SCOR Implementations Vary in scope and objective Green Field Distribution analysis Planning Improvements Change Management / COTS-Consultant Selection How to conduct an ROI evaluation Senior Management support vs. Middle Manager resistance Project timelines Benchmarking Implementation Tools

ATT Wireless – Fixed Wireless Operations

Intel As-Is Modeled in Easy SCOR Suppliers Supplier Suppliers Assemble/ Package Distribution Centers Geo Ports of Entry Americas---> Europe---> Asia--->

Gold’n Plump Supply Chain Planning

90% of that Completed on time F404 Engine HP Rotor Assy NAS F/A 18 DSC NADEP NAVICP CV 25% On-Time Fairchild Fasteners 60% of Requirement Accepted, 90% of that Completed on time Serviceable Modules 188% of Requirement, Svc Engines 112% of Requirement 77%SMA Self Locking Nut D2 S1 D1 S1 M2 D2 S1 D1 S1 Serviceable Rotor S2 Assy (carcass) 164 Days 32 Days Unserviced Engine Module M2 Svc D1 98 days Engine S2 (carcass) Unserviceable Rotor Assy DR2 SR2

Carter Holt Harvey – Focus on Best Practice / Change Management Best practice achieved Practice adopted Practice not yet adopted COTS / Consultant Evaluations

USMC SRAC – IT Gaps and Redundancies

SCOR Projects – A Wide Range of Adoption Consumer Foods Project Time (Start to Finish) – 3 months Investment - $50,000 US 1st Year Return - $4,300,000 US Electronics Project Time (Start to Finish) – 6 months Investment - $3-5 Million US Projected Return on Investment - $ 230 Million US Software and Planning SAP bases APO key performance indicators (KPIs) on SCOR Model Aerospace and Defense SCOR Benchmarking and use of SCOR metrics to specify performance criteria and provide basis for contracts / purchase orders

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