1. West Prior and STR 1© The Delos Partnership 2005 Integrated Enterprise Leadership Priority and Senior Team Reviews

2. West Prior and STR 2© The Delos Partnership 2005 Integrated Enterprise Leadership ACTIONACTION Week 1Week 2Week 3Week 4InnovationReviewInnovationReview CustomerDemandReviewCustomerDemandReview SupplyPlanReviewSupplyPlanReview Priority Review Priority Review Stage 1 Stage 2 Senior Team Review Senior Team Review Stage 5 Stage 7 Stage 3 Support Review Support Review Stage 6 Stage 4

3. West Prior and STR 3© The Delos Partnership 2005 Two Leadership Stages Prioritisation Family Summary –Major Changes –Main Assumptions –Threats & Opportunities –Decisions Taken –Decisions to Take –Recommendations, Implications, Costs Alignment to Business Plan Innovation Status Senior Team Review Continuously reviewing the balance between strategy and operations Continiuously reviewing the operational projection and strategic fit

4. West Prior and STR 4© The Delos Partnership 2005 Priority Review Objectives –To resolve issues around demand supply and innovation plans - timing and resources –To provide proposed financial statement –To facilitate what-ifs and provide basis for decisions (facts not opinions) –To provide issues for resolution by Senior Team

5. West Prior and STR 5© The Delos Partnership 2005 Preparation of the budget Financial statement enables –Visibility of current year outturn – early –Visibility of subsequent year(s) to enable budget to be one set of numbers – early Requires culture change –No six month process –No sandbagging of the numbers –Simple cut-off period

6. West Prior and STR 6© The Delos Partnership 2005 Priority Review Requirements –Financial statement of all the plans –Alternatives for evaluation External events –Governmental –Competitive Internal events –Launch threats –Supply constraints –Realistic set of plans

7. West Prior and STR 7© The Delos Partnership 2005 Budget – the timetable Marketing Plan Manufacturing Plan Financial Plan Corporate “Input” Super Corporate Input Budget JulyAugustSeptemberOctoberNovemberDecember

8. West Prior and STR 8© The Delos Partnership 2005 Where does Value get added ? Budget JulyAugustSeptemberOctoberNovemberDecember Marketing Plan Manufacturing Plan Financial Plan Corporate “Input” Super Corporate Input

9. West Prior and STR 9© The Delos Partnership 2005 Solution Use a monthly Integrated Enterprise Planning process with 5 year horizon to manage strategic and operational planning, and get rid of [most of] the non value adding operations of the budgetary process.

10. West Prior and STR 10© The Delos Partnership 2005 Alternatives to test Sales volumes Supply plans Overtime Capacity change (up or down) Service level strategy Phasing of development plans Timing and size of capital expansion Price/Volume effects Manufacturing strategy Marketing strategy Outsource/In source ONE SET OF NUMBERS

11. West Prior and STR 11© The Delos Partnership 2005 Prioritisation Led by Integrated Enterprise Leadership Director/Manager May mean a series of meetings to discuss options May require simulation capability for review of numbers Multiple sets of numbers based on one set of plans!

12. West Prior and STR 12© The Delos Partnership 2005 Integrated Enterprise Leadership Gap Analysis Strategic plan Time Now IEL Forecast Actual status years RevenueProfit ROCE % RevenueProfit What is the GAP and what are the action plans to close it?

13. West Prior and STR 13© The Delos Partnership 2005 Teamwork A common vision and shared strategy allows: Common goal Common objectives Agreed targets Consensus on performance measurement

14. West Prior and STR 14© The Delos Partnership 2005 Problem FINANCEHRIT FINANCIAL IMPLICATIONS DEVELOPMENT FunctionalAgendas SUPPLY DEMAND

15. West Prior and STR 15© The Delos Partnership 2005 Team Solution DEVELOPMENT FINANCEHRIT DEMAND SUPPLY BUSINESS IMPLICATIONS IntegratedApproach

16. West Prior and STR 16© The Delos Partnership 2005 Integrated Enterprise Leadership Provides sound basis for decision making Enables alternatives to be tested easily – on a spreadsheet ? Provides means for “doing away with” the budget

17. West Prior and STR 17© The Delos Partnership 2005 Priority Review Outcome –Decisions on capacity short term etc. where they can be made –Options for Senior Management Team to review –Review of current financial picture –Options for closing the gap –Numbers to form the basis of next year’s budget

18. West Prior and STR 18© The Delos Partnership 2005 Objectives for Senior Team Review Make decisions on major issues Review the long-term picture not short term crises Review process based performance measures Review and develop long-term strategy

19. West Prior and STR 19© The Delos Partnership 2005 Agenda for discussion Current Business situation –Plan versus Budget/Business Plan –Plan versus last plan (volume/value) Assumptions on which plan is based Issues for Resolution –Innovation development issues –Supply/Demand Allocation issues –Major Capacity changes required –Capital Expenditure Plans Performance measures

20. West Prior and STR 20© The Delos Partnership 2005 Family Summary Major Changes New Product included in Forecast Tender for Russia included Major Assumptions Competition will reduce price by 5 % We Win Russian Tender Major Threats Decisions Required Investment of Eur 0.5 m in Additional capacity for New Product

21. West Prior and STR 21© The Delos Partnership 2005 Financial justification for XYZ project Year 1Year 2Year 3Year 4Year 5 Volume100115120140150 Sales1012131517 Contribution22.52.752.52 Inc Overheads0.5 Cash Flow1.52.02.2521.5 Wkg Capital10.50.2 Cap Expenditure4 Net Cash Flow-3.51.52.051.81.3 Net Present Value @ 15 % =

22. West Prior and STR 22© The Delos Partnership 2005 Forecast must be supported by assumptions JulAugSepOctNovDecJanFebMarAprMayJun 1254145 156 170 135 145160 1345145167135180200 150 200 1256100200 300 200 134750 40 30 20 4050 NUMBERS ! ASSUMPTIONS

23. West Prior and STR 23© The Delos Partnership 2005 The Core Measures and Financial Effect

24. West Prior and STR 24© The Delos Partnership 2005 Workshop Define improvements to the inputs, outputs and agenda for the Priority and Senior Team Review steps in the process.

25. West Prior and STR 25© The Delos Partnership 2005 Integrated Enterprise Leadership ACTIONACTION Week 1Week 2Week 3Week 4 Stage 7

26. West Prior and STR 26© The Delos Partnership 2005 Priority and Senior Team Reviews Long-term - not short-term Strategic - not tactical Assumption based - not opinion based Formal - not informal rumours Team based decisions - not functional Forward looking - not backward looking Decisions – not request for information