2. About Tyco International
A diverse portfolio of market-leading businesses in
electronic security, fire, safety services and products, valves
and controls, and other industrial products
2009 annual revenues of more than $17 billion
Present in more than 60 countries
Strong global businesses in attractive market
Strong balance sheet, cash flow generation and financial
flexibility
Investing to grow our businesses
– Emerging markets
– Technology and innovation
3. Tyco‟s Five Business Segments
Safety Products Electrical and
ADT Worldwide Metal Products
World‟s largest security and Fire Suppression, Electronic Galvanized steel tubes,
alarm monitoring provider Security and Life Safety ol armored wire & cable and more
World leader Flow control
fire and life products and
safety heat-tracing
solutions
Fire Protection Services Flow Control
4. Market-Leading Businesses in Growing, Global
Industries
2009 Revenue = $17B
Electrical &
Metal
Products
$1.3B
ADT WW
Flow Control
$3.8B $7.0B
Safety
Products Fire
$1.5B Protection
$3.4B
5. Strong Positions in Large, Global
and Fragmented Industries
Global Electronic Global Fire Global Industrial Valves
Security Industry Industry & Controls Industry
$72+B Market $32+B Market $40+B Market
Expected Market Expected Market Expected Market
Growth = 5-6% Growth = 3-4% Growth = 4-5%
Tyco 11%
Tyco 12%
Secom Tyco 5%
UTC
Siemens Emerson
Honeywell Cameron
UTC GE Flowserve
Thousands Thousands of
Siemens Thousands
of Others Others of others
~75% ~75% ~85%
Industry Growth + Market Share = Growth Opportunities
Source: Freedonia, McIlvaine, Industry and Management Estimates
6. Balanced Geographic Presence
Other
Americas
8% >50% of our revenue is
Asia
generated outside of the United
Pacific States
15%
Emerging markets represent ~
15% of revenue and grew 20%
Europe
29%
organically in 2009
United States
48%
We operate in more than 60
countries and serve customers
in over 100 countries
110,000 employees
Emerging Markets Provide Revenue and Earnings Diversification
7. …Have Achieved Market-Leading Positions
Global leader in security alarm monitoring
Global leader in anti-theft systems
Global leader in fire alarms and services
Global leader in fire suppression systems
U.S. leader in emergency breathing systems
Global leader in video and access control
Global leader in industrial valves and controls
U.S. leader in electrical conduit
A Global Market Leader in Most of Our Businesses
9. ADT Worldwide
Global provider of
residential and commercial
security systems
2009 revenue of $7.0B
67% Commercial,
33% Residential
52% recurring revenue
7.2 million customers
globally
Broad geographic reach
55% NA, 30% EMEA
10. ADT Has Locations and Monitoring Centers for
Superior Security Service Worldwide
More than 20,000
Service
Technicians
40+ Monitoring
Centers
Worldwide
Countries with ADT coverage
Countries without ADT coverage
11. Fire Protection Services
2009 revenue of $3.4B;
46% service revenue
Market-leading industry
position
Strong global presence
Diversified customer base
Broad offering of fire
products and services
12. Fire Protection Services
Product Lines End Markets
Electronic Institutional
Fire alarms, mass notification, Schools/Universities
hospital nurse call, Hospitals
integrated systems Defense
Government buildings
Airports
Sprinkler Commercial
Sprinklers, engineered Hotels
solutions, special hazards, Retailer
water spray, foam, Office buildings
gas systems Shopping centers
Financial institutions
Industrial
Suppression Oil & gas
Fire extinguishers, Manufacturing
specialty systems Marine
Mining
13. Safety Products
2009 revenue of $1.5B
Market leading provider
of Fire Suppression,
Electronic Security, Life Safety
Products
Strong market position
with leading
technologies
Attractive markets with
good growth
Focus on emerging
market growth
14. Safety Products
Product Lines End Markets
Fire Suppression Institutional
Protecting people and Schools/Universities
valuable assets from the Hospitals
threat of fires Defense
Government buildings
Airports
Electronic Security Commercial
Securing homes and Hotels
businesses from Retailer
unauthorized intrusions Office buildings
Shopping centers
Financial institutions
Industrial
Life Safety Oil & gas
Protecting our Manufacturing
firefighters so they Marine
can protect you Mining
15. Electrical & Metal Products
2009 revenue of $1.3B
Market leader in steel
tubes and pipes, armored
cable and electrical conduit
products
Strong, well-known brands
Purchases and processes
over one million tons of
steel per year
16. Electrical & Metal Products
Business Lines Customers
•Electrical Wholesale
Electrical Distribution
Infrastructure •Home Improvement
Retailers
Solutions
•Wholesale
Steel Tubular & Distribution
Roll Formed •OEMs
Products •Metal Service Centers
•Wholesale
Distribution
Metal Framing •General Contractor
Solutions •OEMs
17. Tyco Flow Control
2009 revenue of $3.8B
Global leader in valves,
controls and related
products
Well-known market-
leading brands
Geographic and end
market diversity
End market diversity –
serves a broad range of
industries and
customers
18. Tyco Flow Control
Product Lines End Markets
•Distribution
Water •Storage
Applications •Treatment
•Chemical/Pharma
•Food & Beverage
Process
•Mining & Mineral
Applications Processing
•Oil & Gas
Energy •Power
Applications •Generation
19. Tyco‟s Focus Areas
Technology and innovation
– R&D centers in emerging markets
– Flow Control engineering centers in India, China and
Holland
Building service capabilities
– ADT service delivery transformation
– TSP – enhanced customer analytics
– SimplexGrinnell – building a services-led culture
– Flow Control – new service centers near our customers
20. Expanding in Emerging Markets
Revenue in Emerging Markets
– $2.6B in 2009
15% of Tyco revenue in 2009
Solid growth potential
Investing in products and people
21. Environment, Health & Safety
Joined Climate RESOLVE program in September 2007
– Set 25% reduction goal of our emissions of
greenhouse gasses
– 50% of greenhouse gasses emitted through our fleet
– Introducing hybrid vehicles into the fleet in 2010
– Utilizing GPS to drive savings
• Improved routing
• Reduced idle time
22. Types of Globalization
Tyco is a global company with a presence in more than 60
countries throughout the world. We are made up of five
segments whom all have varying needs from a
globalization effort!
Our globalization models include:
– Establishing plants in low-cost countries and utilizing the local and
regional supply base to support regional and global customers
– Cross-segment and segment IPO Offices in China and India
– Development of suppliers in LCCs…this includes large multi-national
and regional players
– Development of assembly shops in LCCs to leverage labor & skills
– Utilization of top tier contract manufacturers
23. Global Sourcing
International Procurement
Offices (IPOs)
(Offshore Sourcing Teams)
China, India, Eastern Europe, Latin America
24. Global Sourcing Products & Services
Business
IT Enabled
Products Components Process
Services
Outsourcing
Make Buy Buying IT Software Outsource Call
Decisions Components Development Center To India
For In-House
High Level Assembly ERP Back Office Tasks
Assemblies To India, Canada,
Localize Web Applications Philippines
Finished Goods Components In
OEM Products LCC plants Network AP/AR/Payroll
Examples:
Management Accounting
Own Plants or Resource Plastics parts
Contract From USA to China Engineering Service - Help
Resource Metal parts from
Manufacturing India Services - CAD Desks
Current Focus
Leverage Global Cost & Capabilities
25. OpEx Organization - Sourcing
Tyco Operational Excellence
Strategic Sourcing / Supply Chain
Real Estate IT Indirect Direct Ops Strategy Logistics
Planning &
Portfolio Mgmt Fleet / Fuel Fleet / Fuel
Electronics Globalization
Fleet / Fuel Fleet / Fuel
Transportation
Mgmt
Business & Facilities / Facilities / Facilities / Facilities /
Trade
Facilities Metals Outsourcing
Prog. Mgmt Energy Energy Energy Compliance
Energy
Transaction Corporate IT IT / Telecom /
Packaging Contract Mfg Warehousing
Mgmt Services Office Equip
IT Leadership
Temp Labor Pro Services Distribution
Council
HR / Legal HR / Legal
Plastics
Finance & Analysis
Travel Chemicals
Travel
Marketing /
Print
e-enablement
Office Supply /
MRO
26. Strategic Sourcing Philosophy
7-Step Strategic Sourcing Process:
Select Generate Select Negotiate Operationali
Profile the Sustain the
Sourcing Supplier Implementati and Select ze Supplier
Category Results
1 2 Strategy 3 Portfolio 4 on Path 5 Suppliers 6 Integration 7
Understand Create “go to Open supply Decide most Conduct Operationalize Monitor market
internal spend market” base and appropriate aggressive supplier and supplier
and external approach identify all execution negotiations agreements performance
market viable suppliers strategy and select
suppliers
Focus on Tyco’s Spend Supplier Engagement Implementation
and the Market & Negotiations
Common Approach Deployed Across Tyco
27. Global Sourcing Regions & Commodities
Asia
• Electronic components
• Cables/Harnesses
• Stamping
• Molded parts / Tooling
Eastern • PCB / PCBA
Europe • Textile
• Contract mfg. - Hi Volume
• Raw material • Castings
• Metal parts fabrication
• Castings China
• Tooling
India
Mexico / Latin
• Molds & Dies, Molded Parts
America • Metal parts / Machining
• Chemicals / Resins
• Metal parts
• IT & ITES
• Cable Harnesses
• Textiles
• Assemblies
• Castings & Forgings
Selecting Regions Based on Core Competencies,
Total Cost, Quality, Delivery & Logistics
28. Offshore Sourcing Teams - IPOs
2004-05 2006-07 2008-09
C
H
I
N
A
Team Process/Tools Supplier Strategy
• Development of functional strength • Standardize Sourcing Process • Execution
• Focus on major commodities • Standard tools / metrics •Optimize supplier base
• Supplier identification • Audit credibility • Develop strategic alliances
• Global Sourcing only • Talent development • Consolidate sourcing teams
I
N
D
I
A
Developing Leadership Talent and Core Competency
28
29. LCC Sourcing Organization
Roles & Responsibilities
‘Pitching’ ‘Catching’ ‘Catching’
Leaders In Leaders In Each Commodity Teams
HCC LCC In LCC
•Build LCC funnel / Business case •Build Country funnel / •Commodity Expertise
Business case
•Cross functional interface •Price Negotiation
•Ensure supplier capability/
•Ensure cross-functional readiness •Supplier Audits / Development
resource allocation
•Qualification /Phase in/ •Project Execution
•% LCC Spend target overlap
•Part of Global category
•Total LCC savings target •% LCC Spend target teams
•Budgeting – Tooling, Switching •Total LCC savings target •%LCC by category
cost
•Six Sigma / Transfer process •% savings by category
•Manage phase out of pitching
suppliers • Program EXECUTION •Delivery, Quality metrics
Segment Specific Common Across Segments
Project execution Financial Analysis and Report, Logistics Support/management, Support IT,Admin.
Global Business team Needs, Quality Systems/Support, Supplier Selection / Development, Negotiate
Interface Contracts, Compliance, Six Sigma / Corrective Actions, Part of global category team,
Drive Savings E Auctions – Tools/Training, Supplier Score Card
Accountability & Goal Alignment
30. Transformation To IPOs
Created shared service IPOs & Integrated
Individual Tyco businesses “doing their local teams - similar structure in all IPOs
own thing”... literally meeting in
supplier‟s lobbies.
Developing talent - Career path
Duplicating supplier management
Audit/selection/development Global Best in class processes used by all
Adding business to suppliers with poor
IPOs - Developed with the Business
performance
One face to suppliers – Annual Supplier
Missing volume leverage
day
Conflicting priorities – confusing
suppliers Global linkages - Visibility
Qualification processes , monitoring and
management programs ranged from Emerging Markets - Organic Growth
none to near Best-in-Class. engines
31. IPO Structure
Regional Director
IPO
China / India / EE / LatAM
Sourcing Local sourcing Teams
PM PM PM
Quality Flow Control Flow Control Safety Products
PM
Thermal Control
supporting local manufacturing
EMEA & Asia NA & LA TEMP
Logistics
China
RCM Program Managers dedicated Shanghai, Pudong, Shenzhen
Commodity Teams
and accountable to business
India:
Chennai, Halol, Bangalore
units
Supplier Excellence Funded by BU/Programs Local Sourcing Teams
Quality Team Disbanded /Merged
Centralized Functions with specific
Logistics Team
expertise, Can be dedicated to BU based
• on volume
Bring Synergy across product line
• Consolidation of Volume across PM – Sourcing Transfer Program
product line & across plants. Managers
Reporting/Analysis
Services • Common Processes. RCM – Regional Commodity managers
32. IPO Services
Transfer Project Management
– Supplier Selection RFP, RFQ, Pilot Run to Production
– Specification review and supplier technical communication
– Drawing review
Commodity Management
– Supplier Rationalization
– New Supplier Development
Supplier Performance
– Quality Systems Auditing (including financial background checks), part
inspection etc
– Supplier OTD, quality tracking – expediting etc
– Logistics & planning
33. IPO Supporting A Global Business Unit
Functional Leads In IPOs Global Global Programs / BU
Commodities Engineering Global Business Unit
Support Transfer Teams
Castings / Forgings USA
Metals / Fab. / Machining EMEA
Electronics – Asia
Components, PCBAs
Program Manager in BU Functional Leaders
Tooling
Finished Goods / IPO supporting a Engineering
Assemblies Manufacturing
Particular BU Sourcing
Quality
Global Suppliers
Order Management & Logistics US/EU/Asia
Global
Quality
Shared Commodity Expertise – Dedicated
Program Management
34. Logistics Team Helps Execution !
- Weekly order status - Order follow up
- OTD Improvement - Supplier coaching
- Weekly Con-call - Pre-production status review
- Physical on-site Check
- Manage Freight Forwarder
IPOs - Supplier capacity /Planning
- On time delivery
- Custom/Tariff issues - Payment Chasing
- Shipment Consolidation
Ordering & Payment
Tyco Suppliers
Plants Confirm, Shipment &
Invoice
Providing In Region Support to all Tyco entities
34
35. Established Technology Centers To Accelerate
Sourcing
Accelerating Growth With Centers
of Excellence (COE)
Shanghai COE opened April „08
– 75 engineers with 100 planned
Bangalore COE opened Nov. ‟08
– All Tyco entities co-located
– Team of 45 now in place
– ADT and TSP working together to
identify market opportunities
NPI, Value Engineering, Supplier
changes, regulatory approvals and
36. Tyco Supplier Expectations
Capabilities Processes Social Responsibility
Core competency in eSourcing Integrity
technology
Six sigma IP protection
Global Logistics
Lean
Global safety &
- On time delivery regulatory compliance
Superior Quality ( ISO, CE… )
- Warehousing
Cost competitive Trade compliance
Capacity Comply with Local
regulations
Financial strength
World Class Supply Base
36
37. Overall Benefits
Share & optimize resources – Leverage commodity expertise
and across divisions – Infrastructure COST
Common supplier base - Volume leverage – Product COST
Robust processes with global acceptance – Supplier selection,
audits, quality, transfer processes – Global Credibility
One face to the supplier – Load distribution – Become a key
customer to a fewer suppliers
Monitoring supplier performance – common score card
Leverage regional / co-located technology centers
NPI, Value Engineering, Supplier changes, regulatory
approvals and qualification
Talent development, Training – Create a „best in class‟ team
Global visibility – Career path – Retention
One TYCO team identifying, communicating and addressing
RISKs in the region
38. Overcoming Challenges
Demonstrate Value / ROI – Credit to business
units
Initial resistance from business leaders Dedicated program managers accountable &
– „Control‟ and „Credit‟ reporting to the business units
Accountability - Focus / Priority Engage business units in talent selection &
Local vs. Global needs – quality / performance reviews
regulatory Drive global standards & processes : Avoid
Local supplier relationships – hard to A team/ B team
break Global supplier base : Opportunity to
Cost sharing existing suppliers to develop
Hiring & developing talent - Cost Fair cost allocations
Language Hire the best : multi-national /Multi lingual –
Lack of support : Execution/ speed – Salary adjustments
Frustration / retention Global ownership People/Projects – regular
program reviews with all key stakeholders
39. Global Sourcing Growth
EM Sourcing EM $ Spend $450M
Headcount 81 Growth
68 $390M
50 $280M
India
China
Czech Rep
Mexico
2007 2008 2009 2007 2008 2009
Shared Service IPO – Most HC in Asia Most spend to date is in Asia
Adding HC in E. Eur. and Latin AM Growing link with the market growth
Commodity Center of Excellence Looking beyond China and India in Asia
Compliance Training Exploring E. Europe & Latin AM – in 09
Complimented by Technology Team Internal Resistance remains in pockets
Shifting Role - From Global Sourcing / Cost Reductions
To Enabler of Regional Market Growth
41. …..Shipment of 20 Ton Casting
Pick-up
Logistics Support
Supplier
• Selection/Negotiation with
Freight Forwarder and obtained
Pick up from cost avoidance of nearly US$
Casting Supplier
Custom Clearance and 200K
Loading at Delhi
Airport
• Developed Packing
requirements
• Optimized the Routing
OFF loading from Aircraft • Flawless Execution of project.
at Destination Airport
and Custom Clearance
M/C
Supplier in
ITALY
Ground Transportation from
PARIS to ITALY
42. Key Takeaways
Hire the best talent – Coach /mentor and link them to the global
team.
Communication
Leadership
Content
Do not compromise on suppliers - Need to pick technology &
growth partners
Financial readiness
Technology readiness
Execution excellence
Establish a disciplined internal operating mechanism
Shared commodity management – BU dedicated program management
Communication & share best practices
Demonstrate Value And Deliver Results