Presentation on Bricks Matter and Supply Chain Excellence for the Eventful Group Keynote in Melbourne on September 16

1. Premier Partners: Supported by: Produced by:

2. Lora Cecere
CEO and Founder
Supply Chain Insights LLC (USA)
Bricks Matter: Creating Supply Chain Excellence

3. BRICKS Book
Publishes in
Matter
December
2012
The Role of Supply Chains in Building Market-Driven Differentiation
LORA M. CECERE
CHARLES W. CHASE JR.

4. Evolving Practices

5. Agenda
Supply Chain Stressors
What is Supply Chain Excellence?
Supply Chain 2020
Wrap it Up

6. Growth: A Tough Slog
Years
Industry 1990-1994 1995-1999 2000-2004 2005-2009 2010-2012
Retail 17.05% 42.46% 12.89% 8.76% 5.15%
Consumer
Products 2.12% 0.84% 3.91% 7.26% 2.32%
Food & Beverage 3.86% 2.97% 8.13% 2.59% 4.27%
Chemical 0.40% 6.50% 13.80% 5.30% 13.80%
Pharmaceutical 8.10% 14.60% 6.30% 4.60% 15.70%
High-Tech &
Electronics 27.30% 13.20% 11.00% 11.10% 24.00%
Semiconductors NA NA 4.28% 1.30% 19.75%

7. Price Volatility Will Undercut Business Performance
In your best estimate, how much has commodity price
volatility affected your EBIT over the past 12 months?
What do you expect over the next 12 months?
Decrease EBIT Increase
Over past
24% 34% 18% 15% 9% 12 months
Over next
17% 36% 23% 19% 5% 12 months
Decrease Decrease No effect Increase Increase
>50 basis pts <50 basis pts <50 basis pts >50 basis pts
Percentage of Respondents

8. Supply Chain Management: Top 3 Elements of Pain

9. Collaboration: The Right Stuff
SHARED + + INCENTIVE + RESOURCES + PLAN LEADERSHIP
SKILLS + = CHANGE
VISION
SKILLS + INCENTIVE + RESOURCES + PLAN = CONFUSION
SHARED RESOURCES LEADERSHIP
+ INCENTIVE + + PLAN +
VISION = ANXIETY
SHARED LEADERSHIP
+ SKILLS + INCENTIVE + RESOURCES + = FALSE STARTS
VISION
SHARED FRUSTRATION
+ SKILLS + INCENTIVE + PLAN + LEADERSHIP =
VISION
SHARED LEADERSHIP
+ SKILLS + RESOURCES + PLAN + = GRADUAL CHANGE
VISION
based on J. P. KOTTER

10. Building the End-to-End Value Network
Today
3rd Party
Retail CPG
Supplier
Goal: Working Capital Goal: Growth Goal: Costs
Turns
True collaboration only happens when there is a
sustaining win/win value proposition.

11. Building the End-to-End Value Network
Suppliers
Inventory and Costs
Retail Store Retail
Consumer Warehouse
Manufacturing
Sales
Sales
Sales
Sales
Demand
Time
Time Time Time
60
Days of Working Capital
2009
50
2008
40
2007
30
20 2006
10 2005
Retailers Food Manufacturers Containers and Packaging 2004
Inventory data source: CFO Magazine September 2010-2004

12. Data Latency and Distortion
Store Retailer DC Manufacturer DC Suppliers
Demand
Signal
Accurate
Almost Weekly
Trivial Easy Difficult
Impossible Forecasting is
...
Instant 3-10 Days 10-20 Days 20-50 Days Delay from
Purchase to
Variable 7-20 Days 20-45 Days 45-80 Days Signal
Red Represents Emerging Economies with
Distributor Trade

13. Average Days of Inventory by Year
250.0
200.0
Days of Inventory
150.0
100.0
50.0
0.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Consumer Packaged Goods 59.0 57.0 62.0 64.0 67.0 67.0 68.0 70.0 70.0 64.0 64.0 67.0
Chemical 71.5 71.9 78.2 75.1 62.0 70.3 68.1 64.3 64.3 78.6 72.9 72.8
Pharma 122.2 133.7 190.1 171.0 184.3 175.6 167.8 149.8 154.9 198.7 154.3 131.8
High Tech 93.1 57.6 46.5 48.5 35.9 37.3 43.8 36.8 34.6 41.3 34.8 30.4
Average 86.5 80.0 94.2 89.6 87.3 87.5 86.9 80.2 81.0 95.6 81.5 75.5
Source: Supply Chain Insights 2012

14. Average Days of Working Capital by Industry
350.0
300.0
Days of Working Capital
250.0
200.0
150.0
100.0
50.0
0.0
-50.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Consumer Packaged Goods -20.0 -8.0 -12.0 -2.0 -21.0 -23.0 -8.0 -18.0 -11.0 -10.0 -12.0 -13.0
Chemical 37.3 44.7 61.7 71.9 64.8 64.1 63.8 57.0 51.7 74.8 85.6 77.0
Pharma 64.1 56.4 48.4 56.2 71.8 94.1 92.6 88.1 87.1 111.0 116.0 113.2
High Tech 231.5 290.3 283.5 243.5 173.5 138.9 109.4 103.0 92.4 131.9 138.9 140.9
Average 78.2 95.9 95.4 92.4 72.3 68.5 64.5 57.5 55.1 76.9 82.1 79.5
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Source: Supply Chain Insights 2012

15. Agenda
Supply Chain Stressors
What is Supply Chain Excellence?
Supply Chain 2020
Wrap it Up

16. Evolution of Supply Chain Process Excellence
Building Horizontal Continuous Orchestrate
Align Process Connectors Testing
Learning Demand and Supply
Adapt
Resilient
Reliable
Sense Demand Right Product Efficient
Demand Volatility
and Supply Cost
Right Place
Shape Right Time Procure to
Demand and Supply pay/order to
Supply based Volatility cash
on Market Right Cost

17. Supply Chain Excellence Definition
How Companies Define Supply Chain “Excellence”
Right product, right place, right time at the right
70%
cost.
A responsive supply chain that can adapt as
57%
markets change.
Most Mature
A resilient supply chain that can withstand the
52%
shocks of demand and supply volatility.
The Efficient Supply Chain. Lowest cost per unit. 38%
Right product, right place, right time. 20%
Base: Total Sample (61)
Q14. How does your company define supply chain “excellence?” Please select all that apply.

18. A Supply Chain
is a Complex System
with Complex Processes
with Increasing Complexity

19. The Effective Frontier
Profitable Growth
Revenue Cost of Goods
Working Capital
Corporate Social Responsibility
R&D Strategy and Investment Asset Strategy and Investment
Forecast Accuracy Customer Service Inventory
Channel Strategy Product and Supplier Strategy
Service Portfolio
Sales Distribution Manufacturing Logistics Procurement
Policies Policies Policies Policies Policies
Returns Backorders First Pass Yield Empty Miles Material Yield

20. Useful Ratios
Growth Profitability Cycle Complexity
R&D Margin Cash on Hand C2C Cycle Altman Z
R&D to COGS Ratio Free Cash Flow Ratio Days of Finished Goods Capital Turnover
SGA Margin Gross Margin Days of Inventory Current Ratio
Days of Payables
SGA/COGS Net Profit Quick Ratio
Outstanding
COGS as Percent of Net
Operating Margin Days of Raw Materials Return on Assets
Sales
YoY Sales Growth Days of Sales
Pretax Margin (EBIT) Return on Equity
Outstanding
Operating Margin Days of Work in Return on Invested
Progress Capital
DPO/DSO Return on Net Assets
Inventory Turns Revenue/Employee
Receivables Turns Cost of Sales

21. Corporate Summary

22. Metrics Included for Comparison

23. Metric Equations

24. Cash-to-Cash Cycle vs. Gross Margin (2000-2003)

25. Cash-to-Cash Cycle vs. Gross Margin (2004-2007)

26. Cash-to-Cash Cycle vs. Gross Margin (2008-2011)

27. Inventory Turns vs. Revenue per Employee (2004-2007)

28. Inventory Turns vs. Revenue per Employee (2008-2011)

29. Inventory Turns vs. Revenue per Employee (2002-2011)
SUMMARY SLIDE

30. Building Value Network Strategies
Business Strategy
What are the right things to do to increase company value?
Value-network Supply Chain Strategy
What are the right ways to support the business strategy?
What are the right trade-offs between value drivers for each value network?
Align demand Right product Design the Build Align supply
Supply chain strategy
relationships platforms supply response organizational relationships
systems and
manage talent Effective Supply
Demand Networks Design Networks Continuous Networks
Supply Chain Network Improvement
Joint Value Creation Innovation Execution of buy-side
Strategies Methodologies Design Capabilities Required strategies
Business Process
How do I do the right things right?
Source: Supply Chain Insights, LLC

31. Manufacturing Asset Strategies
Volume, demand variability, technology and of life cycle clusters
Commoditized Commoditized
High 6 5 2 1
Quadrant I
Technology
Quadrant II
Technology
Responsiveness
8 7
Efficiency 4 3
Specialized Specialized
Short Long Short Long
Volume Lifecycle Lifecycle
Commoditized Commoditized
14 13 10 9
Quadrant IV
Technology Quadrant III
Technology
Agility
Specialized
16 15
Efficiency 12 11
Specialized
Low Short Long Short Long
Lifecycle Lifecycle
Low High
Demand Predictability

32. High-tech Company
Products Supply Chain Demand Chain
Direct/Indirect/Partner direct
Business PC & Workstation
Consumer PC Consumer
Portables and Handhelds
Monitors & Options No touch
Supplies
Personal Printing SMB
Shared Printing
Low touch
Digital Imaging
Commercial Printing
Business Critical Servers Configure-to- Public
Industry Standard Servers order (CTO)
Network Storage Solutions
Enterprise Solutions High value &
Consulting & Integration Sol. solutions Enterprise
Managed Services Solutions
Customer Support Solutions Services

33. What is Agility?
How Define Supply Chain “Agility”
Shorter supply
cycles
Flexibility to make
3%
and deliver 10% Most Mature Definition:
whatever is ordered Ability to recalibrate plans
in the face of market,
49% demand and supply
volatility and deliver the
same or comparable cost,
38% quality and customer
Ability to
adapt to service
variations in
demand and
supply
Base: Total Sample (117)
Q11. How would you define what it means for your company’s supply chain to be “agile”? Please select the one that
fits best.

34. Agility Importance vs. Performance
6% Agility Importance vs. Performance
5% (7-Point Scale)
40%
Low (1-3)
89% 32%
Middle (4)
27%
Agility High (5-7)
Performance is 62
% Points Lower
Importance than Importance
Performance
Base: Total Sample (117)
Q12. How important is it for your company’s supply chain to be “agile” in 2012? Please base your answer on however your
company defines agility. SCALE: 1=Not at all important, 7 = Extremely important
Q13. How would you currently rate your company’s supply chain in terms of being “agile”? SCALE: 1=Not at all agile, 7 =
Extremely agile

35. Scenario Planning

36. Agenda
Supply Chain Stressors
What is Supply Chain Excellence?
Supply Chain 2020
Wrap it Up

37. Supply Chain Focal Points for Next 2 Years
Supply Chain Focal Points for Next 2 Years
Total Primary
Improving demand planning 74%
23%
Saving costs 70%
21%
Shortening cycles 66%
21%
Network design 62%
8% Top Supply Chain
New product launch effectiveness 10%
48% Focal Points
Channel sensing 30%
3%
Revenue management 26%
7%
Other 18%
7%

38. IT Systems: Importance & Satisfaction
IT Importance vs. Satisfaction
Importance (6-7) Satisfaction (6-7) Gap (Sat - Impt)
120%
86% 100%
83% 80% 76% 75% 73% 80%
65% 63% 59% 58%
60%
42% 38%
30% 35%
24% 28% 25% 40%
20% 15% 11% 20%
0%
-21% -20%
-23%
-34% -40%
-45% -47%
-56% -55% -52%
-59% -58% -60%
Base: Have
57 59 60 49 36 55 43 27* 44 48
System -80%
Demand Enterprise Order Tactical Supply Price Production Transportation Product Lifecycle Manufacturing Warehouse
Planning Resource Management Planning Management Planning Planning Management Execution Management
Planning Systems

39. Supply Chain Tipping Points
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
JIT Supply Chain Internet/Email RFID
Evolution of Organization
eProcurement
the PC
Re-Engineering the Total Quality
S&OP Theory of Organization Management
Constraints (Michael Hammer)
Supply Chain Excellence = Supply Chain Excellence =
Islands of + Manufacturing Vertical Silo + Efficient Order to
Excellence Excellence Excellence Cash Processes
Inside-Out Inside-Out

40. Supply Chain Tipping Points
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
.com Social
Y2K Responsibility
Demand Driven
Concepts CSCO
Lean Six Sigma
Market-Driven
Value Networks
Supply Chain Excellence = Supply Chain Excellence =
Vertical Silo + Outsourcing Value-Based Outcomes
Excellence Effectiveness Delivered by Horizontal Processes
Inside-Out Outside-In

41. What is a Market-driven Value Network?
An adaptive network focused on a value-based
outcome that senses and translates market
changes (buy and sell-side markets) bi-
directionally with near-real time data latency to
align sell, deliver, make and sourcing operations.
41

42. Getting to Letter Perfect
Common Practice Market-driven Focus
Focus on market drivers:
S Ask sales How do we best shape
demand?
Design of the value chain to
Direct integration to optimize trade-offs, minimize
& supply risk, balance cycles, and
orchestrate demand
Trade-offs between make,
OP Manufacturing plan
source and deliver

43. S&OP Evolution
Business- Greater Benefit
Sales Driven
planning Driven • Growth
Match Demand • Resilience
Maximize
with Supply • Efficiency
Profitability
Market Driven
Manufacturing- Demand Driven
Driven Maximize
Maximize
Opportunity and
Deliver a Feasible Opportunity
Mitigate Risk.
Plan for Operations Sense and
Orchestrate
Match Demand Shape
Demand
with Supply Demand
Market to Market

44. Benefits Received from S&OP Processes
Increasing revenue ▲ 2% 59%
Improving forecast accuracy ▲ 5-7% 57%
Reduction of inventory ▼ 10-15% 50%
Improving asset utilization ▲ 3-7% 42%
Determining outsourced manufacturing 38%
Determining procurement requirements 36%
Improving new product launch ▲ 3-6% 34%
Transportation and warehouse management ▼ 2-8% 32%
Capital planning and asset management 32%
Improvements in the perfect order ▲ 3-6% 30%
Source: Supply Chain Insights, 2012
What benefits have you received from your work with S&OP processes?

45. Putting Together the Pieces
Mastering Supply Chain Management with SAP 2012 | 45

46. S&OP Process

47. An Athlete Needs:

48. What is Agility?

49. S&OP Balance

50. Supply Chain 2020 Tipping Points
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Orchestration Internet of Things
Talent
Shortage Big Data Supply Learning
Chains Supply Chains
Compliance on
Safe & Secure
Digital Manufacturing
Supply Chain Excellence =
Value-Based Outcomes
Delivered by Value Networks
Outside-In

51. US Retail Mobile & Social Presence

52. Source: Intel

53. Big Data will be the NEW
Foundation of the Future
Supply Chain

54. Definition
Structured • Transactional
Challenges:
Data • Time phased data
• Social
Unstructured Volume
• Channel
Data • Customer Service
Sensor • Temperature
• RFID Velocity
Data • QR codes and GPS
New • Mapping and GPS
Data • Video Variability
Types • Voice and Digital

55. Big Data: What is it all About?
Downstream Data
EDI Sentiment Text
Cold Chain Call
Center Logs
Analytics
Analysis Hadoop
eCommerce Social What-if Models
Learning Systems
Geolocation Data Visualization
Ratings & RFID Facebook Scorecards Rules-Based
Reviews Photographs Map Reduce
Video T-Log Data Twitter R Ontology
Forecasting
Weblogs Warranty Returns Digital Path ToConstraint-based
Information
Sensors Mobile Applications
Purchase
Data Mining
Planning

56. Newell Rubbermaid

57. Newell Rubbermaid

58. Definitions
• Demand Sensing: Shortening the time to sense “true” market data to understand
“true” market shifts in the demand response. This is in contrast to the use of order to
shipment data that can have 1-3 weeks latency in translating “true” market demand.
• Demand Shaping: The use of techniques to stimulate demand. This includes new
product launch, price and revenue
management, assortment, merchandising, placement, sales incentives and marketing
programs.
• Demand Translation: The translation of demand outside-in from the market to each
role within the organization. Recognizing that the requirements for
distribution, manufacturing and procurement are different.
• Demand Orchestration: The process of making trade-offs market-to-market based on
the right balance of demand risk and opportunity.
• Demand Shifting: The shifting of demand from one period to another through
advanced shipments, and moving more products into the channel without stimulating

60. BRICKS Book
Publishes in
Matter
December
2012
The Role of Supply Chains in Building Market-Driven Differentiation
LORA M. CECERE
CHARLES W. CHASE JR.

61. Looking Forward
From: To:
Digital marketing Digital Business
Marketing driven Market driven
Sell-in Sell-through
Inside-out Outside-in
Asking the Question we Know to Ask To Listening to Hear the Questions that we do not
Know to Ask
Vertical Process Excellence Horizontal Process Orchestration
Measuring Business Complexity To Managing a System of Complex Trade-offs
The Most Efficient Supply Chain The Most Effective Supply Chain
Near Real-time Real-time

63. Evolving Practices

64. How to contact me:
Name: Lora Cecere
Organisation: Supply Chain
Insights
Email:
Lora.Cecere@SupplyChaininsights.com

65. Premier Partners: Supported by: Produced by: