Value Chain Synchronization

1. Value Chain Synchronization “ Realizing the potential of your value chain as a strategic weapon in the battle for profitable growth with Best Practices ”

2. What is Value Chain Synchronization? Customers Manufacturer Partners&Suppliers Product Synchronizing your product development efforts with your customer requirements, and closer supplier relationships, to increase product innovation and add customer value. • Commercialize Innovative Products • Leverage Globally Distributed Teams • Manage Product & Process Knowledge • New & Growing Markets • Increasing demands for Innovation • Increasing Service Levels • Specific Expertise • Proximity to Markets & Customers • Lower Cost Alternatives • Align to Customer Requirements Shorten Product Lifecycles Increase Quality Best Practice = Creating a Global Innovation Network

3. Business Integration Global strategic coordination Supplier relationship management Value chain integration Local Responsiveness Differing consumer tastes Distribution channels and sales practices Economic and political demands Why you need Value Chain Synchronization? Value chain innovators - Leaders… • Invest more than 2X more to connect them with strategic partners and suppliers as their competitors • Capture4x the information about their overall spending, enabling them to respond to opportunities more efficiently and effectively, • Operate Leaner and see more than a 30% reduction in finished goods inventory • Realize a 25% improvement in on-time delivery Source – AMR Research Design Anywhere, Build Anywhere

4. “… readily translates into an extra 5 -10 points of gross margin in the first year…” Profitable Growth Through Value Chain Synchronization Value Chain Synchronization… “…has helped them generate profit margins up to 73% greater than those of other manufacturers.” “…is paying dividends… • Product cost reduction of nearly 18%. • 10% to 20% improvements in time-to-market cycles”

5. Supplier Relationship Management How Do You Synchronize Your Value Chain? “Manufacturers should align processes, organizations, and metrics to bring sourcing knowledge and decision-making closer tothe point of design. In addition, companies should support integrated processes with the appropriate enabling technology, including integrated sourcing and PLM solutions.” Jim Brown, AberdeenGroup “The focus must extend beyond the single enterprise to enhance collaboration and strategic partnering across the supply chain. It requires tight synchronization of business processes across both procurement and engineering organizations.” Collaborative Product Development Associates, LLC

6. How Do You Synchronize Your Value Chain? Value Chain Integration “We need to stop thinking of supply chains and value chains as different entities, but, rather, should integrate the two. Product design should be fully integrated with production capability, delivery processes, and information about customer demand.” Andrew Feller, Dr. Dan Shunk, and Dr. Tom Callarman ‘Value Chains Versus Supply Chains’, BP Trends – March 2006 “Supply chain performance is all about integration – integration of strategy, processes, organization, and information systems.” Gordon Colborn, PRTM

7. Challenges addressed by Best Practices for Value Chain Synchronization Strategy Challenges Best Practice SupplierRelationshipManagement • Globally dispersed suppliers • Supplier Performance • Increasing Supply Risks • Quality Issues • RFQ Accuracy/Errors • Engineering Changes Create and sustain a superior supply chain by synchronizing with procurement & product development processes • Shorter product lifecycles • Cost of late cycle change • Scrap, & wasted inventory • Spare parts not available • Increasing service costs ValueChain Integration Synchronize the processes of innovation across the product lifecycle

8. Supplier Relationship Management Procurement Mfg Engineering SupplierC SupplierA SupplierB “ Create and sustain a superior supply chain through tighter integration with procurement & product development processes “ Sourcing AutomationRobust tools to improve procurement productivity Sourcing Integration w/ PLMLeverage PLM to improve sourcing accuracy Supplier CollaborationConnect global teams earlier in the design process to design cost out Supplier ManagementInstant access to supplier capabilities to make better design/sourcing decisions earlier

9. Buyers need accurate product data Need business data Sourcing Integration with PLM CR Program 1 Program 2 OEM 2 OEM 1 Mfg 1 Mfg 2 Assy Part Part Part Part RFQ Pkg RFQ Pkg SupplierC SupplierB SupplierA But products can be complex…. And most RFQs are due to change…. • But buyers add little value to these • Buyers need access to PLM Easy access to managed data saves time & reduces errors

10. Supplier Collaboration Assy Procurement Mfg Part Part Engineering SupplierC SupplierB Make Better Decisions Faster Reduce Travel Costs Design Cost Out of Products Bring Teams Together Digitally Changes need to be considered… • Connect teams w/ suppliers earlier • Evaluate cost & schedule impact • Review issues in real-time • Capture and route issues for greater visibility & quicker resolution RFQ Pkg

11. Supplier Management CR Program 2 Program 1 OEM 2 OEM 1 Mfg 1 Mfg 2 Comm.Part St. LouisHi-Capacity Hi-Quality SupplierB SupplierC SupplierA Distr. Mfr 1 P/N ABC Quote Mfr 2 P/N XYZ Quote TaiwanLow-CapacityOK Quality Mfr 3 P/N 123 And Supplier information needs to be accessible…. • Manage Supplier data (capabilities, quality, location, etc.)to make better sourcing decisions • Manage multiple commercial P/Ns representing commodityparts for flexible supply Assy Part Part Part Part Manage supplier data to improve performance & reduce sourcing risk RFQ Pkg RFQ Pkg

12. Single source of up-to-date product knowledge Shared with distributed partner locations Remote clients for secure, real-time connectivity Secure package exchange for partners with no PLM software Synchronize requirements, product, and process data Development IntegrationSynchronize Teams Partner/Supplier Site Lead Site Mfg Supplier Synchronize Synchronize Package Exchange Remote Clients Immediate access across organizational and geographic boundaries

13. Include partners & suppliers as part of core “team” for true concurrent development Synchronize product Bills of Material (EBOM, MBOM), processes (BOP), & “As-Built” configurations Monitor & manage supplier production to control compliance, quality, & inventory Catch issues before they make it to production Manufacturing IntegrationValue Chain as an Extension of the Business Oper Oper Oper Oper Oper Bill Of Process Oper 10,000 Work Instr. Supplier Cost of Change WorkInstr. 1000 COST (e10) 100 10 1 In-Service Prototype Build Production Requirements Design SynchronizeSupplier Data

14. Summary - Value Attained Sourcing Automation Sourcing Integration w/ PLM Supplier Collaboration Supplier Management Development Integration Manufacturing Integration Service Integration Strategy Capabilities Value • Synchronize Global Suppliers • Better Sourcing Decision • Reduce Sourcing Risks • Improve RFx Accuracy • Reduce Direct Material Costs • Improve Product Quality • Shorten Product Lifecycles • Reduce Impact of Change • Reduce Inventory Shortages • Ensure Availability of Parts • Reduce Service Cycle Times SupplierRelationshipManagement ValueChain Integration

15. Thank You