Supply Chain Management and New Product Development: PLM Linkage

1. Supply Chain Management and New Product Development: PLM Linkage February 27, 2007

2. Supply Chain Management and New Product Development: PLM Linkage • Key Emerson Priorities from CPC • Product Life Cycle Management at Emerson – The Linkage between Supply Chain and NPD • Next Steps

3. Key Priorities to Drive Emerson Long Term Value Pricing Supply Chain Management New Product Development

4. Key Priorities to Drive Emerson Long Term Value Pricing Supply Chain Management New Product Development

5. 6 Key Supply Chain Initiatives (Ed Monser Jan 16, 2007)Importance of a Cross-Functional, Holistic Approach • Organize to Drive Supply Chain Programs throughout Business • Active involvement of all functional groups • Eliminate communication silos • Eliminate Root Causes that Stress the Supply Chain • Simplify and Leverage Logistics Network • Digitize the Supply Chain 5. Utilize Tools to Optimize Supply Chain Initiatives • Sourcing Decision Tool • Preferred Supplier List • Supply Chain ROTC 6. Drive Supply Chain Programs using New Products as Catalyst

6. Focus for 2007Continued Engineering & Procurement Collaboration Gate 1 Gate 2 Gate 3 Gate 4 Gate 5 Gate 6 Gate 7 Concept Design Development Launch & & Market Idea Concept & Development Ramp Up Production Project Research Generation Feasibility Production Planning Start - Up Post Launch Review Update Plan Process Final Check Business & AR Audit Plan Material Selector Project e-Sourcing Preferred Suppliers Charter Idea Submission Feedback Loop For Sourcing Strategy Implementation Implement Post Launch Review BOM FOLLOWS PROCESS

7. Key Priorities to Drive Emerson Long Term Value Pricing Supply Chain Management New Product Development

8. Emerson Total New Product Goals 45% 40% Goal 40% 36% 34% 35% 31% 30% 25% New Product %Sales 20% 15% 10% 5% 0% 2001 2002 2003 2004 2005 2006 2007E 2008 2009 2010 2011 N.P. Sales ($B) $5.4 $4.5 $4.5 $4.7 $5.3 $6.7 $7.6 $8.3 $9.8 $10.6 $10.7 Traditional Emerson Metric

9. New Product Development Process - 2007 Product Portfolio Management Gate 1 Gate 2 Gate 3 Gate 4 Gate 5 Gate 6 Gate 7 Concept Design Development Launch & & Market Idea Concept & Development Ramp Up Production Project Research Generation Feasibility Production Planning Start - Up Post Launch Review Update Plan Process Final Check Business & AR Audit Plan Project Charter Idea Submission Continuous Voice of the Customer Feedback and Spiral Development Post Launch Review Innovative Climate & Culture

10. Supply Chain Management and New Product Development: PLM Linkage • Key Emerson Priorities from CPC • Product Life Cycle Management at Emerson – The Linkage between Supply Chain and NPD • Next Steps

11. PLM Key Priorities to Drive Emerson Long Term Value New Product Development Supply Chain Management To fix the parts proliferation issue, one has to "go to the source“

12. Maintenance & Support Market Planning Portfolio Planning Concept Development Production & Testing Retirement Design Maintenance & Support Market Planning Portfolio Planning Concept Development Production & Testing Retirement Design Design Collaboration Marketing/Sales Collaboration Services Collaboration Manufacturing Collaboration Design Collaboration Marketing/Sales Collaboration Services Collaboration Manufacturing Collaboration Customer Requirements Customer Feedback Customers Customers Customer Requirements Customer Feedback Customers Customers PLM Collaborative Foundation B2B integration Design Change Management Design Definition Component Management Other Enterprise Locations Partners Suppliers Other Enterprise Locations Partners Suppliers Other Enterprise Locations Partners Suppliers Other Enterprise Locations Partners Suppliers What is PLM? Product Lifecycle Management (PLM) is a strategic approach to creating and managing a company's product-related intellectual capital, from its initial conception to retirement. PLM improves a company's product development processes and its ability to use product-related information to make better business decisions and deliver greater value to customers.

13. Collaboration Interoperability PDM PLM Works With ERP Innovations Execution ERP Order-to-deliveryprocess Physical and Financial Assets Marketing Selling Rich Intellectual Assets - Product Related Data Disposition PLM Volume-production Product-support Prod Reqtplanning Product-concept Product-definition Product-development Product-introduction Product Customer-support PLM + ERP = The Right Tool for the Right Job Product

14. PLM supports Key Business Initiatives • New product development (NPD) • Capitalize, plan and execute innovative product ideas. • Regulatory compliance • Manage compliance throughout the product lifecycle. • Global product development • Design anywhere, build anywhere, with global teams, suppliers and partners. • Strategic sourcing • Collaborate with suppliers early in the product lifecycle. • Global manufacturing • Build better products faster and more cost effectively. • Maintenance, repair and overhaul (MRO) • Link configuration and information to performance.

15. Emerson PLM VisionDesign Anywhere, Source Anywhere, Build Anywhere Customer Div 6 Hong Kong Philippines Common Phase-Gate Process Div 1 U.S. Div 2 China Div 3 Sweden Div 5 Italy Div 4 U.S. Local Eng Local Eng Local Eng Local Eng Local Eng Local Eng Shared Design Capabilities Div 1 Eng Div 4 Eng Div 5 Eng Div 6 Eng Div 3 Eng Div 2 Eng Shared Manufacturing Capabilities Manufacturing Preferred Materials/Supplier Database & Phase Gate System Supports ‘Design Anywhere, Build Anywhere’ Divisions Maintain Autonomy and Flexibility over Individual Processes

16. Supply Chain Management and New Product Development: PLM Linkage • Key Emerson Priorities from CPC • Product Life Cycle Management at Emerson – The Linkage between Supply Chain and NPD • Next Steps

17. PLM at Emerson • The Emerson PLM Center of Excellence (CoE) was formed May 15, 2006 to serve all Emerson divisions in implementing a common PLM solution • A partnership between Emerson, IBM & UGS was formed to help establish & support the Emerson PLM initiative

18. Systems Eng and Requirements Management Portfolio, Program and Project Management Engineering Process Management BOM Management Compliance Management Today 1-2 Years 2-5 Years SRM : Supplier Relationship Management MRO: Maintenance, Repair & Overhaul Mechatronics Manufacturing Simulation Migration Strategies Implement Base Teamcenter Solution Additional Functionality Overall Strategy Base Solution

19. Emerson Transaction Hub PLM Integration with Teamcenter Design Automation Emerson (Oracle) Systems Innovation Management MCAD Teamcenter ECAD Rqmts, Compliance, Supplier, Mfg Process Software Core Document, CAD, Change, BOM Mgmt Collaboration Portal Suppliers Supply Chain Management Material Information Network Logistics Providers Logistics Information Network

20. Timeline • 8 Divisions Have Already Started UGS PLM Implementations • 22 Divisions have needs and have communicated interest in UGS PLM implementation • 14 Divisions are forecasted to make investment in the next 6 months • 6 Divisions are forecasted to make investment in the next 12 months

21. 3-5 Year Benefits • PLM Standard Platform… Define One Source Of Truth For Product Data Globally • PLM Global Design Management… Bring Disconnected CAD Environments Under File, Change Management, and Part/BOM Control • PLM Integration To Oracle For Design And Execution Data Models… Eliminate Dual Entry, Speed Product Release, Support MBOM Change Management • PLM Supply-Chain Visibility…. Providing Real-Time Visibility For Global Supplier Parts Management

22. Summary and Next Steps • Increased New Product Development and Global Engineering Drive Need for PLM • Strengthen PLM links between Engineering Spaces and Supply Chain Management • Add Procurement to the PLM Core Team as follows: • Dennis Sollberger, Russ Hermes and James Geesey • Examples of issues that need to be addressed include, but not limited to: • Assuring that engineers are knowledgeable about SCM preferred parts and commercial terms before they make a design parts choice • Need to add SCM requirements to the common data model • Executive Support is Critical