Lou Ann Liebman Project General Manager, Demand Supply Planning December 2001

1. Improving Enterprise Profitability through Optimized Supply Chains Lou Ann Liebman Project General Manager, Demand Supply Planning December 2001

2. Topics • Overview of BP Chemicals DSP Efforts • Scope • Benefits • Lessons Learned to Date • Identifying the Value and Selling the Project • Choosing the Technology and Partners • A Successful Implementation • Sustaining the Benefits • Summary

3. BP Group BP Chemicals Demand Supply Planning (DSP) DSP Wave 1 DSP Wave 2 Upstream Chemicals Downstream America Europe Asia Feedstocks Polymers PX/PTA/PDDG Nitriles OS&D Performance Chemicals Feedstocks Polymers PX/PTA S&IC Global O&P Business Dev European JV O&P Asia Aromatics/PTA Acetyls China O&P • Bulk commodities, intermediates, and specialty chemicals • Single-site, regional, and global businesses • Internal, Downstream, Upstream, and external integration

4. Customer Order Management Wedge Planning Procurement Production Planning Materials Planning Offer Allocation Policies Demand Management Global Planning Scheduling Distribution Planning Inventory Management Finance Collaborative Forecasting VMI Planning Manufacturing Automation ATP Logistics Optimization BP Chemicals DSP Functionality EXTENDED FUNCTIONALITY BASIC Related Project

5. DSP Phased Approach To Implementation • Rapidly provide quick-win benefits • Promote standardization across the businesses • Provide common infrastructure for linking to other areas (ERP, Mfg, etc.) • Reduce cost of delivery and maintenance • Improve sustainability of processes • Leverage lessons learned TODAY Few Businesses Implement Advanced Features for Selected Businesses DSP W3 DSP W2 DSP W1 Most Businesses Add More Robust Functionality Based on Business-Specific Requirements Complete Implementation With Remaining Businesses All Businesses Sophistication Leveraging of Single ERP Platform Standardization of Core DSP Processes Initial Implementation With Select Businesses Time horizon

6. Costs: $0.5-$2.0m/business BP Chemicals DSP Costs Technology: Aspen Supply Chain Suite (MIMI) • Partners:TECHNOLOGY • Aspen Technology • Supply Chain Consultants • PROCESS • Accenture • CGEY • SkillSet • IT • PWC • DMR • Logica

7. Distribution Costs Inventory Swaps/Exchanges SG&A Revenue Mfg Costs BP Chemicals DSP Project Justification Benefits: • Inventory Reductions (Raw Materials, WIP, Finished Goods) • Manufacturing Costs (materials, conversion, cross-plant optimization) • Increased Revenues (demand management, customer differentiation, prime production) • Transportation and Distribution Costs (sourcing, dist. planning) • SG&A (efficiency, headcount reductions) • Swaps/Exchanges Payback: Less Than One Year

8. Lessons Learned: Identifying the Value and Selling the Project • Identifying the Value: • Assess value -- and verify with stakeholders. • Use combination of top-down and bottom-up assessments. • Challenge with “best-in-class” perspective. • Determine how success will be measured. • Selling the Project: • High-level sponsorship is important,… • Identify a sponsor who believes in the end goal. • Ensure commitment to resources -- $$ and people. • … But business/site buy-in is critical. • Identify and use champions. • Get end-users involved as early as possible. • Address alignment and interfaces with other initiatives. Set priorities.

9. Lessons Learned: Choosing the Technology and the Partners • Selecting the Technology: • Don’t underestimate technical issues. • Quiz vendors hard on technology capabilities. See demos. Talk to references. • Expect to encounter need for some developmental work. • Choose a technology that has been applied in your industry, and a vendor that has knowledge in particular areas where you expect to see high value. • “Has this been done in the field with multiple, paying, petrochemical customers?” • Selecting the Technical Partners: • Quantity and Quality of resources is critical. Interview key consultants for technical, people, and project management skills. • Reserve the right to replace ineffective resources.

10. Lessons Learned: Choosing the Technology and the Partners Selecting Other Partners: Consider 3rd party assistance for process design work and change management. • Recognize process issues will be at least as important as tool development. • Don’t implement a faster way to get the same, wrong answer. • Automating business rules means first having to agree to them. • Change management must also be addressed. • Stakeholder Identification • Change Readiness Assessments • Organization impacts (roles & responsibilities, organizational design changes) • Risk Assessments • Communication Plans • Training Plans • Metrics

11. Lessons Learned: A Successful Implementation • Securing Internal Resources: • Business/site leads should optimally: • Have broad understanding of business/site across most of the supply chain field • Have detailed knowledge in area where high value is expected • Have project management experience • Be empowered to make decisions • Be able to gather additional business/site input as needed • Communicate well to all areas/levels of the business/site • Lead resources should be 100%. Part-time resources (such as key end-users) should be at least 25% to be effective. • Commit internal resources for life of project.

12. Lessons Learned: A Successful Implementation • Determining Project Approach: • Schedule-driven or value-driven • Degree of standardization desired • One “central” project or a set of individual ones • Benefits come through delivery and use of the individual projects, but implementation and support will be more effective and economical if standardization and leveraging is used. • Central roles should facilitate the individual projects. • Business/site resources need to recognize the benefits of standardizing wherever possible and leveraging learnings across projects.

13. Lessons Learned: A Successful Implementation • Following Good Project Management Basics: • Start addressing data issues yesterday. • Address roles and organization issues early. • Define scope thoroughly up front. • Review schedule. If it sounds too aggressive, it probably is. • Put deliverables on individuals’ objectives and business/site scorecards. • Focus on delivery of high-value pieces first. Get some quick wins. • Have a project plan and use it routinely to track progress. • Identify robust leading indicators of project success/failure. • Replace ineffective resources quickly. • Expect challenges and technical hurdles. Manage expectations. • Communicate!

14. Lessons Learned: Sustaining the Benefits • Sustaining the Benefits: • Provide for on-going support and enhancements. • Ensure all processes have owners. • Recognize processes are “living.” • Measure and report benefits. • Reward champions. • Publicize successes. Share learnings.

15. BP Chemicals DSP Summary • Understand the potential reward, and set a vision to achieve it. • Cultivate internal ownership. • Expect to make some mistakes, but learn a lot. • Celebrate success!