Breakout Presentation from Elemica's inSIGHT 2013 Conference

1. Critical Mass Makes
Magic Happen
Sanjiv Bhatia
Oct 10, 2013

2. How Magic Happens?
Relative Benefits
Relative Investment
Low Value
Non Differentiating
Key Differentiating
Spend too much
on Low-Benefit Initiatives
Traditional Approach
Elemica Approach
Relative Benefits
Relative Investment
Low Value
Non Differentiating
Key Differentiating
Map $’s Invested
to Benefits
Focus Time and Money on Value-Added Initiatives 2

3. Value Creation Framework
STEP DESCRIPTION KEY DELIVERABLES
Step 1
Value identification, Value Chain Blueprint,
Partner Discovery
Value Realization Roadmap, Key Metrics,
Business Case
Step 2
eReadiness Assessment, Partner
Prioritization
Step 3 HL Program Plan Onboarding RoadMap
Prioritization Matrix
Following Roadmap Development, the Onboarding Program can be
implemented in one or more Project Workstreams
Step 4 Onboarding Implementations.. Successful Project Golive
3

4. Step 1: Value
Identification
Supply Chain
Process Analysis
Supply Chain Blueprint
BUSINESS-SPECIFIC SUPPLY CHAIN
VALUE DRIVERS
MEASURES
PERFORMANCE TARGETS
OPERATIONAL PRACTICES / STRATEGIES
TOOLS/TECHNOLOGIESeBusiness Maturity
4

5. Value Drivers
Asset Intensity
Reduction
Cost Reduction
n Compress value
network
n Automate interactions
n Improve coordination
n “Hire the customer”
10–20%
Target Value
Improvement
n Customize offering
n Enable value pricing
n Create new offerings
n Optimize (virtual
channels)
n Improve customer
acquisition/intimacy
n Reduce working
capital
n Reduce physical
infrastructure
10–20%
30–60%
Revenue
Enhancement
Value Focus
$X
$Y
$Z
5

6. Metrics Identification and
Definition - Example
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Employee satisfaction (Culture Index)
Responsibility IndexCompliance
Supply chain costs / Sector revenue
Asset utilization
Pocket margin
Cost
Adherence to business rules
Commercial unit satisfaction
Collaboration
Growth
Perfect order
Customer
MetricTheme
31 - 41 Days
71 - 91 Days
Future
Performance
Opportunity
133.3 DaysOTC Cycle Time -
(Sales Cycle + DRO)
47.3 DaysSales Order Cycle
Time
Current
Performance
AverageMetric
31 - 41 Days
71 - 91 Days
Future
Performance
Opportunity
133.3 DaysOTC Cycle Time -
(Sales Cycle + DRO)
47.3 DaysSales Order Cycle
Time
Current
Performance
AverageMetric
90%Not Tracked
Today
On Time Delivery and
Installation Rate
0.6 - 0.9%
40 - 50 Days
0.92% -1.57%Order Management
Cost Percentage of
Revenue
(Preferred over Cost per
Order)
86 DaysDays Revenue
Outstanding
90%Not Tracked
Today
On Time Delivery and
Installation Rate
0.6 - 0.9%
40 - 50 Days
0.92% -1.57%Order Management
Cost Percentage of
Revenue
(Preferred over Cost per
Order)
86 DaysDays Revenue
Outstanding
BUSINESS AND
OPERATIONAL METRICS
DEFINED TO DELIVER ON
SUPPLY CHAIN GOALS
Key Steps:
1) Define Business Value Generation Metrics for Greatest Opportunities
2) Calculate Current and Potential Impact on Revenue and Costs
WHAT WILL SUCCESS LOOK LIKE?
POTENTIAL VALUE STRATEGIES FINANCIALS
INCOMESTATEMENTBALANCESHEET
Annual
Benefits
One Time
Benefits
$65
Million
$43
Million
Sales
Gross Margin
(Cost of Goods Sold)
Inventory
Carrying Costs
Selling, General &
Admin Expenses
Inventory
Accounts
Receivable
Fixed Assets
Accounts
Payable
Sales
Gross Margin
(Cost of Goods Sold)
Inventory
Carrying Costs
Selling, General &
Admin Expenses
Inventory
Accounts
Receivable
Fixed Assets
Accounts
Payable
Improve Commodity Purchasing to
Procure with Better Market Timing
Better visibility and management of
Inventory to reduce carrying costs at
10% cost of capital
Utilize shared services
And process optimization
Tools for demand chain, forecasting,
and build-to-order.
Visibility improvement
Reconfigure Customer Contracts to
Motivate Earlier Payment
No Recommendation
Automate and consolidate
Process across business to achieve
better control
Increase Supply Chain Flexibility
to Meet Customer Requirements, especially
During Tight Market Periods
$42Million
$4 Million
$32 Million
$18 Million
$6 Million
N/A
$6 Million
$85 Million
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7. Business Case - Example
7

8. Step 2: Identify Partner
Universe
Business Entity (Company, Division etc.)
– Product Line/Group
• Customers
• Suppliers
• Carriers
• Warehouse Operators
• …
Discover partners on the Elemica network. Search by
Region, Business Process, Transaction, Custom Tags...
8

9. Business Value Rank
Rank Partners on Business Value Enabled
9

10. Technical Assessment
New Message Types, Business Rules,
Transformation Requirements Increases
Technical Complexity
Complexity Classification
H
M
L
10

11. Partner Prioritization
Partner Name Business Rank Technical Rank
Cementhal 31 14
Evonik 21 8
Tyco 6 33
Cognis 14 42
Toyota 11 16
Hyosung 46 27
…. …. …..
Business Rank is based on analysis of business value created by a partner
Technical Rank is based on the technical complexity associated with onboarding a partner
Partners are ranked independently based on Business and Technical Criteria
These are then mapped onto a Prioritization Matrix
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12. Prioritization Matrix
Technical Complexity
BusinessCriticality
II
Complex Onboarding
IV
Complex Onboarding
III
Easy Onboarding
I
Low Hanging Fruit
Low
High
Low High
12

13. Example Prioritization
Matrix
13

14. eReadiness Assessment
Contact
and
survey
Provide
options
Provide
program
timelines
Contact
Provide
info &
docs
Select &
commit to
timelines
Commit
Click –thru
agreement
Choose
options
Roadmap is adjusted based on Partner Response to the eReadiness Assessment
14

15. Campaign Management
§ Create and Manage Campaigns for large scale on-boarding
§ Consolidated workspace for event status
15

16. Campaign Management
Monitor trading partner progress across various steps
in the on-boarding process.
16

17. Step 3: Rollout Roadmap -
Example
Year 1 Year 2 Year 3
1 • Achieve consistency of priorities among the executive and functional leadership
2 • Improve communication, knowledge sharing, and collaboration
3 • Increase ownership of aligned roles & responsibilities
4 • Revenue Recognition and 2 Step Order solution
5 • Gain cross-functional agreement on SSC
6 • Review Sales compensation plan
7 • Reconsider Serialization
9 • Educate Sales & SSC staff re: each others tasks
16 • Create Order Project Managers
8a • Reengineer Sales and SSC processes
11 • Eliminate Evergreen Contracts
10 • System Driven Ibase Updates
7b • Serialization Changes
14 • Develop Change Management Process
18 • Revise ATP Process
15 • Perform Customer Segmentation
17 • Develop eBusiness Strategy
8 • Reconfigure SAP, Siebel, and their Interfaces
12 • Implement Sales BOM
13 • Reengineer Configurator capabilities
Governance
Process
Technology
17

18. In Conclusion
23-80%Automation Savings
Orders
$29.49
Cost of Manual Order
$5.99
Cost of Electronic Order
11-30%Automation Savings
Shipments
$101.28
Cost of Manual Shipment
$71.37
Cost of Automated Shipment
15-80%Automation Savings
Invoices
$22.45
Cost of Manual Invoice
$4.42
Cost of Electronic Invoice
Potential Business Value of using the Elemica Network………..
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