2. Agenda Overview of Supply Chain Management (SCM) What are the key objectives of SCM?

What are the challenges with SCM integration? What benefits are derived from SCM? What are the key components of SCM solutions? Where are the improvements found? What is the next generation SCM solution? What benefits can be derived from these trends? 3. Agenda (Contd.) An approach to implement SCM strategies? How do you measure success? How do you overcomes these challenges? SCM Excellence Road Map SMEs in APAC region & research findings SCOR Framework & Implementation 4. Overview of SCM Process Custom packaging Consolidation Pre-assembly Material management JIT delivery Kitting Hub operations Sub-assembly Custom packaging Outsourcing Inventory & Labour management Transport Cross-dock Customs clearance Global forwarding Secondary Reverse logistics Inventory factoring L/C financing freight payment Equipment leasing Equipment financing Private fleet financing Equipment financing Project financing L/C financing Credit servicing EDI services VMI services MRP systems RFID systems Integrated supply chain & Production planning tools WMS DRP systems Transport routing Command & control Satellite tracking Suppliers Inbound Logistics Manufacturing Distribution Centres Finished Product Distribution Customer Physical Services Financial Services Information Services

5. SCM is a network of business partners from raw materials to the consumer including : manufacturing, distribution, transportation, wholesaler, retailer and any other supplier that participates in the production, delivery and the sale of a product or service. What is Supply Chain Management (SCM) ? 6. Supply Chain Management (SCM) and Execution (SCE) are the interactive and collaborative processes and tools that leverage strategic relationships within the supply chain for the sharing of confidential and mission critical sales, forecasting, planning, purchasing and replenishment data with the ultimate objective of maximizing efficiencies, reducing costs and increasing profits by proactively insuring that the right product is delivered to the right place at the right time . What are SCM & SCE key objectives ? 7. The basic supply chain should be integrated to manage the a complex flow of information, both between and within enterprises The challenge is to integrate this information and make it accessible where, when and how needed What are some of the challenges? 8. Get the right product in the right place at the right time . Create an awareness of the supply chain structure including organizations, capabilities, strengths, weaknesses and opportunities for improvement. Build a stronger supply chain through the development of bonded and collaborative relationships with business partners. Increase supply chain end-to-end visibility with real time communications of inventory

requirements, orders, shipments, payments and performance. Improve forecast, planning and replenishment accuracy Reduce costs and increase profits through increased efficiencies, negotiations and compliance. Reduce inventory levels through inventory management disciplines. Improve service levels through performance management . What benefits are derived from SCM ?

9. Store In-Stock Channel Design Network Rationalization Flow of Merchandise Distribution Operations/ Transportation Planning, Buying, Allocation Supporting Infrastructure Right goods, right place, right time, right cost The optimum combination of facilities and transportation modes that achieve service targets The cost effective Distribution Channels at the lowest cost Synchronized flow of merchandise to optimize inventories and meet customer demand The most appropriate operational linkage between client and vendors Functions and processes consistent with vendor operating strengths and needs The most appropriate information systems and support areas to plan and manage the flow of goods strategy Key components of SCM solutions 10. Overview of SCM Process Suppliers Inbound Logistics Manufacturing Distribution Centres Finished Product Distribution Customer Suppliers Manufacturing Distribution Centres Finished Product Distribution Customer Make to Stock Make to Order 11. Where are the improvements found ? Value Chain Diagnostic Component Selection and Sourcing Production Scheduling Demand

Management Warehouse Management Strategy and Network Design Logistics Supply Planning (Inventory, Master and Distribution Planning) Value Chain Transformation Operations Performance Improvement

12. What is Next Generation SCM Solution? Supply chain innovations are being driven by 4 major themes Value Chain Transformation Globally The Customer Driven Supply Chain Networked Value Chains Globalization Virtualization Collaboration Web Enablement B2B Gets Real 13. What are the benefits from these trends ? Global Supply Chain Restructuring & Outsourcing Collaboration with Trading Partners Collaboration for New Product Development and Market Launch Continuous Supply Chain Value Improvement Applications Integration and Outsourcing of Application Management Incremental cost efficiencies from suppliers through eSourcing Reducing costs, increasing responsiveness and flexibility Bringing products to market more effectively Reduce customization Increase new product introductions Integrate multiple enterprise systems Outsource for rapid transformation Asset Optimization Tax advantaging Greater efficiencies Higher performance Networked value chains Eliminating functional and asset redundancies Accelerate time to market Global capabilities capture Leverage existing ERP investments Expand functionality to deliver benefits Optimized cost, service, margins, profits Business Trends Potential

Benefits Globalization Virtualization Collaboration Web Enablement

14. How to implement SCM strategies? Transformation Operations Technology Enablement Process Change Technology Implementation Operations Outsourcing Application Management Business Performance Management Security & Privacy Business Intelligence Product Lifecycle Management Sourcing and Procurement Enterprise Asset Management Logistics and Distribution Supply Chain ERP Supply Chain Strategy & Operations Integrated Supply Chain Planning 15. What is the best approach? Prepare Focus Redesign/ Design Configure Deploy Business Domain Organization Domain Application Domain Architecture Domain Project Management Domain Operations Domain Engagement Launch Engagement Close Run and Maintain 16. Using a framework enables a Holistic, Incremental and Iterative Approach : Business Domain - best practices, redesign processes Organization Domain - redesign organization / roles, manage changes, training Application Domain - design, configure, integrate, document, test, migrate data Architecture Domain - IT infrastructure Operations Domain - skills transfer, manage operations Project Management Domain manage project, risk, quality and communication Best Practice approach (Contd.) 17. The success of YOUR SCM initiative is the sum of many elements. How do you measure

success ? Skills Education and Training Implementation Methodology Business Transformation Project and Risk Management Application & Architecture Change Management ERP Applications Data Migration Operations Application Integration

18. What are the 8 CSF ? Clarity of Direction Disciplined Project Management Visible & Committed Leadership Targeted & Effective Communications Measurable Goals Broad-based Participation Single Program Focus Compelling Need for Change Critical Success Factors 19. Limited knowledge / experience in Supply Chain practices. Supplier-Retailer relationships are limited to buy-sell transactions no strategic planning, forecasting , etc. Communications and operations are outdated legacy models (phone, fax, email, etc.) Significant amount of time and effort spent on manual, labor intensive operations. Best practice tools and technology are expensive and out of reach for independent small to mid-size businesses. What are some of the challenges ? 20. Supply Chain education develop a knowledge and understanding of best practices and how they apply to your specific organisation (disciplines, tools, costs, benefits, opportunities). Develop a short-term and long-term strategic plan for building a world-class, competitive supply chain. Prioritise your goals with SMART objectives. How to overcome these challenges ? 21. Supply Chain Excellence - Road Map

22. How are SMEs in APAC region, reaping the benefits of SCM practices ? 23. SMEs in APAC Region Many SMEs are playing a vital role at critical supply chain links (eg. suppliers of parts, manufacturers of products or distributors to customers). SME are finding it easier to re-engineer existing business processes and adopt SCM approaches than the large organisations. They are not faced with organisational structure and cultural barriers. SME Managers are continuously improving the SCM process as their organisation grows. They find managing change easier (eg. size and flexibility advantages). SME are not free from global competition. They are introducing SCM best practices and information systems in an integrated manner , as a method of addressing the competitive environment. 24. Issues addressed Cross-organisational integration Long-term relationships Information sharing EDI E-commerce Total quality management Just-in-time (JIT) Timely, realdemand driven information Planning collaboratively Cost transparency Risk and benefit sharing 25. Research undertaken on SMEs in the SCM arena 26. Research findings Caldwell, Harland, Powell, Woerndl and Zheng (2002, p. 124) identified: SMEs tend to focus more on achieving operational efficiencies but overlook the strategic potential of IT

27. Research findings (Contd.) Levy, Powell and Yetton (2001, p. 133-144) found: The introduction of information and communication technologies into SMEs is usually fragmented . They are concentrated on operational support and transaction processing. The organisation structure, owners attitude, limited IT infrastructure, limited knowledge and limited expertise in integrated system tend to decrease their ability to plan effectively. 28. Supply Chain Operations Reference-Model (SCOR) Overview 29. The SCC is an independent, not-for-profit, global corporation with membership open to all companies and organizations interested in applying and advancing state-of-the-art supply chain management systems and practices. Over 800 Company Members Cross-industry representation Chapters include Australia, New Zealand, South East Asia The Supply-Chain Council (SCC) has developed and endorsed the Supply Chain Operations Reference-model (SCOR) as the crossindustry standard for supply chain management. Supply Chain Council (SCC) 30. Cross Functional Framework Process reference models integrate the well-known concepts of business process reengineering, benchmarking, and process measurement into a cross-functional framework. Quantify the operational performance of similar companies and establish internal targets based on best-in-class results Benchmarking Characterize the management practices and software solutions that result in best-in-class

performance Best Practices Analysis Process Reference Model Capture the as-is state of a process and derive the desired to-be future state Business Process Reengineering Capture the as-is state of a process and derive the desired to-be future state Quantify the operational performance of similar companies and establish internal targets based on best-in-class results Characterize the management practices and software solutions that result in best-in-class performance

31. SCOR - 5 distinct Management Processes Supplier Customer Customers Customer Suppliers Supplier Make Deliver Make Deliver Make Source Deliver Source Internal or External Internal or External Your Company Source SCOR Model Building Block Approach Processes Metrics Best Practice Technology Plan Source Deliver Return Return Return Return Return Return Return Return 32. Customers Suppliers P1 Plan Supply Chain Plan P2 Plan Source P3 Plan Make P4 Plan Deliver Source Make Deliver S1 Source Stocked Products M1 Make-to-Stock M2 Make-to-Order M3 Engineer-to-Order D1 Deliver Stocked Products D2 Deliver MTO Products D3 Deliver ETO Products S2 Source MTO Products S3 Source ETO Products SCOR - Processes Return Source P5 Plan Returns Return Deliver Enable D4 Deliver Retail Products 33. SCOR Boundaries SCOR Spans: All supplier / customer interactions Order entry through paid invoice All physical material transactions From your suppliers supplier to your customers customer, including equipment, supplies, spare

parts, bulk product, software, etc. All market interactions From the understanding of aggregate demand to the fulfillment of each order Returns

34. SCOR Boundaries (contd) SCOR does not include: Sales administration processes Technology development processes Product and process design and development processes Some post-delivery technical support processes SCOR assumes but does not explicitly address: Training Quality Information Technology (IT) administration (nonSCM) 35. SCOR Implementation Roadmap Material Flow Operations Strategy Analyze Basis of Competition Configure supply chain Align Performance Levels, Practices, and Systems Implement supply chain Processes and Systems Competitive Performance Requirements Performance Metrics Supply Chain Scorecard Scorecard Gap Analysis Project Plan AS IS Geographic Map Design Specifications TO BE Geographic Map Information and Work Flow AS IS Maps Disconnects Design Specifications TO BE Maps Develop, Test, and Roll Out Organization Technology Process People 36. Example - Mapping Material Flow (D1) (D1) (S1) (SR1,SR3) (S1, D1) (SR1,DR1,DR3) (D2) (DR1) (S1, D1) (SR1, DR3) (S1, D1) (SR1,DR1,DR3) (S1, D1) (SR1,DR1,DR3) (S1) (SR1,SR3) (S1) (SR1,SR3) (S1) (SR1,SR3) (S1, S2, M1, D1) (SR1,,DR1) Latin American Suppliers Warehouse Other Suppliers Manufacturing European Supplier Warehouse Warehouse Warehouse

37. Linking SC Performance Attributes and Level 1 Metrics Performance Attribute Performance Attribute Definition Level 1 Metric Supply Chain Delivery Reliability The correct product, to the correct place, at the correct time, in the correct condition and packaging, in the correct quantity, with the correct documentation, to the correct customer. Delivery Performance Fill Rates Perfect Order Fulfillment Supply Chain Responsiveness The velocity at which a at which a supply chain provides products to the customer. Order Fulfillment Lead Times Supply Chain Flexibility The agility of a supply chain in responding to marketplace changes to gain or maintain competitive advantage. Supply Chain Response Time Production Flexibility Supply Chain Costs The costs associated with operating the supply chain. Cost of Goods Sold Total Supply Chain Management Costs Value-Added Productivity Warranty / Returns Processing Costs Supply Chain Asset Management Efficiency The effectiveness of an organization in managing assets to support demand satisfaction. This includes the management of all assets: fixed and working capital. Cash-toCash Cycle Time Inventory Days of Supply Asset Turns 38. Level 1 Performance Metrics Customer-Facing SCOR Level 1 supply chain Management Assets Supply Chain Reliability Cost Responsiveness Delivery performance Fill rate Perfect order fulfillment Order fulfillment lead time Supply Chain Response Time Production flexibility Total SCM management cost Cost of Goods Sold Value-added productivity Warranty cost

or returns processing cost Cash-to-cash cycle time Inventory days of supply Asset turns Internal-Facing Flexibility

39. Example - SC Scorecard & Gap Analysis 50% $30M Revenue $30M Indirect Cost 35 days 97 days 0% 63% Supply Chain SCORcard Performance Versus Competitive Population Overview Metrics SCOR Level 1 Metrics Actual Parity Advantage Superior Value from Improvements Delivery Performance to Commit Date 85% 90% 95% Fill Rates 94% 96% 98% EXTERNAL Supply Chain Reliability Perfect Order Fulfillment 80% 85% 90% Order Fulfillment Lead times 7 days 5 days 3 days Flexibility Responsiveness Production Flexibility 30 days 25 days 20 days Total SCM Management Cost 19% 13% 8% 3% INTERNAL Cost Warranty Cost NA NA NA NA NA Value Added Employee Productivity NA $156K $306K $460K NA Inventory Days of Supply 119 days 55 days 38 days 22 days NA Assets Cash-to-Cash Cycle Time 196 days 80 days 46 days 28 days Net Asset Turns (Working Capital) 2.2 turns 8 turns 12 turns 19 turns NA Supply Chain Response Time 82 days 55 days 13 days 45 days $7 M Capital Charge Key enabler to cost and asset improvements $30M Revenue 40. Conclusion Review of the SCM Process, the importance of integration and the benefits. Next generation SCM solution and the benefits that can be derived from these trends. Best Practice approach in Implementing SCM strategies SCM

Excellence Road Map SCOR Framework & Implementation