CASE STUDY Presented By Donald Cross

ANALYSIS MAIN ISSUES Impact on Total Business 1. Managing Warehouses 2. Compliance 3. Lean Culture 4. New Global Logistics.ORG/ Local 5. Sales & Operation Planning (S&OP) 6. Process Harmonization To Improve Cost Efficiency 7. Delayering of Supply Chain 3-1 8. Consolidate Supplier Base & Transport Costs 9. Indirect Spend Optimization 10. Project Start up With PMO

1. Measuring & Develop metrics to optimize logistics 2. Indirect optimization projects with stakeholders/ Group 3. Management – Americas logistics team “No I in team” 4. Compliance & Data transparency (create visibility creates control) 5. Total Customer Service Solutions/ Service Levels/ Frontline 6. Develop Warehousing KPI’s/ Benchmark 7. Transport spend report Air, Ocean, Domestic (Air Freight Spend) 8. 3PL/ Freight Partners QBR/Budget/ Service 9. Multiple Supplier Consolidation 10. Creating a Culture for Change

“Building bridges between logistics and all departments to drive excellence. Resulting in pride and passion in our achievements as one Company.

Managing Warehouses 3PL & Satellite

1. FORM A CROSS-FUNCTIONAL TEAM—including representatives from multiple disciplines and departments across your enterprise.

FORMING A CROSSFUNCTIONAL TEAM

COLLABORATION

New Idea’s

Process & Continuation

More Success

Purchasing

Production

Manufacturing

Sales &

Marketing

Customer Service

Information

Technology

Finance

3PL

In the cross-functional team, include colleagues responsible for managing the company’s brand and

orchestrating the customer experience.

1) COMMUNICATE 2) VISUALIZE 3) ACKOWLEDGE

GENERAL OUTSOURCING MOTIVATIONS

Increase Revenue

Improve Capabilities

Reduce Costs

Increase Flexibility and Responsiveness Increase Speed to Market Improve Speed to Market

Focus on Core Business Gain Access to new Technology Gain Access to Advanced Skills

Reduce Operating Costs Reduce Capital Investment Transform Fixed Variable Costs

VALUE 3PL DRIVERS 1. Safety & Security - Compliant medical device warehouse facilities 2. Detailed Tracking - Web interface complete visibility 3. Daily Updates - KPI monitored uploaded (D-LOGPLUS) 4. On Going Value - Ongoing process improvement & cost reductions 5. Accurate on Time Deliveries - Optimization and Just in time 6. Real Time Metrics - Performance dashboards/ KPI’S 7. Cost V’s Insource - Budget & Value 8. Transport Costs Insource to Outsource

Compliance

COMPLAINCE CHALLENGES

EFFICIENT COMPLIANCE – Process Harmonization to Reduce Costs

The compliance space has matured over a period of time and is aiming for achieving efficiency along with effectiveness. Efficiency leads to cost reduction but efficiency cannot be achieved unless the compliance initiative is automated and controls are optimized. Controls cannot be optimized unless the controls are standardized. No amount of effort for standardization of controls will yield results unless business processes are standardized. Efficient compliance means following a consistent framework approach to achieve efficiency in reporting, consolidation and evaluation of controls. It is strategic, proactive and a long term compliance perspective

Lean Management

LEAN MANAGEMENT = LEAN CULTURE Overview Lean Management

Goals: Steady Cost Reduction Zero-Defect-Quality No Raw Material, finished goods or WIP High Production Flexibility

3 Cornerstones Of Lean Management: Principle 1) Avoid Capital Cost 2) Standardized Material Flow Just in Time (JIT) 1) Always provide the right material in the right time, in the right quantity at the right place. 2) Only when reaching the minimum quantity (consumption of which will cover the time for new delivery) a new order will placed (Kanban-principle), so that there is not big inventory buffer.

Approach:

Lean Management is focusing on the organization of all resources in a supply chain by eliminating non value-adding activities (waste) in order to achieve the optimal profitability.

Accelerate Production

Facilitate Production

Reduce complexity by using components

Standardization of the production program

Supplier

3PL Warehouse

Stage 1 1 User 8 hrs shift

Stage 2 2 User 8 hrs shift

Stage 3 1 User 8 hrs shift

Final Check 1 User 8 hrs shift

Process Time: 30 Min

Changeover Time: 5 min

Yield: 95%

Batch Size: 1

Process Time: 60 Min

Changeover Time: 25 min

Yield: 75%

Batch Size: 1

Process Time: 90 Min

Changeover Time: 15 min

Yield: 92%

Batch Size: 1

Process Time: 30 Min

Customer Customer Service

Request Phone/Email

Confirmation Phone/Email

Order Email

Confirmation Email

! 5 pieces 5 Hours

! ! 2 pieces 3 Hours

2 pieces 0.3 hours

Example: Finalizing the Value stream map

Total Lead Time (value Adding and non value adding time)

Sales & Customer

LEAN MANAGEMENT = LEAN CULTURE

Overnight Delivery

5 hrs 3 hrs 0.3 hrs (8.3 hrs) (3.5 hrs) (39%)

0.5 hrs 1 hrs 1.5 hrs 0.5 hrs Value Adding Time

Challenges of Global Sales & Operations Planning (S&OP)

• What do we want to achieve • Where do we want to be in short & long term • Clear vision & strategy, measurable plan 1) New Markets 2) Expansion into New Geographies 3) Be ahead of competition 4) Cost Reduction 5) Launch New Product • Do we want more than one S&OP? • Global companies AVERAGE more than one S&OP • Risk: Cultural and Regional differences

Growth, Revenue & Profit Improve Rev 2% to 5% Reduce Inventory 7% to 15%

Obstacles

• Language barrier (Chinese, Dutch, English & Spanish) • How does each region define success • How service levels are calculated and measured • Inconsistencies will exist from Region to Region • Enterprise Resource Planning (ERP) & Acquisitions

Accounting Sales Manufacturing

Financial Evaluation Inventory Producing Efficiently (Mix & Location) (Capital & Investment) (Hold More goods) Each Department focuses on own metrics and goals rather than company goal!

Multi Million Dollar Company with Operations 40 Countries

Improve Sales

Forecast

Increase visibility future

demand

Reduce Inventory

Obtaining Global view of demand, supply & inventory is a major challenge Data highly static and inconsistently represented Unable to Slice and Dice data (regional & global)

“S&OP BIG BANG TEST” Implemented in North America 1. Updated Forecasts Leads to Sales Plan 2. Production & Inventory Plan 3. Customer Lead Time (Backlog Plan) 4. New Product Development Plan 5. Strategic Inefficient Plan 6. Resulting Financial Plan

Americas EMEA AsiaPac

IMPLEMENTATION PLAN

Commence data gathering process, site visits, Operational methods

Review the current operations and facilities to establish suitability. Produce Data Report. Compile specification of Services & or Facilities Required document. Approach suitable contractors with an Enquiry Document to establish capability and interest. Develop and issue Invitation to Tender (ITT) document, prepare shortlist, arrange reference visits, field enquiries and select. Prepare Contract & Service Level Agreement documentation; assist with negotiation. Assist with implementation and monitoring of contractor performance.

First Step: Organization V’s Software Data Material Flow: 1) Receive 2) Store 3) Pick 4) Ship Gain real-time access and insight into warehouse operations, no matter where warehouse activities are conducted. Decrease inventory levels and carrying costs with greater visibility across all warehouse activities, regardless of system Reduce or eliminate the reliance on costly ERP and standalone warehouse management systems Improve flexibility and adaptability for managing remote, in-transit and satellite warehouse and storage locations Optimize warehouse labor and reduce overtime with improved access to workforce requirements and information Enhance warehouse productivity with automated and accurate picking, put away and inventory transfers

SATELITE WAREHOUSE

Thank you for your time.