] JILL MIKROS [ ASUG INSTALLATION MEMBER MEMBER SINCE: 2000 MARCDERE LOUIS [ ASUG INSTALLATION MEMBER MEMBER SINCE: 2009 RAJEEV KAPUR [ ASUG INSTALLATION.

]

JILL MIKROS[ASUG INSTALLATION MEMBER MEMBER SINCE: 2000

MARCDERE LOUIS[ASUG INSTALLATION MEMBER MEMBER SINCE: 2009

RAJEEV KAPUR[ASUG INSTALLATION MEMBER MEMBER SINCE: 2008

This presentation is copyrighted: 2010 E.I. DuPont de Nemours & Company, All rights reserved

Manage Uncertainty in Chemicals via Inventory Optimization

Ray AdamsSAP, IBU Chemicals

David GiacominiAnand Sundar

DuPont Company

Chris PottsEastman Chemical

Real Experience. Real Advantage.

[ Spot Oil Prices – Department of Energy

07/0

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10$25

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Spot Oil Prices

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arre

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Real Experience. Real Advantage.

[ Relationship to Inventories and Price Indices

Jan

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05

May

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Invy/Sales Ratio

IPEX Price Index

Source: US Bureau of Census Inventory to Shipments Ratio, ICIS Pricing

Real Experience. Real Advantage.

[ Powerful Trends Are Re-Shaping Chemicals Business Worldwide

Globalization

New opportunities and competitors

Consolidation / M&A IP Management

Innovation & Portfolio Management

Innovation networks and Hybrid Development

Portfolio optimization Alternative Feedstocks

Compliance

Environmental compliance

Global trade compliance

Risk Management

Price volatility Cost pressures Proximity to raw

material sources

Energy & Raw Materials Management

Operational Excellence & Business Network Innovation Operational Excellence & Business Network Innovation

Tightening up of Working Capital

Cash is King, Increased Focus on Cash-to-Cash cycle

Prepare for the Unexpected: Strive for Transparency

Sustainability becomes a Board Room Topic

Challenging Prices and Reducing Margins

Cost Reduction

Focused Investment

?

Real Experience. Real Advantage.

[

Canada3%

Latin America12%

Developed Asia9%

Emerging Asia11%

Developed EMEA20%

U.S.38%

Emerging EMEA

7%

Company Profile$26.1B

2009 Company Sales• DuPont is the world’s most dynamic

science company • Creating sustainable solutions essential to

a better, safer, healthier life for people everywhere

• Founded in 1802• Operating in more than 70 countries• Total 2009 Sales $26.1B

Real Experience. Real Advantage.

[ DuPont IDS: Headed in the Wrong Direction

Real Experience. Real Advantage.

[ DuPont’s SmartOps® Journey

Laying the groundwork

•SmartOps® Forum

•Initial business discussions

•Agreement to move ahead with POVs

Proofs ofValue

•SmartOps® led proofs of value for 2 businesses

•Identified business value for MIPO

•Made decision to license SmartOps®

ManualImplementations

•4 businesses

•Developed data management processes

•Demonstrated SmartOps® value

Automation &Integration

•Automate the data extract, transform, and load processes

•Address requirements for scenario management

•Standardized support model

Real Experience. Real Advantage.

[ DuPont Business Requirement

Business Unit F – SAP R/3

Business Unit S – SAP R/2

“How do we provide a scalable architecture that can integrate supply chain data from several heterogeneous IT systems

Business Unit A – SAP APO 4.1

Business Unit E – Legacy application

Business Unit N MIMI

Business Unit C – SAP APO 3.0Business Unit P - Legacy

Real Experience. Real Advantage.

[

9

SAP R3

MIMI

SmartOps® MIPO

LTT

SAP-APO

INFORMATICA Staging Area

Data Gateway

Time Phased SS Levels

BW

1a

6

5 4

3

2

Excel / other

1b

Validate and Update SS in APO

Manu

Non – SAP Systems

5

6

Error Handling and Resolution

Architecture for SmartOps® Integration

Data Store

Real Experience. Real Advantage.

[

All SmartOps® BUs begin using integrated functionality

First BU begins using fully integrated functionality

The Journey Continues

Who we are A global manufacturer of chemicals,

plastics and fibers headquartered in Kingsport, Tennessee

A company dedicated to economic success, environmental stewardship and social responsibility

A leading producer of coatings, adhesives, specialty plastics and cellulose acetate fibers

A manufacturer of PET polymers for packaging

The first company to commercialize a gasification facility in the U.S., in 1983, which is operating at industry-leading performance

12

What We’ll Cover …

Achieving the Right Balance – Why Eastman chose SAP Enterprise Inventory Optimization by SmartOps® (SAP EIO)

Project Tools and Processes: A Six Sigma Journey Reporting – Measures and Dashboards Results and Future Wrap-up

13

Achieve the Balance

Determine optimal inventory

strategy

Execute the optimal strategy

Check results and act to reoptimize

the strategy

Some key stakeholders:• Customers• S&OP• Supply chain• Procurement• Logistics• Manufacturing• Business Manufacturing cost

Profitability

$$

Inventory Cost

Customer service level

14

Started with a Pilot/Proof of Concept

Work began: July 2008• Pilot area: 90 items, 15 plants/warehouses

Manual models of pilot area: Oct 2008• Decided upon major parameters and settings

Automated pilot area: Feb 2009 Concluded pilot project: May 2009 Company wide rollout: June 2009 SharePoint reporting: Oct 2009 SharePoint dashboard: Dec 2009

15

Parallel Project Efforts

Business Process Design using Six Sigma

S&OP Business process design

team Supply chain management Supply planning Manufacturing Procurement Software implementation

team

Software Tool Implementation & Configuration

Technical team Business process design

team Supply chain management

16

Business Process Design Using Six Sigma

Define• Stakeholder matrix

• Interview guide and plan

• The Affinity Diagram (KJ Analysis) – key process needs to meet

Conceptualize• Process concept generation to meet key needs

Design of the business process Optimize – Testing and improving the process Control – Establishing the control plan for the process

17

Business Process Summary Slide

Inventory Measures

18

1. Inventory level status – Current Inventory against limits 2. Percent in control – % of KGs in control – weighted 3. Percent touched safety stock – Percent of items that touched

safety stock in last 90 days

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Project Benefits

Initial results are consistent with our expectations Demonstrating relationship of forecast accuracy, customer service,

master data, and inventory investment Identifying the right number, and identifying levers to improve the

summation of the variables Accelerating the rollout to other groups within our company using

black belts

20

7 Key Points

Master data is critical and expect to spend significant amounts of time to correct

Accurate forecasts are foundational to optimizing inventories Technical changes have been easier to overcome than business

process redesign Measures and dashboards helpful to speed adoption SAP EIO by SmartOps while a good tool, is NOT a silver bullet SAP connectivity is not a simple out-of-the-box connection Expect continual iterations and loops; MANY small steps and

changes are needed to complete the journey

Real Experience. Real Advantage.

[

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[

] Thank you for participating.

David [email protected]

Anand [email protected]

Chris [email protected]