End to End Supply Chain Excellence

E2E Supply Chain Excellence- Delivering a Culture of Continuous Improvement (Sustainably)- DuPont Experience

Don Wirth – VP Global Operations SC and CoE (retired)

EI duPont de Nemours

Business’s Do Not Compete Supply Chains Compete

Todays Discussion

• Why and Where: focus for E2E Supply Chain Excellence

• Our Journey and the challenges we faced

• Results and successes

• The approaches and differences

• Challenges and Actions

2

Future Focus for Industry Competitiveness

DuPont Focus Industry TodayIndustry view 10yr from

now

Customer Responsiveness 4 1 1

Productivity Improvement 1 2 5

Logistics management 6 3 6

Demand Management 7 4 7

Enterprise Alignment 1 5 2

Performance Measurement 8 6 8

Vendor management 9 7 9

Asset management 1 8 10

Employee Development 4 9 3

System Infrastructure 10 10 3

Corporate Executive Board and Supply Chain Council 2010

60% of Leading Supply Chain Professionals see need for Transformation

3

+

+

Better Customer Experience

Increase Margin (Reduce Cost to Serve)

Increase Velocity(asset optimized)

From …

High inventory vs. best in class

Underutilized Assets

Non productive inventory

High complexity

Manual interventions

Numerous work arounds

Significant expediting

Inconsistent delivery performance

Difficulty meeting promises

Significant churn and effort

To …

Automated, streamlined, rules based processes

Reduced manufacturing costs

Reduced expediting costs

Advantaged working capital productivity

Aligned E2E performance

Capital available to re-invest

Reliable Supply

Competitive Lead Times

Differentiated service levels

What a Business wants from Continuous Improvement- AND not OR

And…

And…

4

The DuPont Story from Best Practice to Production System and Demand led Fulfillment

Demand LedFulfillment

2009

In 2006, struggling with Sustainability of benefits we undertook the DuPont Production System (DPS)to align the

organization, engage our workforce, and achieve bottom-line results. The success of DPS, has led to Engaging

Business Teams to transform with Demand Led Fulfillment (DLF) how we deliver to Customer with significant performance improvement

Performance

Managing Processes

Engagement

And not OR

5

Why A Focus on Continuous Improvement is Important in 21st Century

6

ACTUAL BENEFITS TO DATE

• 40% improvement in EH&S performance

• Delivery to Promise has reached 80/85% (27%) from 60-70% with a goal of 95%

• $1.5bn reduction in manufacturing costs on sales revenue (4%) of assessed entitlement of $3.5B

• $2bn reduction inventory from $ 6.5bn = $500m pa reduction in carrying cost of inventory (30%)

Qualitative Benefits

• Improved safety behaviour

• Higher predictability in manufacturing performance

• More capacity availability

• More responsive Supply Chain Capability

• More effective Supply Chain Structure

• Higher labour and asset productivity

• Engagement and enablement of improvement right down to operator level

6

DuPont Global Integrated Operations – At a glance

2007 2008 2009 2010 2011 2012 2013

80

9

0 1

00

1

10

1

20 Supply Chain

Costs

Production

Volumes

DuPont Integrated Operations WorldwideGlobal Supply Chains 90+ Plant sites 200+ SitesWarehouses 740+Shipping Major Container userEmployees (approx.) 34,000+Countries 45

Contract operations ~1000 SitesNew Product Launches 5%-25%Annual Gross Productivity > $1B per year PTOIDelivery to

Promise (DTP)

TRC Rate

Diverse Operations• Seeds

• Discrete Parts

• Food Additives

• Industrial Biotech

• Film production

• Polymer Production

• Fiber production

• Consumer goods

• Electronic materials

• Continuous chemical process

• Fine and custom chemicals

• Fluorine Chemicals

7

The Evolution of a Business System Approach

Create Demand / Innovate

Fulfill Demand

DevelopMarket and Shape

Supply Chain Transformation

Business Processes Improvement Approach

Operate Supply Chains and PlantsOperations Excellence

Make Money improve profitability

Stag

ed F

ocu

s

BuildCapabilityEfficiency

DeliverBusiness

Excellence

GrowMarket

Best PracticeFocus

Engage Entire Workforce

8

Stages of supply chain maturity (AMR / Gartner View)

Stage 1 (React)

“Historic Accidental”

Stage 2 (Anticipate)

“Grouped for Focus”

Stage 3 (Integrate)

“Balanced Mix”

Stage 4 (Collaborate)

“Value Discovery ”

Stage 4 >(Orchestrate)

“Value innovation”

React

Reactive

Reactive Reactive

Sense

X

Demand

Product

Supply

Improvement Projects

Projects Projects

Projects

Demand

Product

Supply

X

“Value Translation Network”

Va

lue

Shape for

Value

Synchronize

Demand

Product

Supply

“Demand - driven Integrated E2E

Processes”

De

ma

nd

Demand

Product

Supply

“Integrated Functional

Excellence”

Integrate

Demand Supply

ProductProduct

Business Architecture

9

The Transformation Zone

Leadership Focus on Supply Chain Excellence of Stage 1-3

Managing

Processes

CapabilitiesMetrics &

Motivators

Systems &

Information

Flows

Collaborative

Structures

Culture

(M & B)

Competencies (skills)

Standard work processes

Project Management

Accountabilities

Cross-functional interfaces and

processes

Governance

Decision Rights

Performance metrics

Entitlement ($$$$)

Enforcement sanctions

Data quality and visibility

Data ownership

IT Systems

Organizational connections

Roles and responsibilities

Operations, Maintenance, Quality,

Planning and HR

Mindset and behaviors

Change management initiatives to fit with

cultural requirements

Typical Focus Areas at this Level

• Skills building S&OP, Demand Planning, Supply Planning, Operations functional excellence

• Value Chain mentality ( Product Family approach)• Understanding Managing processes• IT solutions• Functional KPI’s• Project based improvements $ delivered• Improvement to Business KPI’s

10

Leadership Focus on Supply Chain Excellence of Stage 1-3

Managing

Processes

CapabilitiesMetrics &

Motivators

Systems &

Information

Flows

Collaborative

Structures

Culture

(M & B)

Competencies (skills)

Standard work processes

Project Management

Accountabilities

Cross-functional interfaces and

processes

Governance

Decision Rights

Performance metrics

Entitlement ($$$$)

Enforcement sanctions

Data quality and visibility

Data ownership

IT Systems

Organizational connections

Roles and responsibilities

Operations, Maintenance, Quality,

Planning and HR

Mindset and behaviors

Change management initiatives to fit with

cultural requirements

Frustrations with Stages 1-3

• Value delivery often with negative consequences to other areas. Benefit sustainability

• Value delivery underwhelming• Manufacturing Assets typically are unreliable and

unpredictable• S&OP often devolves into a PO discussion or delegated

to SC Professionals• Customer Service not where needed

11

Leadership Needs Systemic Thinking to provide the reinforcing

elements to ensure sustainability

Managing

Processes

CapabilitiesMetrics &

Motivators

Systems &

Information

Flows

Collaborative

Structures

Culture

(M & B)

Competencies (skills)

Standard work processes

Project Management

Accountabilities

Cross-functional interfaces and

processes

Governance

Decision Rights

Performance metrics

Entitlement ($$$$)

Enforcement sanctions

Data quality and visibility

Data ownership

IT Systems

Organizational Structure and connections

Roles and responsibilities

S&OP, Product Teams, Decisions Center

and Plant steering Teams

Mindset and behaviors

Change management initiatives to fit with

cultural requirements

12

• Opportunity assessment - Strategy tested plus hypothesis driven analysis

• Customer Segmentation

• Portfolio Segmentation

• Supply Chain Capability

• Structural and Operational Archetyping

• Agile, efficient, cash focus

• MTO, MTS, FTO and other

• R, R, A, C, A linked to Plant operating discipline

• Systemic Implementation• What is working

• What is possible

• Integrated approach

• What’s important for competitive success – KPI’s (leading and Lagging)

13

Transforming Supply Chain Performance To Demand Driven

Requires More

• Leadership Alignment on shift in journey, Cultural development and Business value ( a conscious choice to go forward)

• Understand and then focus on Key KPI’s both leading and lagging and then track. (EH&S, DTP, DTR, OFLT, MTP, FPPQY……..OEE, SP, Productivity)

• Deployment design choices of speed, value and geography

• Training requirements for all levels of Operations (leaders to Operators)

• Need for delivery of benefits and understanding of financial flows

• Resource investment in front end loading and then understanding benefits from investment

• Consistency of purpose taking the long view to winning in market

Challenges and required Actions

14

Thank you

15