’re-HYDRA-ted’ Business Case Response Frank Schaapveld Senior Director Supply Chain Medtronic

Business Case Assumptions Integration goals: - keep Hydra brand & market positions - accelerate profitable growth In house manufacturing, DC & transport BG led integration organization PMO resources available to support Lean Change Acceleration Program led by HR Well functioning IT systems & data marts No burning issues 3rd party DC/WMS Supplier Contracts flexible/negotiable 2

‘re-HYDRA-ted’ The Power of One 3 Wave Program ‘re-HYDRA-ted’ – The Power of One Wave 1 Prepare & Launch Install Integration Team Shape the Program Launch Change Management Program 10 Days Wave 2 Quick hits Alignment Sales Improve MFG output Alignment Suppliers Integration OTC processes Performance Mngt 90 Days Wave 3 Future State KAM program top 5 Footprint optimization Leadership & structure TBD

‘re-HYDRA-ted’ The Power of One Wave 1 Prepare & Launch Part of overall BG led Integration team Select strong project leader FS Sponsor Identify key stakeholders X-functional (sub)team - critical functions/positions - recognize need & will to change - full time available - BG Black Belts - determine TBV project members - team objectives (not yet personal) All leadership -> yellow belt training All SC employees -> 5S program 10 Days Install Integration Team Shape the Program Launch Change Management Program

‘re-HYDRA-ted’ The Power of One Wave 1 Prepare & Launch Deep dive assessment comparing strategy/value proposition BG/Hydra Identification of integration synergies Identification of Hydra process improvement opportunities (ST/LT) Establish a shared need for change First data analysis & diagnose ‘Connect’ with the integration goals (profitable growth / increase flexibility) Define KPI dashboard Communication planl 10 Days Install Integration Team Shape the Program Launch Change Management Program

‘re-HYDRA-ted’ The Power of One Wave 1 Prepare & Launch Apply Change Acceleration Process © General Electric Communication Plan - frequent - transparent - reach all employees Involve Works Council Measuring employee satisfaction 10 Days Install Integration Team Shape the Program Launch Change Management Program

Change Acceleration Process

Change Acceleration Process (cont’d)

Change Acceleration Process Profile on change processes 100 75 50 25 Helpful tips: Click on the individual dots to move them up and down the line. To move the dots, be sure you see the crossed arrows when your cursor is resting on top of the dot. If you need more dots, simply click on a dot, right click on the mouse and choose “copy.” Right click again on the mouse and choose “paste.” Once you paste it, you can click on the dot to move it anywhere in the document. Leading Change Creating a Share Need Shaping a Vision Mobilizing Commitment Making Change Last Monitoring Progress Changing Systems & Structures

‘re-HYDRA-ted’ The Power of One Approach Wave 2 Wave 2 Quick hits 90 Days Alignment Sales Improve MFG output Alignment Suppliers Integration OTC processes Performance Mngt

‘re-HYDRA-ted’ The Power of One Wave 2 Quick hits Define Product/Market value proposition Identify required flexibility (mix, volume, new product/packaging) Potential short term rationalization Implement S&OP process - copy/paste from BG - clear expectation and R&R description - demand segmentation? - consensus process Main KPI - order fill rate - forecast accuracy (personalized) 90 Days Alignment Sales Improve MFG output Alignment Suppliers Integration OTC processes Performance Mngt

‘re-HYDRA-ted’ The Power of One Wave 2 Quick hits Debottlenecking production - analyzes of line efficiency (technique, processes, people) Process analyzes applying Lean Sigma techniques; - process mapping - Kaizen improvement sessions - failure tree analysis - prioritization of quick wins Empowerment - 5S program - value contribution tree (cascade) Main KPI - MFG output versus built plan (S&OP) - line fill rate 90 Days Alignment Sales Improve MFG output Alignment Suppliers Integration OTC processes Performance Mngt

‘re-HYDRA-ted’ The Power of One Wave 2 Quick hits Collaborative process mapping - Kaizen - Failure tree analysis - potential identification Identify leverage with BG - centralize procurement process - connect with S&OP – transparency - volume concentration Prepare for SNC or VMI/CPFR Renegotiate contracts Main KPI - Efficiency improvement procurement - $ spend reduction vs pre-merger 90 Days Alignment Sales Improve MFG output Alignment Suppliers Integration OTC processes Performance Mngt

‘re-HYDRA-ted’ The Power of One Wave 2 Quick hits Order intake - customer master - order processing - order information to customer Production planning - implement best practice BG - centralize production planning Distribution & transport - leverage BG DC & transport - stop contract 3PL - 1 consolidation shipment to customer Main KPI - Efficiency integrated processes - $ spend reduction vs pre-merger 90 Days Alignment Sales Improve MFG output Alignment Suppliers Integration OTC processes Performance Mngt

‘re-HYDRA-ted’ The Power of One Performance Management - clear job descriptions (R&R) - personal objectives (cascaded down) Install operational reviews - performance vs KPI target - (pro-active) root cause analysis Create safety, trust & accountability - process focus - allow mistakes - drive accountability - coaching Establish recognize program Main KPI - # employees with personal objectives - operational dashboard incl. narratives - illness rate (incl. illness frequency) Wave 2 Quick hits 90 Days Alignment Sales Improve MFG output Alignment Suppliers Integration OTC processes Performance Mngt

‘re-HYDRA-ted’ The Power of One Customer value chain collaboration Process alignment (VMI/CPFR) - cross dock services - packaging re-engineering - VMI / CPFR System integration (EDI / ASN) Wave 3 Future State TBD Rationalization MFG location - where to produce which product (capacity, growth, lead time to market, total sc costs, large/small split) Multi brand / packaging facilities Change of MFG concept; recipe central – finishing local KAM program top 5 Footprint optimization Leadership & structure Future state organization structure (balanced span of control, flat, transparent, process tuned) Talent development program Empowerment program Employee satisfaction

’re-HYDRA-ted’