DI Supplier Development project Operated by Valcon & Implement Hypothesis trees DI Supplier Development project Operated by Valcon & Implement

Levers for improving supplier development Productivity Quality Product and specifications Logistic and planning Working capital

Productivity Production Production Administration Governance Levers Production Production Administration Governance Themes Initiatives Joint S&OP planning e.g. sharing of forecast Batch size optimization e.g. using VMI Minimise down time e.g. timely delivery Reduce change over e.g. use of standard material Reduce scrap e.g. by improved quality, see also “7 types of waste” Increase volume e.g. more sales if lower unit cost Avoid redundant processes e.g. in and outbound control Investments e.g. possible if stronger customer commitment Process optimisation e.g. common standards and correct master data IT integration e.g. on order and/or invoice Organisation and mandates incl. escalation of issues Collaboration policies incl. process for continuous improvement Alignment on goals and shared KPI’s Joint Risk Management

Quality Level of quality QA/QC CSR Governance Shared code of conduct Compliance gab and actions e.g. on safety and environmental Traceability in supply chain Levers Themes Initiatives Avoid over engineering e.g. on tolerances Common standards e.g. on quality level Transportation requirements e.g. on temperature Reduce excessive control e.g. level and placement of control Right level of tracebility e.g. if recall Use correct analysis methods e.g. knowledge transfer Organisation and mandates incl. escalation of issues Collaboration policies incl. process for continuous improvement Alignment on goals and shared KPI’s Joint Risk Management

Products & specifications Levers Product design & redesign (Re) design to cost e.g. standard material selection, lower cost substitution, recycling (Re) design for manufacturing e.g. lower change over time and scrap reduction (Re) design for transport e.g. doublet stacking Product design & redesign Process Governance Themes Initiatives (Re) design for value e.g. commercial differentiation Mass customisation Make/buy business case & decision e.g. use BOM Early supplier involvement Common ECO process Common standards e.g. on product specifications and certificates Organisation and mandates incl. escalation of issues Collaboration policies incl. process for continuous improvement Alignment on goals and shared KPI’s Joint Risk Management

Logistic and planning Planning and control Planning and control Levers Planning and control Joint S&OP process incl. sharing of forecast, capacity and manning Differentiated service level and lead time on ABC products Move push/pull upstream by changing trigger for VMI/Consignment stock Planning and control Logistic Governance Themes Initiatives Increase flow and reduce lead time in supply chain by aligning batch size and pace for supply of materials into production Ensure correct master data incl. correct parameter setting in ERP systems Joint planning e.g. factory pick up Transparency in transport cost and TCO Transport optimisation e.g. double stacking, filling rate Logistic optimisation e.g. correct labeling, units customised to warehouse Organisation and mandates incl. escalation of issues Collaboration policies incl. process for continuous improvement Alignment on goals and shared KPI’s Joint Risk Management

Customer and supply outstanding Working capital Levers Stock reduction Joint S&OP process incl. sharing of forecast and agreement on stock level Increase forecast accuracy e.g. fix MRP noise that create to high purchase demand Parameter tuning on safety stock, order quantity, service level Stock reduction Customer and supply outstanding Governance Themes Initiatives Capacity reservation instead of stock building Housekeeping, clean up dead stock Reduce/remove excessive stock e.g. both parties holding safety stock Improving timeline from invoice to payment e.g. by stop and unnecessary control processes Correct invoices for faster payment and/or automatic invoice approval Optimise payment terms e.g. by using reverse factoring Organisation and mandates incl. escalation of issues Collaboration policies incl. process for continuous improvement Alignment on goals and shared KPI’s Joint Risk Management