1 Analytics to Unlock Operational Value Service Offerings

2 Opportunities at the intersections of functions BuyConvertSell Product – plant - market – logistics decisions Choice of raw material Amidst pressures of daily operations, it is a challenge to identify and act on value enhancement opportunities at the intersection of functions Illustrative SUPPLIERS CUSTOMERS

3 Typical opportunity at interface between Sales - Operations Generic Linear Programming Model Maximize Contribution across all product-market-plant combinations Subject to Yields or recoveries achievable, based on production technology in use at the plant Capacity constraints for each relevant production facility and transportation mode Demand constraints for each market Generic model would need to be customized and detailed for each business Typical business challenge: What basket of products to make to maximize contribution in a fluctuating market Feedstock Composition Output Capability Output Sale- ability Contribution Recovery Ratios Capacity Constraints Demand Constraints Market Price Conversion Costs Copper Example

4 Typical opportunity at interface between Sales - Operations – Outbound Logistics Planning What products to make at which plant and to ship to which market by what mode of transport to maximize contribution Outbound Logistics Production Planning Sales Generic Linear Programming Model Maximize Contribution across all product-market- plant combinations (taking into account all direct costs, including transportation costs) Subject to Demand constraints for each market Order shipment sizes for each customer (if relevant) and / or transportation mode Capacity constraints for each relevant production facility and transportation mode Minimum and maximum run lengths, if relevant Minimum and maximum load sizes, if relevant Yields or recoveries achievable, based on production technology in use at the plant Could have added complexity of servicing customers from warehouses / transshipment points Generic model would need to be customized and detailed for each business Typical business challenge: What products to make at which plant and to ship to which market by what mode of transportation to maximize contribution

5 Typical opportunity at interface between Sales - Operations – Inter Plant Logistics Planning Generic linear programming model Maximize Σ(Earnings – ΣCost across various stages of processing) for all products across all plants Subject to Demand being met Capacity being available Other considerations (scrap consumption, material balancing, customer line certification / preferences etc.) Typical business challenge: What products to process to what stage of processing at each plant to maximize contribution across the business Market Demand & Conversion Premium Plant Capabilities Possible Paths (for an order to be processed) Plant Capacities and Costs Other Considerations * Optimal Loading & Contribution Aluminium Products Example

6 Typical opportunity at interface between Sales - Production Planning – Operations – Procurement Typical business challenge: What feedstock maximizes total contribution across all products and by products Feedstock Procurement Production Planning Operations Sales Composition Cost Demand Capacity – yield Contribution Technology Conversion costs Demand Price Maximize Contribution across all product-market-plant combinations Max Contribution from a Feedstock : Linear Programming Model Plot for multiple feedstocks

7 Typical opportunity at interface between Sales and Production Typical business challenge: Optimal production run length in the face of demand fluctuations and capacity constraints Phosphates Production Planning Example Generic linear programming model Minimize plant idle capacity Subject to Demand being met Capacity constraints Inventory build up being within norms Based on Capacity requirement of different shared resources (throughputs) of different products

8 Typical opportunity at interface between Outbound Logistics Planning and Sales Typical business challenge: Optimal FG inventory to be held at each node of the distribution network Total FG inventory (Working Capital Locked Up) in the System Lost Sales / Delays in Order Servicing due to Stock Outs Transportation Costs In case of Fashion Retail, Markdowns Due to Missed Seasons or Trends Optimal Balance Between Minimizing What-if Simulation Model(s) combining human judgment with mathematical modeling capabilities

9 Typical opportunity at interface between Operations and Technical Support Services Given captive power plant capacity > demand, how to balance load to minimize cost of power consumed Minimize cost of power consumed across captive generation and grid Subject to Steam (at different pressures) + Power demand being met Capacity constraints Based on Calorific value of different types of coal Boiler efficiencies Turbine productivity Typical business challenge: What mix of coal to use in which boilers to run which turbines for how long to generate required quantum of electricity at lowest cost

10 Typical opportunity between Procurement and Commercial Typical business challenge: Whether to stock up or liquidate stocks of a highly price volatile input material Phosphoric Acid Price Prediction Example Predicting the price of Phosphoric Acid (commodity common raw material) based on 2 different PA production technologies Regression analysis to develop correlation Prediction model to forecast prices Used monthly to decide whether to stock up or liquidate stocks of PA, based on whether prices are forecast to move up or down

11 Typical opportunity at interface between Spares Procurement and Maintenance / RM Procurement and Production Planning Typical business challenge: Optimum inventory holding, without exposing plant to stock outs What items to procure centrally vs distributed procurement What items to hold centrally vs distributed (more relevant for spare parts) Reorder levels, reorder quantities etc ABC Inventory Classification A : High volume consumption B : Medium volume consumption C : Low volume consumption XYZ Inventory Classification X : High value stock holding Y : Medium value stock holding Z : Low value stock holding VEA Inventory Classification V : Vital to plant operations E : Essential for plant operations A : Auxiliary to plant operations Determine inventory holding and procurement policies for each combination Determine reorder levels and reorder quantities by analyzing consumption patterns, economic order quantities, lead time for delivery by suppliers, buffer stock requirements to offset supply uncertainties

12 Typical opportunity across Procurement-Production-Sales-Distribution Typical business challenge: How to minimize the cash to cash cycle Study of supply chain process for i ssue identification and redesign opportunities (e.g. functional overlays highlight conflicting functional objectives, rework loops highlight process deficiencies etc.) to reduce total cycle time S U P P LI E R Pay for RM, PM Purchase RM, PM Receive RM, PM Store RM, PM Issue RM, PM Produce PPC Manage WIP Deliver to W/H Prep del. doc. Ship Invoic e CUSTOMERCUSTOMER W/H Collect orders Test quality Illustrative Supply Chain Process Map Note: Flow depiction, resources, controls removed for simplification Procurement Function Stores Function Production Function Stores and Logistics FunctionAccounts Sales Collect outstandings

13 Typical opportunity across Procurement-Production-Sales-Distribution Typical business challenge: How to minimize the cash to cash cycle Spinning & Weaving Unit Example Identification of critical supply chain processes and their business imperatives Analysis of current state and redesign to address business imperatives Identification of projects, responsibility allocation and program implementation and governance

14 Summary of Potential Service Offerings Operational decision support system Product mix decisions Production planning for single plant, multi-plant Transportation logistics planning (mode and route) Procurement timing (stock up or liquidate based on price forecasts) Feedstock blend composition / procurement Captive power generation modality Stores and spares inventory holding policies Cash to cash process design Strategic decision support system Capacity planning given a product mix and demand estimate Product mix planning given a capacity and pricing-costing estimate Distribution network planning

15 Illustrative Tools Used in Such Model Building Operations Research Models Linear Programming Models Goal Programming Models Analytical Tools Regression Analysis Trend Analysis / Curve Fitment Process mapping and analysis

16 Thank you Contact details : Ajita Kini : Cellphone ;