May 10, 2012SC Visibility, Role of S&OP. 1 SC Visibility, Role of S&OP - K Y Shankar, Director Supply Chain Bausch + Lomb

May 10, 2012SC Visibility, Role of S&OP. 2 Role of S&OP Manage Demand Forecast Understand and Manage Supply Constraints Integrate financial planning and budgeting with demand/supply planning Create profit optimized demand/supply plan Optimize inventory holding, customer service Minimize forecasting errors Provide executive visibility on revenue, profits and cash flow

May 10, 2012SC Visibility, Role of S&OP. 3 The practice of capturing and storing data to help take decisions on three critical flows in supply chain – materials, capital and information. It’s a window into: Supply Chain Processes Wide range of available data Understand patterns, trends and events Predictability in areas of demand, supply constraints, market changes Real time information on SC operations – status of orders, shipments, in-transit, inventory, track & trace,stock outs, costs Performance measurements through right metrics What is Supply Chain Visibility

May 10, 2012SC Visibility, Role of S&OP. 4 Bausch and Lomb - S&OP Process–

May 10, 2012SC Visibility, Role of S&OP. 5 Bausch and Lomb Vision CareSurgical Pharmaceutical Lenses Intraocular Lenses Phaco Machines Instrument and Devices Eye Allergies Glaucoma Conjunctivitis Retinal Diseases Lens Care n Products  Regulated/Unregulated, > 10 k sku’s, shelf life ranging between 1-4 years, temp controlled n Product Sourcing  8-10 different international locations, Third party vendors n Distribution  One Central Warehouse, Distributor/stockist network across India, Customers Profile - Opticians, Opthals/Eye Hospitals, Chemists n Transportation  Ocean,Road,Air Cargo and Courier for Sourcing and Distribution n IT Infrastructure  Multiple ERP Systems, One global system for Planning, Analysis and Dashboards Business Synopsis Organizational Overview

May 10, 2012SC Visibility, Role of S&OP. 6 Planning process loosely Integrated Poor visibility of Demand/Supply balance No clear owner of demand plan Communication gaps between Business, Finance and Supply Chain No linkage between Volume Forecast for Supply Chain and Financial Forecast Limited usage of IT tools Where did we start……

May 10, 2012SC Visibility, Role of S&OP. 7 Joint Ownership across the business S&OP and Forecasting Process / Ownership

May 10, 2012SC Visibility, Role of S&OP. 8 Local S&OP Monthly Cycle The monthly process is designed to reach consensus on a single S&OP Outlook (Plan) that allocates critical resources (capacity, materials, people, time and money) to profitably meet demand S&OP is a cross-functional business planning process that impacts the entire organization and is intended to facilitate mid- and long-term decision-making Local Pre- S&OP Tactical Demand Review Unconstrained Demand Plan Tactical Supply Review (Informal) Gap Analysis Resources Performance Metrics Local Management S&OP Aligned S&OP Outlook Gap & Opportunity Key Participants:  Country MD  Sales  Marketing  Finance  Supply Chain Sales & Marketing Alignment Meeting (SAM) Marketing Supply Chain Ownership Sales participation Unconstrained Demand Plan Local S&OP Framework Local Pre-S&OP Local Management S&OP

May 10, 2012SC Visibility, Role of S&OP. 9 TVC lifts PR lifts Overseas data on launch assumptions Cannibalization impact on base Deletions / Upgrades Competitive activity / launches Price activity 0-3mth focus Trade Inventory The responsibility for providing key inputs leading to the agreement on a final forecast is cross functional and is a critical part of the S&OP process Base Sku’s Sales Marketing Supply Chain NPD Promotional Distribution targets / assumptions Units per Store per week assumptions Promotional activity Incremental volume assumptions Promotional volumes Order dates Cannibalization assumptions Exit strategy – “Clearance plan” TVC lifts PR lifts Pack changes 3-12mth focus Manugistics forecasted base volumes Prior base sku knowledge from past forecast assumptions and actual trends Prior knowledge on past NPD, order phasing Stock availability data Prior promotional knowledge for comparison Stock availability data Supply Chain = Process owner / Governance / Principles Forecast Development Process Ownership

May 10, 2012SC Visibility, Role of S&OP. 10 Critical Elements A Complete, Agreed-To Forecast of Total Product Demand A Complete and Accurate Picture of Demonstrated Production Capacity and Current Inventory Status A Robust Planning Process to Mesh Demand With Capacity A Rigorous, Formal and Participative Management Process for Supply/Demand Issues Resolution Four process components and several guiding principles were used to design the S&OP n One forecast, agreed upon by Marketing, Planning and Finance, drives the S&OP process n One unit of measure provides common terms of discussion n Responsibilities and accountabilities throughout the process are clearly defined and understood n All key players participate at the right moment in the process n A high level of communication and feedback, lead to better mutual understanding Guiding Principles

May 10, 2012SC Visibility, Role of S&OP. 11 Customer Service: Inventory Forecast Accuracy  Fill Rate  OTiF (late 2010)  On Time Delivery  Average Back Order  Fill Rate  OTiF (late 2010)  On Time Delivery  Average Back Order  $ / Days on Hand (DOH)  Slow Moving / Obsolescence  Returns/Exchange  $ / Days on Hand (DOH)  Slow Moving / Obsolescence  Returns/Exchange  Forecast Error  MAPE  Forecast Bias  Forecast Stability  Forecast Error  MAPE  Forecast Bias  Forecast Stability Outlook & Others  Promotion lead time adherence  S&OP adherence  Forecast outlook in volume & dollars against Plan, Latest Estimates  Promotion lead time adherence  S&OP adherence  Forecast outlook in volume & dollars against Plan, Latest Estimates Metrics for Tracking & Measurements

May 10, 2012SC Visibility, Role of S&OP. 12 Establishing S&OP meetings as Key business priority Senior Leadership support Identification of Leader to implement the change Clear definition of roles and responsibilities Clearly Defined Metrics for tracking the performance S&OP meeting dates part of each stakeholders calendar Quality and Reliability of the data aggregated from Various sources Implementation of Manugistics demand planning tool IT enabling process with adequate tool functionality Integration of ERP (Oracle) and Planning & Forecasting (Manugistics) Key Challenges

May 10, 2012SC Visibility, Role of S&OP. 13 Improved Financial Forecast accuracy Aligned communication between Business, Finance and Supply chain Sales and Volume Forecasting for Outlook/Budgets is easier and more accurate Alignment of demand and financial plan Build-up of demand plan from base plan, better clarity on impact of promotions Reduction in Inventory due to increased Forecast accuracy and Frequent & timely replenishment due to implementation of Manugistic Where we are today…

May 10, 2012SC Visibility, Role of S&OP. 14 Improved Visibility of Demand and Supply – Stock On Index improved by 20% Improved service level and Fill rates, OTIF increased by 15-20% Provide firm dates to customers on shipping of back orders. Manual replenishment plan replaced with Weekly replenishment based upon forecast through Manugistic Auto PO creation in Oracle leading to increase in productivity Inventory reduced by 12%, Obsolescence by 10% due to increase in inventory turns and better management of the product life cycle New product launches on time due to increased coordination with Sales and Marketing Current status on Supply Chain Processes

May 10, 2012SC Visibility, Role of S&OP. 15 Thank You