1 © The Delos Partnership 2004 Supply Chain Workshop – 21/22 April 2004 Starting the journey

2 © The Delos Partnership 2004 MGG Supply Chain Improvement NO W FUTURE  The picture for change  The journey ahead Clever Competent Control Processes Information MGG will have a world class integrated Supply Chain of Internal / External sites. - Excellent Customer Service - Lowest Cost of Goods - Compliance Safety & Quality MGG will have a world class integrated Supply Chain of Internal / External sites. - Excellent Customer Service - Lowest Cost of Goods - Compliance Safety & Quality Loosely connected sites, level of process definition - variable service - competitive cost of goods - compliance with Safety & Quality Loosely connected sites, level of process definition - variable service - competitive cost of goods - compliance with Safety & Quality People

3 © The Delos Partnership 2004 Objectives for Workshop 1.A practical Common vision and how it can be achieved - quickly 2.Excitement at what is possible – which leads to motivation 3.Actions that will say how to get Control 4.How to apply Lean/Agile 5.Commitment to becoming World Class

4 © The Delos Partnership 2004 The Delos Model Innovation Innovation Vision Strategy Prioritisation Prioritisation Demand Support Supply

5 © The Delos Partnership 2004 Workshop Outline 1.Intro exercise Familiarisation Scene setting Objectives 2.Establish a vision Organisation [ e.g. connected companies with joined up thinking and processes] Information systems Culture Measures and targets 3.Describe the processes for the supply chain and how they should work; application of Lean, Agile and Quality concepts Innovation, Demand and Supply Culture Information and systems Measures 4.Action Plan Short term/Medium Term/Long Term How to prevent failure Who/What/When/Where/How

6 © The Delos Partnership 2004 Vision Define how the overall organisation should look – e.g. Virtual Centre Locally global Common processes Culture of honesty, trust and realism Linked information systems Extraordinary levels of performance Carried out in workshop groups

7 © The Delos Partnership 2004 MGG Supply Chain Vision MEASURED BY EXCELLENT CUSTOMER SERVICESOn-Time in Full 3 rd Party. On-Time in Full Group Back Orders Lead Time 99% 1% 4 wks LOWEST COST OF GOODSOverhead / 1000 Production Overhead / Pack Cost of Sales Material Cost Stock Write-Off as % of Sales 3€ 0.1€ < x % ? <0.1% QUALITYBatches Right First Time Recalls Regulatory Audit Success Cost of Batches Rejected Customer Complaints 99.99% % <3 ppm HSELost time accidents Frequency HSE Incidents X <Y

8 © The Delos Partnership 2004 Merck Benchmark – Inventory Turns Source : annual reports and Hoover.com

9 © The Delos Partnership 2004 Describe the processes Outline how each local site should work and global interaction Information systems –Integrated –Simple links across geography Ways of working –Material and Capacity planning –Service Level offering Culture –Honesty –Realism –Trust

10 © The Delos Partnership 2004 Process definition format 1.Introduction 2.Description 3.Breakout group [s] 4.Feedback 5.Record decisions and activities

11 © The Delos Partnership 2004 What is a Supply Chain ? STRATEGIC PLANS. OPERATIONAL PLANS. DEMAND PLANNING SUPPLY PLANNING SUPPLIER MANAGEMENT. CONTRACTS. TRANSPORTATION. MAKE PLANNING. CAPACITY PLANNING. MATERIAL MANAGEMENT. LEAN MANUFACTURING. WAREHOUSE MANAGEMENT. TRANSPORT MANAGEMENT. DOCUMENTATION. RELATIONSHIP MANAGEMENT. CUSTOMER ORDER MANAGEMENT. REVENUE MANAGEMENT. MEASUREMENT INFORMATION PEOPLE PLAN PROCESS BUY MAKE MOVE SELL

12 © The Delos Partnership 2004 A Global model Week 1Week 2Week 3Week 4 Demand Planning Demand Planning Demand Planning Demand Planning Demand Planning Customer New Activity Review Innovation Supply Review Supply Review Supply Review Supply Review Financial/ Priorities Consolidated Recocniliation Financial/ Priorities Corporate Review Senior Team Review GLOBALLOCALGLOBALLOCAL LEVEL 1 Country/ Market LEVEL 2 Region/ Business Unit LEVEL 3 Europe/ Global HQ

13 © The Delos Partnership 2004 Describe the processes Innovation Innovation Vision Strategy Prioritisation Prioritisation Demand Support Supply Innovation Innovation Vision Strategy Prioritisation Prioritisation Demand Support Supply Innovation Innovation Vision Strategy Prioritisation Prioritisation Demand Support Supply United Kingdom Ireland Germany Innovation Innovation Vision Strategy Prioritisation Prioritisation Demand Support Supply Spain Innovation Innovation Vision Strategy Prioritisation Prioritisation Demand Support Supply France Innovation Innovation Vision Strategy Prioritisation Prioritisation Demand Support Supply Australia

14 © The Delos Partnership 2004 Framework for Process Review Process InputsPurposeOutputs People Desired Culture Measures Link to other Processes

15 © The Delos Partnership 2004 Prepare an Action plan 1.Define the actions required 2.Allocate activities to be undertaken on return 3.Identify resources required 4.Identify short term gains 5.Identify longer term activities 6.Agree outline implementation plan for each site

16 © The Delos Partnership 2004 Delos Change Journey MobiliseDesignCommunicateReviewUnderstandASSESSASSESS EDUCATION STRATEGY & DESIGN DEFINE & MEASURE BENEFITS ORGANISATION SYSTEMS World Class Local Class

17 © The Delos Partnership 2004 Process to get there 1.Prepare the workshop 3 days on site to familiarise with MGG Tailor Material 2.Carry out workshop 21/22 April – offsite with social event overnight