1 © The Delos Partnership 2003 Global Strategic Operations Planning One set of numbers at all times

2 © The Delos Partnership 2003 Opening discussion 1.Consider three cases where a customer has got what they wanted, but with unnecessary cost to the business, and review how this happened. 2.Consider three cases where you know that a customer has not got what they want and review why you think this happened. 3.Review existing performance measures and see how these help add value to the customer’s experience with MD-I.

3 © The Delos Partnership 2003 Objectives for Global Strategic and Operations Planning One set of numbers at all times Integrated Plans Teamwork Decisions made in timely fashion Consistent performance measures

4 © The Delos Partnership 2003 Conflicting Objectives ? Inventory/ Capacity Customer Service Manufacturing Costs Manufacturing Flexibility

5 © The Delos Partnership 2003 Conflicting Objectives Finance Marketing Manufacturing Sales

6 © The Delos Partnership 2003 Vertical Functional Organisation MD Sales Marketing Technical Operations Finance HR R&DR&D R&DR&D MKTGMKTG MKTGMKTG SALESSALES SALESSALES OPSOPS OPSOPS ACCTSACCTS ACCTSACCTS HRHR HRHR Directors Managers Supervisors/Team Leaders

7 © The Delos Partnership 2003 Disintegrated Business Planning Long term plan Short term Plan Medium Term Plan

8 © The Delos Partnership 2003 Lack of Visibility Year to date is below budget and last year, and therefore there is an urgent need to cut costs, and reduce inventory, in order to improve cash flow…

9 © The Delos Partnership 2003 Disintegrated Business Planning Annual operating Plan Master Production Schedule Supplier Schedule Factory Schedule £’s/Euros/$ 18 months 1/ year SKU’s 12 weeks 1/week

10 © The Delos Partnership 2003 Strategy vs Execution “It is not so much the strategy that causes the failure. 80 % of companies fail to execute their strategy” - Kaplan and Norton : “Strategy Focussed Organisation” “It is not so much the strategy that causes the failure. 80 % of companies fail to execute their strategy” - Kaplan and Norton : “Strategy Focussed Organisation”

11 © The Delos Partnership 2003 Vision and Strategy Vision –Clear statement of direction –Understood by all Strategy –Means of getting there –Requires clear focus Operational Excellence Customer Intimacy Product Leadership

12 © The Delos Partnership 2003 Setting the Vision Simple Owned by the Managing Director Understood by everyone Visible e.g. Simply the best

13 © The Delos Partnership 2003 Vision – Messier-Dowty To be the world leader in Landing Gear Systems as viewed by our Customers, Employees, Shareholders,Suppliers

14 © The Delos Partnership 2003 Strategy Clear Focus on overall strategy –Strengths/Weaknesses/Opportunities/ Threats –Market Position –Competitive Position –Technological Position

15 © The Delos Partnership 2003 Teamwork With a common vision and a strategy there is a chance to develop common Objectives Commitment Team direction

16 © The Delos Partnership 2003 Supporting Processes There are three key supporting processes –Innovation New products New processes –Customer Relationship management Sales linkage Marketing linkage –Supply Management Internal Factories External suppliers

17 © The Delos Partnership 2003 Delos Business Model Strategy Prioritisation Changes Vision DemandSupply Support

18 © The Delos Partnership 2003 Management of Innovation Needs Management across all the projects

19 © The Delos Partnership 2003 Demand Planning Needs a Simple Process Filter Demand Execute Forecast Capture Actual C O N S E N S U S F O R E C A S T Review Commercial Plans Review Exceptional Demand Hold Demand Review Assumptions written down and agreed

20 © The Delos Partnership 2003 Master Scheduler Strategy Master Scheduler Sales Forecasts Customer Orders Manufacturing Plan Purchasing Plan ERP System Balanced Plan

21 © The Delos Partnership 2003 In Balance ?

22 © The Delos Partnership 2003 Prioritisation Which customer gets preference Spares or Original Equipment New product versus existing product Which market gets supply Must be balanced

23 © The Delos Partnership 2003 GS&OP Gap Analysis Strategic plan Time Now SOP Forecast Actual status years profitoutputrevenueprofitoutputrevenue What is the GAP and what are the action plans to close it?

24 © The Delos Partnership 2003 Strategic Operations Planning Annual Operating Plan Monthly Review Master Production Schedule Supplier Schedule Factory Schedule Volume [Family] Value 42 months horizon Volume [Family] Value 30 months horizon Volume SKU Value 18 months horizon Volume [Part number] Value 18 months horizon

25 © The Delos Partnership 2003 Measurement What gets measured is what Gets done What gets measured is what Gets done Actual versus Budget Actual versus target Actual versus Budget Actual versus target Traditional Measures

26 © The Delos Partnership 2003 On track … “From looking at the wake behind the ship, I can see we are still on course…”

27 © The Delos Partnership 2003 Delos Business Model Strategy Prioritisation Changes Vision DemandSupply Support

28 © The Delos Partnership 2003 Velocity Measure STORESTORE STORESTORE INSPECTINSPECT INSPECTINSPECT RECEIVERECEIVE RECEIVERECEIVE PICKPICK PICKPICK RUNRUN RUNRUN INSPECTINSPECT INSPECTINSPECT STORESTORE STORESTORE RUNRUN RUNRUN INSPECTINSPECT INSPECTINSPECT STORESTORE STORESTORE Elapsed Time VA Velocity % = sum of Value Added Time [VA] Total Elapsed Time

29 © The Delos Partnership 2003 Global Strategic Operations Planning Is not A meeting for the Production scheduler and Customer Services Manager Operations Scheduling Detailed Capacity Planning meeting Sorting out next week’s plan

30 © The Delos Partnership 2003 Global Strategic and Operations Planning Is : A formal process for communicating requirements [Demand] and capabilities [Supply] A means for resolution of medium term to longer term issues The way of delivering the strategy by developing plans to close the gaps

31 © The Delos Partnership 2003 Globalisation In a global business Customers do not mind where the product comes from Customers expect same level of performance wherever it comes from Customers expect same level of quality and speed of response

32 © The Delos Partnership 2003 Globalisation Global companies need Common processes Common levels of quality Common policies and procedures Common measures of performance To deliver the common standards that the customers come to “take for granted”

33 © The Delos Partnership 2003 Integrated Business Vision And Strategy Processes People Improvement Measures Customer Service Shareholder Performance Innovation Suppliers

34 © The Delos Partnership 2003 Global Strategic Operations Planning Needs a vision and strategy Requires integration of the key processes All-embracing performance measures –Measuring processes and not people Needs a formal process to support it In a global organisation needs global and local integration