1 © The Delos Partnership 2003 Global Strategic and Operations Planning Prioritisation and Strategy Review

2 © The Delos Partnership 2003 Strategic Operations Planning ACTIONACTION Week 1Week 2Week 3Week 4 Innovation Review Innovation Review Customer Demand Review Customer Demand Review Supply Plan Review Supply Plan Review Priority Review Priority Review STAGE 1 STAGE 2 Senior Team Review Senior Team Review STAGE 5 STAGE 6 STAGE 4 STAGE 3

3 © The Delos Partnership 2003 TOP LEVEL GS&OP PROCESS DIAGRAM: Global Innovation Customer Demand SupplyPrioritySenior Team Week 1Week 2Week 3Week 4 LEVEL 1 Country LEVEL 2 Business Unit LEVEL 3 Global R&T 3x BU Demand Site (x6) Demand CS Demand Priority By Site (x6) Priority Between 3 BU/CS SNR TR Op’s Innovation 2 nd week of month Global Planning Priority Within 3 BU/CS 3 meetings: M-DT/B/G Programme Innovation (x3) Sites (x6) Global Planning Supply Planning By Site (x6)

4 © The Delos Partnership 2003 Priority Stage Objectives –To resolve issues around demand vs supply, project plans vs timing vs resources –To provide financial review – revised Roll –To facilitate what-ifs –To provide issues for resolution by Senior Team by exception

5 © The Delos Partnership 2003 Prioritisation Requirements –Financial statement of all the plans –Alternatives for evaluation External events –Governmental –Competitive Internal events –Launch threats –Supply constraints

6 © The Delos Partnership 2003 Preparation of the budget/roll Financial statement enables –Visibility of current year outturn – early –Visibility of subsequent year[s] to enable budget to be one set of numbers - early

7 © The Delos Partnership 2003 Financial Planning Spreadsheet Sales Plan-3-2 Demand Plan120 Actual Demand Difference512 Cum Diff Last Demand Plan120 New Demand Plan Difference Cum Diff Months Q4Q1 360 Supply Plan-3-2 Supply Plan125 Actual Supply Difference Cum Diff Last Supply Plan New Supply Plan Difference Cum Diff Q4Q1 360 Inventory Plan-3-2 Stock Plan Actual Stock Difference Last Stock Plan8691 New Stock Plan Difference Q4Q1 Financials-3-2 Actual Sales Product Cost Contribution Admin Overheads Manufacturing Overheads Profit Change in Stocks CASH FLOW Projected Sales1200 Product Cost480 Contribution720 Admin Overheads100 Manufacturing Overheads100 Profit520 Change in Stocks CASH FLOW Q4Q

8 © The Delos Partnership 2003 Gap Identification

9 © The Delos Partnership 2003 SOP 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?

10 © The Delos Partnership 2003 Alternatives to test Demand Volumes Supply Plan Overtime/capacity change Timing of Capital Expansion Price/Volume effects Emergencies ONE SET OF NUMBERS

11 © The Delos Partnership 2003 Reviewing the Gap Aspiration

12 © The Delos Partnership 2003 Global Strategic Operations Planning Provides sound basis for decision making Enables alternatives to be tested easily – on a spreadsheet ? Provides means for “doing away with” the budget/roll

13 © The Delos Partnership 2003 Priority Review Outcome –Decisions on capacity short term etc. –Decisions for management team –Review of current financial picture –Presentation of next year’s budget

14 © The Delos Partnership 2003 PRIORITY PLANNING BY SITE TOP LEVEL PROCESS Review & discuss operational solutions “S&OP Co-ordination Team” Supply Planning Identifies Issues and Potential Solutions Op’s/Procurement/Finance/Quality Mgt Propose evaluations for next run Agree actions Implement Site Actions Agree outstanding issues for Priority Within BU’s/CS To Priority Planning Within/Between BU’s/CS To Next Supply Planning Cycle Document issues for Priority Within BU’s/CS Forward intersite issues to GPT

15 © The Delos Partnership 2003 By Site Site Load & Capacity Profile Critical Workcentre Load & Capacity Profiles Other Workcentre Load & Capacity Profiles 5 year horizon - Rolling first 24 months - Fixed years 3 to 5 (re-establishment of year Roll 1) OE by programme Spares by major parts (product/process) PRIORITY PLANNING BY SITE PROFORMA (1)

16 © The Delos Partnership 2003 PRIORITY PLANNING BY SITE PROFORMA (2) Outstanding Issue (Problem/Opportunity) Proposed SolutionCostImpactDecision PointRisks 10% overload mar-may ‘04Offload5% reductionIncreased L/TNext CycleLate Delivery 15% Overload (constant) in AssemblyHire 2 menIncreased overheadsVolumes could reduce New Issue (Problem/Opportunity) Action Taken/Solution SelectedOwnerDeadline Overload in 1 st half 2004Reschedule repatriated gears & update MRP accordingly Master SchedulerNext process cycle Existing ActionUpdateOwnerDeadline Change Cell layout On schedule/budget MRP not yet updated Op’s ManagerJune ‘04 ‘What If?’ scenario Project€/£/ $ Next Milestone Final MilestoneImpactProject Manager Status New m/c cap-ex£1mApproval: 07/03Installation: 07/0535% capacity increaseA. Person New material introduction 

17 © The Delos Partnership 2003 GPT PRIORITY PLANNING TOP LEVEL PROCESS Review & discuss intersite workshare potential solutions Site Priority Planning identifies intersite workshare issues and potential solutions GPT/Op’s Mgt Propose evaluations for next run Agree actions Return To Site Priority Planning To Next Supply Planning Cycle

18 © The Delos Partnership 2003 GPT PRIORITY PLANNING PROFORMA Use existing GPT Intersite Workshare document with: Horizon extended to 5 years And include assumption for current split Amend current document to show proposed work split along-side current Add assumptions for change

19 © The Delos Partnership 2003 PRIORITY PLANNING WITHIN BU’s/CS TOP LEVEL PROCESS Review & discuss potential solutions “S&OP Co-ordination Team” Site Priority Planning identifies issues and potential solutions BU’s/CS Propose evaluations for next run Agree actions Implement Actions Agree outstanding issues for Priority Between BU’s/CS To Priority Planning Within/Between BU’s/CS To Next Supply Planning Cycle Document issues for Priority Between BU’s/CS

20 © The Delos Partnership 2003 By Site Site Load & Capacity Profile Critical Workcentre Load & Capacity Profiles Other Workcentre Load & Capacity Profiles 5 year horizon - Rolling first 24 months - Fixed years 3 to 5 (re-establishment of year Roll 1) OE by programme Spares by major parts (product/process) PRIORITY PLANNING WITHIN BU’s/CS PROFORMA (1)

21 © The Delos Partnership 2003 PRIORITY PLANNING WITHIN BU’s/CS PROFORMA (2) Outstanding Issue (Problem/Opportunity) Proposed SolutionCostImpactDecision PointRisks 10% overload mar-may ‘04Offload5% reductionIncreased L/TNext CycleLate Delivery 15% Overload (constant) in AssemblyHire 2 menIncreased overheadsVolumes could reduce New Issue (Problem/Opportunity) Action Taken/Solution SelectedOwnerDeadline Overload in 1 st half 2004Reschedule repatriated gears & update MRP accordingly Master SchedulerNext process cycle Existing ActionUpdateOwnerDeadline Change Cell layout On schedule/budget MRP not yet updated Op’s ManagerJune ‘04 ‘What If?’ scenario Project€/£/$Next MilestoneFinal MilestoneImpactProject ManagerStatus New m/c cap-ex£1mApproval: 07/03Installation: 07/0535% capacity increaseA. Person New material introduction 

22 © The Delos Partnership 2003 PRIORITY PLANNING BETWEEN BU’s/CS TOP LEVEL PROCESS Review & discuss potential solutions “S&OP Co-ordination Team” Priority Planning Within BU’s/CS identifies issues and potential solutions BU’s/CS Propose evaluations for next run Agree actions Implement Site Actions Agree outstanding issues for Senior Team Review To Senior Team Review To Next Supply Planning Cycle Document issues for Senior Team Review

23 © The Delos Partnership 2003 By Site Site Load & Capacity Profile Critical Workcentre Load & Capacity Profiles Other Workcentre Load & Capacity Profiles 5 year horizon - Rolling first 24 months - Fixed years 3 to 5 (re-establishment of year Roll 1) OE by programme Spares by major parts (product/process) PRIORITY PLANNING BETWEEN BU’s/CS PROFORMA (1)

24 © The Delos Partnership 2003 PRIORITY PLANNING BETWEEN BU’s/CS PROFORMA (2) Outstanding Issue (Problem/Opportunity) Proposed SolutionCostImpactDecision PointRisks 10% overload mar-may ‘04Offload5% reductionIncreased L/TNext CycleLate Delivery 15% Overload (constant) in AssemblyHire 2 menIncreased overheadsVolumes could reduce New Issue (Problem/Opportunity) Action Taken/Solution SelectedOwnerDeadline Overload in 1 st half 2004Reschedule repatriated gears & update MRP accordingly Master SchedulerNext process cycle Existing ActionUpdateOwnerDeadline Change Cell layout On schedule/budget MRP not yet updated Op’s ManagerJune ‘04 ‘What If?’ scenario Project€/£/$Next MilestoneFinal MilestoneImpactProject ManagerStatus New m/c cap-ex£1mApproval: 07/03Installation: 07/0535% capacity increaseA. Person New material introduction 

25 © The Delos Partnership 2003 Measures Schedule adherence MPS stability Expedited parts internal/external Concessions Actual/planned capacity Outputs Load/capacity issues Statement of policy decisions Supply plan Requirements for cap-ex Security stocks Recording of actions taken “What if?” scenarios & alternatives for resolving issues Identification of risk on materials See slide 27Inputs Global Planning Demand: – Intersite workshare (GPT Plan) Global Planning Issues: – Intersite balancing – Risk management Feedback from previous cycle People Process Owner: Process Owner: – L. Schneider-Maunoury (ISO P6) Site Operations Managers Maintenance Quality Master scheduler Site procurement/Supply Chain Mgr’s Global procurement GPT S&OP Co-ordinator Human resources Scope/Purpose Produce a realistic Manufacturing & Supply Plan Balance required capacity vs. planned capacity Define mismatches on capacity Resolve Operating Plan only issues Improve: – Process – Quality – Job satisfaction – Flow to increase capacity NOT to solve all issues Links to Other Processes Make/buy Load/capacity reviews MPS - where applied GPT “Global Planning Team” Process

26 © The Delos Partnership 2003 Measures Delivery Schedule adherence Perfect Order Delivery Non-Right First Time Stock Turns Forecast Accuracy Velocity Lead-Time Variance Plan vs. Forecast Outputs Action plan (incl. filtered issues) Report for Senior Team Review Status vs. plan last time Decisions to be made Gaps identified Business performance Performance Measures Local decisions & associated action plan Proposals in order of preference Financial projectionsInputs Site Issues: Site Issues: – Capacity overloads/underloads – Overtime – Offload – Cap-ex – Manning – Process improvement Output from Output from Innovation Output from Customer Demand Output from Supply Planning Budget information for comparison Previous actions for review People Process Owner: – L. Schneider-Maunoury Demand Planning Process Owner Supply Planning Process Owner Action V Co-ordinator Finance Site Op’s VP, S&OP Co-ordinator, CS Rep & BU reps Global Op’s GVP, Finance Director, CS VP & BU VPs Scope/Purpose Evaluate issues/scenarios Propose solutions & alternatives Filter issues Both site & global: 2 steps Document decisions taken Translate into Financial & Business terms PHASE 2: Review financial impact/ forecasts at sales margin level Links to Other Processes Finance Review PIC “Site Priority Planning” Process

27 © The Delos Partnership 2003 Measures Delivery Schedule adherence Perfect Order Delivery Non-Right First Time Stock Turns Forecast Accuracy Velocity Lead-Time Variance Plan vs. Forecast Outputs Action plan (incl. filtered issues) Report for Senior Team Review Status vs. plan last time Decisions to be made Gaps identified Business performance Performance Measures Local decisions & associated action plan Proposals in order of preference Financial projectionsInputs Within BU’s/CS Issues: Within BU’s/CS Issues: – Programme vs. programme – Rescheduling – OE vs. spares – Financial gap – OE/Spares vs. test Output from Output from Innovation Output from Customer Demand Output from Supply Planning Budget information for comparison Previous actions for review People Process Owner: – L. Schneider-Maunoury Demand Planning Process Owner Supply Planning Process Owner Action V Co-ordinator Finance Site Op’s VP, S&OP Co-ordinator, CS Rep & BU reps Global Op’s GVP, Finance Director, CS VP & BU VPs Scope/Purpose Evaluate issues/scenarios Propose solutions & alternatives Filter issues Both site & global: 2 steps Document decisions taken Translate into Financial & Business terms PHASE 2: Review financial impact/ forecasts at sales margin level Links to Other Processes Finance Review PIC “Priority Planning Within BU’s/CS” Process

28 © The Delos Partnership 2003 Measures Delivery Schedule adherence Perfect Order Delivery Non-Right First Time Stock Turns Forecast Accuracy Velocity Lead-Time Variance Plan vs. Forecast Outputs Action plan (incl. filtered issues) Report for Senior Team Review Status vs. plan last time Decisions to be made Gaps identified Business performance Performance Measures Local decisions & associated action plan Proposals in order of preference Financial projectionsInputs Between BU’s/CS Issues: Between BU’s/CS Issues: – Programme vs. programme – Rescheduling – OE vs. Spares – Financial gap – OE/Spares vs. test Output from Output from Innovation Output from Customer Demand Output from Supply Planning Budget information for comparison Previous actions for review People Process Owner: – L. Schneider-Maunoury Demand Planning Process Owner Supply Planning Process Owner Action V Co-ordinator Finance Site Op’s VP, S&OP Co-ordinator, CS Rep & BU reps Global Op’s GVP, Finance Director, CS VP & BU VPs Scope/Purpose Evaluate issues/scenarios Propose solutions & alternatives Filter issues Both site & global: 2 steps Document decisions taken Translate into Financial & Business terms PHASE 2: Review financial impact/ forecasts at sales margin level Links to Other Processes Finance Review PIC “Priority Planning Between BU’s/CS” Process

29 © The Delos Partnership 2003 Top Level GS&OP Cycle: MTWFT Calendar Month MT W FT Calendar Month SNR TR Priority Between 3 BU/CS Priority Within 3 BU/CS Supply Planning By Site (x6) 3x BU Demand 3x CS Demand Global Planning SNR TR Priority Between 3 BU/CS Global Planning Priority Within 3 BU/CS Priority By Site (x6) R&T Programme Innovation (x3) Op’s Innovation Global Planning Priority By Site (x6) Supply Planning By Site (x6) 3x BU Demand Site (x6) Demand 3x CS Demand Programme Innovation (x3) Sites (x6) Global Planning Priority By Site (x6) Op’s Innovation R&T Global Planning Site (x6) Demand Sites (x6)

30 © The Delos Partnership 2003 Workshop Identify using the format how the local process will work in reality Don’t design it here – that’s for later Identify key people, sources of data, and process for putting together a real prioritisation process

31 © The Delos Partnership 2003 Framework for Process Review Process InputsPurposeOutputs People Desired Culture Measures Link to other Processes

32 © The Delos Partnership 2003 Strategic Operations Planning ACTIONACTION Week 1Week 2Week 3Week 4 Innovation Review Innovation Review Customer Demand Review Customer Demand Review Supply Plan Review Supply Plan Review Priority Review Priority Review STAGE 1 STAGE 2 Senior Team Review Senior Team Review STAGE 5 STAGE 6 STAGE 4 STAGE 3

33 © The Delos Partnership 2003 TOP LEVEL GS&OP PROCESS DIAGRAM: Global Innovation Customer Demand SupplyPrioritySenior Team Week 1Week 2Week 3Week 4 LEVEL 1 Country LEVEL 2 Business Unit LEVEL 3 Global R&T 3x BU Demand Site (x6) Demand CS Demand Priority By Site (x6) Priority Between 3 BU/CS SNR TR Op’s Innovation 2 nd week of month Global Planning Priority Within 3 BU/CS 3 meetings: M-DT/B/G Programme Innovation (x3) Sites (x6) Global Planning Supply Planning By Site (x6)

34 © The Delos Partnership 2003 Objectives for Senior Review Issues for Resolution –Supply/Demand Allocation issues –Major Capacity changes required –Capital Expenditure Plans Current Business situation –Plan versus Budget/Business Plan –Plan versus last plan [volume/value] Assumptions on which plan is based Performance measures

35 © The Delos Partnership 2003 Family Summary Major Changes New Product included in Forecast Tender for Russia included Major Assumptions Competition will reduce price by 5 % We Win Russian Tender Major Threats Decisions Required Investment of Eur 0.5 m in Additional capacity for New Product

36 © The Delos Partnership 2003 Financial justification for XYZ project Year 1Year 2Year 3Year 4Year 5 Volume Sales Contribution Inc Overheads 0.5 Cash Flow Wkg Capital Cap Expenditure 4 Net Cash Flow Net Present 15 % =

37 © The Delos Partnership 2003 Forecast must be supported by Assumptions JulAugSepOctNovDecJanFebMarAprMayJun NUMBERS ! ASSUMPTIONS

38 © The Delos Partnership 2003 The Core Measures and Financial Effect

39 © The Delos Partnership 2003 BNFL Site Process Site Thorp HLWP Magnox Mox LAEMG/ WRD Solid Waste Plant Services Week 1 Week 2 Week 3 Week 4 NPD Dem Demand and Supply Sup Site NPD Demand and Supply Projects Integration Mfg Integration Outage Plan SSMMPR SMR

40 © The Delos Partnership 2003 Global Strategic and Operations Planning Long Term not short term Allows review of current projection versus strategic intent Based on realistic numbers Financial and volume numbers – one set of numbers

41 © The Delos Partnership 2003 SENIOR TEAM REVIEW TOP LEVEL PROCESS Review & discuss potential solutions “S&OP Co-ordination Team” Priority Planning Between BU’s/CS identifies outstanding issues and potential solutions M-DI Executive Committee Propose evaluations for next run Issue ‘Plan’ To Next Supply Planning Cycle Document decisions within Senior Team Review proforma Agree actions Start of next cycle Implement actions

42 © The Delos Partnership 2003 SENIOR TEAM REVIEW PROFORMA (1) By Site Site Load & Capacity Profile Critical Workcentre Load & Capacity Profiles Other Workcentre Load & Capacity Profiles 5 year horizon - Rolling first 24 months - Fixed years 3 to 5 (re-establishment of year Roll 1) OE by programme Spares by major parts (product/process)

43 © The Delos Partnership 2003 SENIOR TEAM REVIEW PROFORMA (2) Existing ActionUpdateOwnerDeadline Change Cell layout On schedule/budget MRP not yet updated Op’s ManagerJune ‘04 ‘What If?’ scenario Outstanding Issue (Problem/Opportunity) Proposed Solution CostImpactDecision Point Risks 10% overload mar-may ‘04Offload5% reduction Increased L/TNext CycleLate Delivery 15% Overload (constant) in Assy Hire 2 menIncreased overheads Volumes could reduce New Issue (Problem/Opportunity) Action Taken/Solution SelectedOwnerDeadline Overload in 1 st half 2004Reschedule repatriated gears & update MRP accordingly Master Scheduler Next process cycle

44 © The Delos Partnership 2003 Measures Progress against action plan/action due dates achieved Previous vs. current strategies Demand accuracy Not Right First Time Schedule Achievement Velocity On Time New products Outputs Decisions made Actions requested Output for cascade Agreed set of Assumptions Agreed strategies Agreed financial plan Guidance/targetsInputs Output from Output from Innovation Output from Customer Demand Output from Supply Planning Output from Priority Planning Reports form previous STR’s People Process Owner: – Martyn Hurst M-DI Exec Committee Steering Committee Scope/Purpose Understand & evaluate priorities & assumptions Make decisions based on priority review output Review performance data Feedback & rationale for decisions Discussion around gaps: – Actions resulting Buy-off of financial changes Sign off of financial projection Provide update on strategy Reach consensus on proposals & assumptions from priority review Links to Other Processes Executive Review Meeting Annual strategy meeting Feeds next S&OP cycle “Senior Team Review” Process

45 © The Delos Partnership 2003 Top Level GS&OP Cycle: MTWFT Calendar Month MT W FT Calendar Month SNR TR Priority Between 3 BU/CS Priority Within 3 BU/CS Supply Planning By Site (x6) 3x BU Demand 3x CS Demand Global Planning SNR TR Priority Between 3 BU/CS Global Planning Priority Within 3 BU/CS Priority By Site (x6) R&T Programme Innovation (x3) Op’s Innovation Global Planning Priority By Site (x6) Supply Planning By Site (x6) 3x BU Demand Site (x6) Demand 3x CS Demand Programme Innovation (x3) Sites (x6) Global Planning Priority By Site (x6) Op’s Innovation R&T Global Planning Site (x6) Demand Sites (x6)

46 © The Delos Partnership 2003 Workshop Identify using the format how the local process will work in reality Don’t design it here – that’s for later Identify key people, sources of data, and process for putting together a real senior team review

47 © The Delos Partnership 2003 Framework for Process Review Process InputsPurposeOutputs People Desired Culture Measures Link to other Processes