1. Product Profitability Management and Analysis On-Ramp to SAP PLM

2. Introduction to Samsung PLM at Samsung Product Profitability Management&Analysis and SAP Case Study Demo Summary Overview

3. World-class products are core to Samsung $28B revenues in FY 2000 Introduced 250 products last year 32 award winning products Average 14 month concept to obsolescence lifecycles 6 month concept-to-shelf lifecycle Electronics Electro-Mechanics Heavy Industries Chemicals Ship building Aerospace Defense Optical and semi-conductor equipment Display devices Liquid crystal displays Cathode ray tubes Petro-chemicals Fine chemicals Defense Optical and semi-conductor equipment

4. Strategic PLM Initiative at SDSA (Samsung Data Systems America) Introduce and support PLM initiatives through out Samsung and its subsidiaries to keep Samsung corporation competitive Make best practices and lessons learnt from our experience with Samsung to our customers in discrete manufacturing vertical Partner with the leading PLM Vendors and provide domain knowledge (CAD Data Management, Visualization and Integration) that enhances their PLM offering

5. Critical Enterprise Data that have a Lifecycle Customer Relationships Solution: SAP R/3 SD module, CRM application Projects Solution: SAP R/3 Project Systems module Product Profitability Planning / New Product Introductions / Engineering Change Analytics/Adapting to Market Demand ???

6. Why SAP was not being considered to be the PLM Solution Product data originates in Design PDM systems (PTC, SDRC, Cadence) No easy mechanism to expose it to the SAP R/3 based systems in a controlled manner

7. Conditions in Manufacturing Product Profitability Many products do not meet projected profitability targets Time to Market Time delays common in most new product introductions Cost of Quality Cost of quality cutting into profits The Industry is under pressure to perform

8. The Challenges to achieving these goals

9. The Existing Approach to Measuring ROI Investments Revenues SGA COGs Service Data Warehouse P&L Statement

10. What is the Silver Bullet? 1.Start with the “end-game” : Margins 2.Work backwards from this desired result 3.Focus is on “How do I get to this result” Vs “Lets analyze this result” If you do not start with your destination in mind, any path can get you there (or get you nowhere)

11. Our Approach Product Profitability Management&Analysis 1.Start with the “end-game” : Margins 2.Work backwards from this desired result 3.Leverage data in existing systems PPMA

12. What can Product Companies do to increase Profitability Concept & Definition ExecutionService Service Management Apps Ability to Impact P&L Enterprise Investments Ignore Area of Greatest Impact! ERP / MRP PLM CAD PPMA

13. THE INVERTED P&L STATEMENT FLOW Investments Revenues SGA COGs Service P&L Statement

14. Part – 1 PLANNING PROFITABILTY Part – 2 MANAGING PROFITABILTY Part – 3 ADAPTING PROFITABILTY Background Company: PDA Company Description: Maker of Handhelds PPMA DEMO

15. Part I - PLANNING PROFITABILITY Problem Description –PDA Company is evaluating different design options –Basic PDA –Basic PDA with cell phone –Basic PDA with cell phone and camera What product has the highest profit potential?

16. Part I - PLANNING PROFITABILITY What is the profit potential of each PDA design option? –Investment –Service Costs –Transformation Costs –Material Costs What is the best warranty contract to offer with this product that maximizes PDA Company’s profitability Are there any other tradeoffs that I can make? CHALLENGES

17. Part II - MANAGING PROFITABILITY Problem Description –The chosen PDA is being manufactured and an Engineering Change for the LCD panel is being considered in response to a competitive situation What is the impact of this change and when is the right time to introduce this change

18. Part II - MANAGING PROFITABILITY What is the impact of this ECO Response to the Change across multiple locations P&L Impact Alternatives / Options / What if … CHALLENGES

19. Part III - ADAPTING PROFITABILITY Problem Description –Revenues do not match expectations –Lower ASP –Higher Competition What remedial action shoud be taken to protect profitability

20. Part III - ADAPTING PROFITABILITY 1.Reduce price to increase total revenue? 2.Switch to higher quality components ? 3.Phase out product and liquidate inventory? 4.Use excess inventory components for next PDA? 5.Delay the launch date of the next PDA? 6.What if ? 7.… CHALLENGES

21. SUMMARY Redefining PLM in Financial Terms allows SAP to take control Provides an ON-RAMP to SAP PLM functionality SAP R/3 continues to be the master repository and the system of reference Increases the usability and ROI of the investment in SAP R/3

22. For a copy of this presentation and screenshots Hiren Shah Hiren@zesati-samsung.com 650 954 7047

23. Thank you for attending! Please remember to complete and return your evaluation form following this session. Session Code: [3702] Hiren@zesati-samsung.com 650 954 7047