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2009 Complexity Reviews

2009 Complexity Reviews. Required Reports, Topics, Charts & Analysis. Agenda For Complexity Reviews. Business Overview Demand Management Detailed Review of S&OP Process Projects Related to Shaping Demand Customer Segmentation ABCD & Margin Analysis * Legacy Product Management *

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2009 Complexity Reviews

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  1. 2009 Complexity Reviews Required Reports, Topics, Charts & Analysis

  2. Agenda For Complexity Reviews • Business Overview • Demand Management • Detailed Review of S&OP Process • Projects Related to Shaping Demand • Customer Segmentation ABCD & Margin Analysis* • Legacy Product Management* • Supply Management • Parts Analysis (Including Slow Moving)* • Preferred Supplier Migration Plan • Material ABCD Planning Review & Process* • Inventory Metrics* • Product Management • NPD 2.0 Process & Assessment* • Platform and Product Analysis* • Component Engineering / Part Gate Keeping • Legacy Product Management • Other Division Programs / Best Practices – Quarterly Webcast • Complexity Index (ECI) and Project Roadmap* * Denotes Areas With Required Exhibits

  3. 2009 Complexity Review Committee • 18 Site Reviews Targeted for November 2008  June 2009 • Review Team Will Consist of: • Craig Doiron – VP Product Management • Ray Keefe / Mike Phelan – VP Manufacturing / Director Lean Manufacturing • Bill Trosky / Pam Jackson– VP Technology and NPD Development • Tano Maenza – Director IT Solutions and PLM • Jenny Lenhard – Profit Planning Analyst • Josh Oed – Supply Chain Analyst • Procurement Business Leader • Division Attendees • President and Direct Staff (incl. TBL) • Operating Management as Required • Complexity Package & Required Exhibits Distributed by Mid-November A Summary Will Be Presented At Profitability Review Best Practices Will Be Identified and Shared at Summit Meetings

  4. Complexity Review Schedule As of February 6, 2009

  5. Complexity Review Exhibits • Demand Management • Major Customer Analysis • Customer Segmentation ABC Matrix • Supply Management • Supplier Analysis • Material Analysis • Supply Chain Complexity • Suppliers by the Numbers • Inventory Velocity and ITO Forecast • Part Growth Analysis • Material ABC Analysis • Product Management • Platform Analysis & Platform/Product Line Left-Right Analysis • NPD ECAM or Self-Assessment • Levers to Remove Complexity • Emerson Complexity Index (ECI)

  6. REQUIRED REPORTING Major Customer Analysis

  7. Customer Segmentation ABC Matrix • Identify in each segment of the matrix: • Unique SKUs in box/ total SKUs in box • Unique sales $ in box/ total sales in box • GP of SKUs in box/ total GP in box Customers C B A A B Products / SKU’s C Try To Isolate “Legacy” Products In This Region REQUIRED REPORTING

  8. EXAMPLE Fisher Regulators Complexity ReviewCustomer Segmentation Customers A 26 B 80 C 1087 Unique SKUs in box/Total SKUs in box Unique Sales $ in box/Total Sales in box GP of SKUs in box/Total GP in box A 275 B 814 Products / SKU’s C 3586 70/20/10 Split2007 Trade Sales DollarsMcKinney/Fromex Regulator Technologies Complexity Review November 25, 2008 Company Confidential

  9. EXAMPLE CIM - HAC Legacy Analysis Matrix

  10. Fisher Regulators Complexity Review Levers to Remove Complexity EXAMPLE Demand Management Ideas to Shape Demand Link ABC categories in price book to material plan Drive SIOP to Part Level Trim/price option constructions to drive behavior Real time prospectus to set expectation and drive product selection to stocked items - Legacy, low volume Part #’s (ABC/ABC) - Last Time buys - “C&D” Customers - Catalog reduction / Portfolio analysis Eliminate - Price - Lead Times structured - “Shaping” - Restrict “promises” Mitigate - S&OP / Forecast accuracy - Isolate Complexity (C&D cells) Reduce Impact Regulator Technologies Complexity Review November 25, 2008 Company Confidential

  11. REQUIRED REPORTING Material Analysis

  12. REQUIRED REPORTING Supply Chain ComplexityIdentifying Parts & Suppliers Active Suppliers # Suppliers $k/Supplier

  13. EXAMPLE Fisher Regulators Complexity Review NA Supply Chain Complexity Active Suppliers Spend Per Supplier Spend Per Part Number Suppliers $K $K Regulator Technologies Complexity Review November 20, 2008 Company Confidential

  14. REQUIRED REPORTING Suppliers By The Numbers2008 & 2009 Complexity Leverage 8% 82%

  15. EXAMPLE Fisher Regulators Complexity Review FY08 Supplier Leverage - North America Complexity Leverage 8% Regulators NA Spends <$20K with 48% of its Supply Base 82% • Need to focus on consolidation of the “little guy” • Hard work and limited $ savings, but it eliminates complexity • Utilize EMR preferred Suppliers to increase leverage Regulator Technologies Complexity Review November 25, 2008 Company Confidential

  16. Instructions for Ex. 245 - Inventory Velocity

  17. REQUIRED REPORTING Exhibit 245 - Inventory Velocity Will Tie to ITO, RAW Velocity, WIP Velocity and FG Velocity Charts

  18. REQUIRED REPORTING ITO Forecast Ties to Exhibit 245

  19. REQUIRED REPORTING Raw Velocity Forecast Ties to Exhibit 245

  20. REQUIRED REPORTING WIP Velocity Forecast Ties to Exhibit 245

  21. REQUIRED REPORTING FG Velocity Forecast Ties to Exhibit 245

  22. 2007 2008 2009F REQUIRED REPORTING Part Growth Analysis No. of Parts

  23. REQUIRED REPORTING FISHER VALVES - MARSHALLTOWN Material ABC Analysis Keep Annual Order Axis Static (i.e. 0 – 250 for each chart) Previous 12 Months

  24. EXAMPLE Fisher Regulators Complexity Review Delivery Frequency - A Items Increase Frequency To Reduce Inventory Part Numbers Annual Receipts Regulator Technologies Complexity Review November 20, 2008 Company Confidential

  25. EXAMPLE ABC Analysis – Order Frequency at Climate Tech (REF Division) • Areas Of Focus • Box/Skid Quantity Reduction • Weekly Automated Releases • LTL vs. Full Containers Drive To Optimum Mix Number Of Receipts • Opportunity • Understand Freight Impact • Handling, Movement Costs • Drive To Larger Orders • Expect Lower Freight, Handling Costs Increased Order Frequency Drives Inventory Improvement (A Items) Fewer Orders Drives Cost Improvement (C Items)

  26. REQUIRED REPORTING Platform Analysis

  27. REQUIRED REPORTING Product Platform Sales and GP Analysis Sales GP% Grow Manage Create Left / Right Charts for all Product Platforms

  28. EXAMPLE Product Platform 1Product Line Sales and GP Analysis Sales GP% Grow Manage

  29. Adding Component Complexity Engineer Q2FY09 10,750 Parts Eliminated – Base Company • Eliminate 50% of our loose equipment platforms and parts • Re-Engineer to expand capabilities and global application coverage • 80% of our core products will be improved EXAMPLE Fisher Regulators Complexity Review Reducing Complexity by Re-Engineering Regulator Technologies Complexity Review November 20, 2008 Company Confidential

  30. NPD ECAM and Self-Appraisals Division Should Assign an NPD Self-Appraisal Representative The Leader Should Attend the WebEx Training NPD Self-Appraisal Leader Should Contact Bill Trosky (Trosky@cmu.edu) or Pam Jackson (Pamela.Jackson@emerson.com) of Corporate Technology to Get Started REQUIRED ECAM or Self-Appraisal Required Before Prof Review

  31. Appraisal Recommendations • For Profit Review, the recommendation is to be prepared to discuss: • Results of the NPD-ECAM or NPD Self-Appraisal Survey • Actions taken as a result of the feedback from the ECAM or Survey or top 2-3 areas that are planned to be addressed • Corporate Technology Recommendations: • Start with an NPD Self-Appraisal survey • Develop process improvement plan based on findings • Conduct intermediate Self-Appraisal surveys to assess progress • Periodically (perhaps once every four years) conduct a full NPD-ECAM to corroborate internal assessments and for the identification of best-practice improvements from other Divisions • Periodically (perhaps once every four years) conduct external appraisals/surveys for the identification of best-practice improvements from industry

  32. REQUIRED REPORTING Levers to Remove Complexity Demand Management Supply Management Product Management Eliminate Mitigate Reduce Impact

  33. Levers to Remove Complexity EXAMPLE Supply Management Product Management Demand Management - Legacy, low volume Part #’s (ABC/ABC) - Last Time buys - “C&D” Customers - Catalog reduction / Portfolio analysis - Parts consolidation - Database cleansing - “D” options • - Supplier Consolidation • Preferred, leverage suppliers • - MOQ’s Eliminate - Price - Lead Times structured - “Shaping” - Restrict “promises” - MOQ negotiations - Process in-sourcing as appropriate - Supplier Development - Legacy, low volume Part #’s - replacements - Last Time buys - Component Engineering - discipline Mitigate - Sourcing strategies based on ABCD - Process in-sourcing - Supplier development - S&OP / Forecast accuracy - Isolate Complexity (C&D cells) - Platform approach - Later customization - Parts consolidation - DFM / DFA Reduce Impact

  34. REQUIRED REPORTING Emerson Complexity Index (ECI)

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