Stephen P. Crane, CSCP Wacker Chemical Corporation Director Strategic Supply Chain

1. Stephen P. Crane, CSCP Wacker Chemical Corporation Director Strategic Supply Chain

2. Implementing Integrated Sales & Operational Planning Page 1 CONTENT

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4. Implementing Integrated Sales & Operational Planning Page 3 WE ARE COMMITTED TO BENCHMARK-QUALITY PRODUCTS DESIGNED FOR OUR FOCUS INDUSTRIES

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6. Implementing Integrated Sales & Operational Planning Page 5 WHAT IS SALES & OPERATIONS PLANNING? Is an executive decision-making process Ties operational plans to financial plans: ONE set of numbers Is a forum for setting relevant strategy and policy Balances demand and supply Deals with volume in both units and $ Monthly process reviewed by management at an aggregate level What business plans to do covering an 18-month horizon to: Plan for resources Execute business plan/strategy

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14. Implementing Integrated Sales & Operational Planning Page 13 TYPICAL BENEFITS FROM IMPLEMENTING S&OP Forecast error reduction��20-25% Inventory reduction���...�5-10% Inventory turns increase�.�.5-10% Service level increase�� ...5-10% Top Line revenue growth.�..�2-5% SKU rationalization���.�10-20%

15. Implementing Integrated Sales & Operational Planning Page 14 HIGH FORECASTING ACCURACY YIELDS TANGIBLE BENEFITS IN SUPPLY CHAIN PERFORMANCE High forecast accuracy cuts cost out of the entire supply chain Companies that are best at demand forecasting average; 15% less inventory 17% higher perfect order fulfillment 35% shorter cash-to-cash cycle times 1/10 the stockouts of their peers 1% point improvement in forecast accuracy can yield a 2% point improvement in perfect order fulfillment 3% increase in forecast accuracy increases profit margin 2%

16. Implementing Integrated Sales & Operational Planning Page 15 Companies with higher forecast accuracy also achieve better delivery performance Delivery performance to request date increased 2% for each 5% increase in forecast accuracy BENEFITS OF IMPROVING FORECAST ACCURACY

17. Implementing Integrated Sales & Operational Planning Page 16 INVENTORY LEVEL VS. FORECAST ACCURACY

18. Implementing Integrated Sales & Operational Planning Page 17 BENCHMARKING OBSERVATIONS Emphasize S&OP as a first step S&OP is the most critical element to drive supply chain benefits Demand planning and supply planning are the largest profit drivers Supply chain benefits normally fall into the range of 3 to 5% of sales revenue on a sustainable basis through CI efforts Over 50% of increases in shareholder value over the past three years have come from supply chain improvements

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20. Implementing Integrated Sales & Operational Planning Page 19 AIR PRODUCTS POLYMERS BUSINESS UNIT $600 million global business Diversified geographies 65% of sales in N. America 30% Europe, 5% Asia 6 Plants (4 NA, 1 Europe, 1 Asia) 600 Products 1,800 Ship-to Customer Locations 3,500 Planning Combinations (Material-Ship-to-Primary Source Plant)

21. Implementing Integrated Sales & Operational Planning Page 20 Just went live on SAP, master data issues New processes, tools, and data sources Planning processes loosely integrated Poor visibility of demand/supply balance Numerous service issues, late deliveries, renegotiated orders Communication gaps between business, finance, and supply chain No linkage between volume forecasts for supply chain and financial forecast WHERE THEY STARTED IN 2003

22. Implementing Integrated Sales & Operational Planning Page 21 GLOBAL WORK PROCESSES

23. Implementing Integrated Sales & Operational Planning Page 22 S&OP PROCESS STEPS

24. Implementing Integrated Sales & Operational Planning Page 23 S&OP PROCESS CYCLE

25. Implementing Integrated Sales & Operational Planning Page 24 EXECUTIVE S&OP MEETING

26. Implementing Integrated Sales & Operational Planning Page 25 S&OP DRIVES THE BUSINESS PLAN

27. Implementing Integrated Sales & Operational Planning Page 26 S&OP PROCESS KPIs Forecast Accuracy (%) Production Plan Adherence (%) Inventory Days of Supply Financial Forecast Accuracy (%)

28. Implementing Integrated Sales & Operational Planning Page 27 Major sources for forecast inaccuracy: Upside account assumptions Consignment billing issues Price increases Raw material supply allocations APO master data Major sources for forecast inaccuracy: Upside account assumptions Consignment billing issues Price increases Raw material supply allocations APO master data

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32. Implementing Integrated Sales & Operational Planning Page 31 WHERE ARE THEY TODAY Improved visibility of demand and supply Improved service, On-Time Delivery at 98% Improved financial forecast accuracy S&OP meetings are boring�a sign of success Communications aligned between business, finance, and supply chain Sales and volume forecasting for outlooks/budgets; easier and more accurate; drives supply chain plans Business plans validated against supply chain capabilities on a monthly basis

33. Implementing Integrated Sales & Operational Planning Page 32 One volume forecast aligned w/ all business plans; Financial, Supply Chain, Operational, & Commercial Ongoing net productivity benefits ~ $18 Million+ / year Improved financial performance Net Asset Investment down by 25% Operating Income increased by 80% ORONA improved from 5% to 13% MAJOR IMPROVEMENTS SINCE 2003

34. Implementing Integrated Sales & Operational Planning Page 33 THE S&OP CHECK LIST If you answer no to any of these questions, you have an opportunity to go back and make improvements to your current S&OP process. Hopefully you have heard a few key points this afternoon that you can take back to your company and apply to your S&OP process. Thank you.If you answer no to any of these questions, you have an opportunity to go back and make improvements to your current S&OP process. Hopefully you have heard a few key points this afternoon that you can take back to your company and apply to your S&OP process. Thank you.

35. Implementing Integrated Sales & Operational Planning Page 34 ROAD BLOCKS & CHALLENGES

36. Implementing Integrated Sales & Operational Planning Page 35 BU A FORECAST DEVIATION TREND It took only 6 months to achieve the lowest Forecast Deviation in Wacker

37. Implementing Integrated Sales & Operational Planning Page 36 BU B FORECAST DEVIATION TREND Forecast deviation chemical product level

38. Implementing Integrated Sales & Operational Planning Page 37 �The only sustainable competitive advantage any company can have is the ability to consistently react to market opportunities faster than the competition. A company�s products, engineering, proprietary manufacturing processes or even a powerful brand simply no longer ensure long term, sustainable advantage�

39. Implementing Integrated Sales & Operational Planning Page 38 The WACKER Group