The Role of IT in Convergence

1. The Role of IT in Convergence Bob ParkerMay 2009

2. Agenda • Manufacturing in the Context of the Economic Situation • Bridging Strategy and Execution • The Business Case for Convergence • An Architecture of Architectures • Essential Guidance

3. The Good Times It was great run.. • Strong Revenue Growth • 200+ Basis Points in Profit • The Productivity Effect • Consumer Sentiment over 80 • 77 Months of Expansion • Fueled by BRIC and easy credit Source: Manufacturing Insights Global Performance Index

4. The Bad Times And some continued concern.. • More Financial Issues • Real Wages Stuck • Consumer Confidence Low • Auto Sales Way Down • Global Effects – WE, BRIC • Manufacturing Activity Low

5. The Leading Indicators And some reason for hope.. • Major liquidity injections • Automotive investment • A new US President • Investment in R&D • A pause that refreshes? • Serving the “700’s”

6. Near/Long Term Trends Industry: • Companies Will Exploit Existing Tangible and, Especially, Intangible Assets to Ride Out the Financial Crisis and Prepare for Recovery Supply Chain: • Companies will “right size" their supply chains for Profitable Proximity; standard corporate platforms will seek to configure, calibrate, and control increasingly complex scenarios Revenue Management: • Manufacturers will advance precision customer targeting discipline to strengthen their brand promise and respond to new consumer realities Source: IDC Manufacturing Insights Top 10 Predictions for 2009

7. Linking Strategy to Execution Policy Strategic Intelligent Decision Models Information Tactical Operational Innovation Network(s) Business Network(s) Supply Chain Network(s) Collaboration Design Introduce Sustain Execution Source Make Deliver Serve Attract Sell Innovation Growth Productivity Strategic Goals

8. The Importance of Business Networks Outer Economic Network Supply Chain Economics Product Lifecycle Economics Demand Management Economics Core Financials Inner Resource Network Operational Resources Human Resources Information Resources

9. Profitable Proximity Order Management PUSH PULL Network Sourcing Strategy Capacity Constraints Inventory Policy Cost/lead-time tradeoffs Service Level Agreement Terms of Sale Demand Chain Supply Chain Product Flow Information Flow

10. Business Case: Better Revenue

11. Higher Margins

12. Value Chain Structures Engineering Oriented Automotive Aerospace & Defense Consumer Durables Farm, Construction, and Industrial Machinery Technology Oriented Semiconductor Consumer Electronics Contract Manufacturing Computing & Telecom Asset Oriented • Bulk Chemical • Specialty Chemical • Metals • Pulp and Paper Brand Oriented • Food & Beverage • Health & Beauty • Footwear / Apparel • Household Goods • Retail / Wholesale

13. SC Process Improvement Priorities Deploying SCOR process mapping lean, six-sigma, and other process control methodologies for broader areas of supply chain (beyond just manufacturing plants)

14. SC Process Improvement Priorities Deploying SCOR process mapping lean, six-sigma, and other process control methodologies for broader areas of supply chain (beyond just manufacturing plants)

15. IT Matters in Lean Productivity improvement requires a combination of best practices and IT +8% +20% Management Practices 0% +2% Intensity of IT deployment Source: London School of Economics and McKinsey study of 100 manufacturers (France, Germany, UK, U.S.)

16. An Architecture of Architectures External Services Multi-Enterprise Business Network Incubate Consulting Collaborative Decision Environment Invest Integration Industry Process Platform Integrate Outsourcing Physical Delivery Infrastructure Optimize

17. Closed Loop Decision Making Key Output Decision Context Portfolio: Balance Risk and Reward Resiliency in Mitigating Risk Configure Network Network: Optimize Cost and Service Levels Speed in Response Calibrate Processes Local Execution: Compliance with Policy Consistency in Execution Control Activity Information Policy

18. Closed Loop Decision Making Key Output Decision Context Portfolio: Balance Risk and Reward Resiliency in Mitigating Risk Configure Network Network: Optimize Cost and Service Levels Speed in Response Calibrate Processes Local Execution: Compliance with Policy Consistency in Execution Control Activity Information Policy SCOR Lean 6 Sigma

19. Decision Architecture Decision Hierarchy Domain Configurations Business Networking Tools Strategic Advanced Analytic Engine Tactical Operational Semantic Information Repository

20. MEBN and Clouds Connectivity Services Client Organizing Services CLOUD Server Integration Services

21. IT Governance Model Business Strategy Demand Capabilities Needed Office of ProcessPerformance Improvement Supply Prioritized NewInvestment IT Value Platforms Lean Sigma Organization

22. In Conclusion • Take advantage of tremendous opportunities in Convergence by: • Aligning Business Requirements of: • Consistent processes • Increased collaboration • Faster decision making • With IT Value Platforms through: • Investment in enterprise applications • Creation of intelligent decision models • Incubating new technology and driving down the cost of mature assets • And by organizing around process improvement governance

23. Additional Questions ? How to Contact: Bob Parker- Email: bparker@manufacturing-insights.com Phone: +1 508-988-7861