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THE IMPACT OF TECHNOLOGY IN THE PROCESS INDUSTRIES 2002 OSIsoft User’s Conference March 13, 2002 Monterey, Californi

Millennium Chemicals Inc. THE IMPACT OF TECHNOLOGY IN THE PROCESS INDUSTRIES 2002 OSIsoft User’s Conference March 13, 2002 Monterey, California. Roy Lyford-Pike Vice President - IT & CIO. MILLENNIUM CHEMICALS IN BRIEF . Position Share

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THE IMPACT OF TECHNOLOGY IN THE PROCESS INDUSTRIES 2002 OSIsoft User’s Conference March 13, 2002 Monterey, Californi

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  1. Millennium Chemicals Inc. THE IMPACT OF TECHNOLOGY IN THE PROCESS INDUSTRIES 2002 OSIsoft User’s Conference March 13, 2002 Monterey, California Roy Lyford-Pike Vice President - IT & CIO

  2. MILLENNIUM CHEMICALS IN BRIEF Position Share TiO2 2 in the world 16% 2 in the US 23% Acetyls 2 in the US 19% Terpene-basedfragrance chemicals 1 in the world n/a Equistar*Ethylene 1 in the US 17% Polyethylene 2 in the US 15% * 29.5% owned

  3. Stallingborough LeHavre Ashtabula, OH Thann Baltimore, MD Houston, TX Jacksonville, FL Shanghai Paraiba Perth/Bunbury, WA Bahia A GLOBAL COMPANY

  4. E-BUSINESS Helps Drive The Vision Millennium Chemicals’ Vision E-Business Vision Growth Create value by linking enterprises and supply chains in a new collaborative business model that adds value to our customers and ourselves Cost Contain-ment Improve EVA® Working CapitalUtilization

  5. E-BUSINESS VISION To create value by linking enterprises and supply chains in a new collaborative business model that adds value to our customers and ourselves Transformation Growth Cost reduction

  6. TRANSFORMATION LED BY IT • Let’s look at where we came from to see where we are going • evolution of IT • old business model • new business model • characteristics of virtual enterprises • infrastructure issues

  7. USE OF IT IN BUSINESS • 1960’s to 1970’s: • emphasis on data processing • operating on mainframes • aimed at functional requirements • Material Requirements Planning (MRP) • linear, batch processing • user written

  8. USE OF IT IN BUSINESS (cont’d) • 1980’s: • MRP II considered capacity and resource constrains • manufacturing centric • purchased specialized programs • online aimed at functional requirements • still mainframe based, w/ network PC’s • emphasis on business applications

  9. USE OF IT IN BUSINESS (cont’d) • 1990’s: • Enterprise Resource Planning (ERP) packaged systems • single, real-time interface • integrated systems with reengineered processes • driven by globalization • client/server architecture • with point-to-point EDI

  10. USE OF IT IN BUSINESS • 2000’s: • ERP Adv Planning Supply Chain integration • real-time web-enabled interface to transactional and plant systems (OSIsoft PI) • enterprise linking and collaboration • driven by need for speed and agility • connect one-to-many and many-to-one • arrival of e-commerce and the virtual enterprise

  11. Customers Suppliers IT Infrastructure Supply Chain BUSINESS TRANSFORMATION:Old model Company A Info Info Sales Warehouse Distribution R&D Engineering MFG Assy Mat’l Mat’l

  12. R&D Eng Value Chain BUSINESS TRANSFORMATION:New model for Virtual Enterprise Co. A Info Info Co. C Co. B Suppliers Customers Sales Whse Assy Distrib MFG Assy Mat’l Mat’l Mat’l Market Place Sales IT Co. E Co. D

  13. VIRTUAL ENTERPRISE • Partner companies behave as one • Information flows through Internet • Driven by need for speed, cost reduction • Give up competencies, people, assets, infrastructure • From inter-enterprise to inter-value connections • Information flows seamlessly between companies

  14. WHAT’S NEEDED FOR VIRTUAL ENTERPRISES TO SUCCEED? • Enabling infrastructure • Agile, robust, e-business architecture • Service level agreements

  15. ENABLING INFRASTRUCTURE • Be open for business 24x7x365 • Rapid response to any and all • Provide secure environment for transactions and data transfer • Link to extended enterprise • Protect customer privacy • Make it scalable to be cost effective

  16. AGILE, ROBUST E-COMMERCE ARCHITECTURE • Access to workflow depends on user profile • Tasks and workflow configured dynamically • Governed by business rules • Need multiple player access to corporate ERP and plant systems (OSIsoft PI is our standard) • Framework must allow fast upgrades

  17. SERVICE LEVEL AGREEMENTS • Needed to define business network performance • communications protocols • data exchange formats • response times • management of change • problem resolution • measurement

  18. TWO BIG QUESTIONS • Who “owns” the extended business process? (i.e who will keep it all together?) • How to share gains when one part of the chain incurs the costs and the other reaps the benefits?

  19. Millennium Chemicals Inc.

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