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Long Boat Key October 14, 2009. A Decade of Global Partnership 1998-2008. UTi Logo. Jointly Creating Supply Chain Competitive Advantage. About Dow Corning. UTi Logo. Jointly Creating Supply Chain Competitive Advantage. A joint venture of The Dow Chemical Company and Corning Incorporated
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Long Boat KeyOctober 14, 2009 A Decade of Global Partnership 1998-2008 UTi Logo Jointly Creating Supply Chain Competitive Advantage
About Dow Corning UTi Logo Jointly Creating Supply Chain Competitive Advantage • A joint venture of The Dow Chemical Company andCorning Incorporated • Organized to explore the potential of the silicon atom in 1943 • Vision: We are innovative leaders • unleashing the power of silicon to benefit everyone, everywhere. Dr. Franklin J. Hyde 2
Silicones come in many forms with many features Methylchloro Silanes UTi Logo Jointly Creating Supply Chain Competitive Advantage Quartz Carbon Silicon Metal Methyl Siloxanes • Fluids • Emulsions • Adhesives • Resins • Elastomers • Sealants These are sold and used directly or converted by our customers into their finished products. Silicones are used in millions of products around the world. 3
Dow Corning innovating around the world UTi Logo Jointly Creating Supply Chain Competitive Advantage • More than 7,000 products and related services • Approximately 25,000 customers • Over $5 billion in sales in 2008, globally dispersed with more than 60% outside the US • Approx. 10,000 employees worldwide • Aglobal leader in silicones and high purity silicon • Strong channels to market – distributors, web, commercial organization 4
Dow Corning serves customers’ diverse needs… UTi Logo Jointly Creating Supply Chain Competitive Advantage Automotive Beauty & Personal Care Chemical Manufacturing Construction Electronics Food & Beverage Healthcare Household & Cleaning Imaging Paints and Inks Power and Utility Solar Pressure Sensitive Rubber Fabrication Textile, Leather & Nonwovens 5
UTi Logo Jointly Creating Supply Chain Competitive Advantage Dow Corning – One Company, Many Big Opportunities Dow Corning Corporation Focus is on Polysilicon for Semiconductor and Solar Industries Focus is on Products Standard Silicone Products Relentless pursuit of efficiency Focus is on Markets Specialty Products & Services Relentless pursuit of innovation 6 6
UTi Logo Jointly Creating Supply Chain Competitive Advantage Dow Corning locations worldwide Manufacturing Sites 7
Financial performance UTi Logo Jointly Creating Supply Chain Competitive Advantage 8
UTi Logo Jointly Creating Supply Chain Competitive Advantage UTi Financial Highlights (FY09) CAGR = 19% CAGR = 19% • Revenues: $4.5 billion • Net Revenues: $1.5 billion • Operating Income: $154 million* • Net Income – $97 million continuing ops: ($0.97/share)* UTi Worldwide (UTIW Listing on Nasdaq) Comprehensive Global Network • 20,415 employees • Owned Freight Forwarding locations in 288 cities in 62 countries • 200 Logistics Centers in 26 countries (26.4 M ft.2) Six Major Industry Verticals Service Lines • Retail, Consumer Products • Fashion and Apparel • Pharmaceutical • Chemicals • Automotive and Assembly • Hi-Tech and Consumer Electronics • Air freight and ocean freight forwarding • Customs Brokerage • Contract Logistics • Truck Brokerage and Distribution • Supply Chain Management Services * Excludes impairment, restructuring and severance charges of $130.6 million /$109.5 miillion after taxes April 2009
UTi Logo Jointly Creating Supply Chain Competitive Advantage Services Services 1996 1996 1997 1997 1998 1998 1999 1999 2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009 2009 Raw Material Raw Europe Europe Global Global (Si Metal) Material Ocean Freight Forwarding Air Freight Forwarding Europe Europe Global Mexico Cross Mexico Cross Duty Drawback (Lost in 2005) Border Border Customs Brokerage Houdeng Routing Ctr Canada Europe Europe Multibase Turkey Turkey Contract Logistics Distribution LLP LLP France Platform Platform China China China China 3rd Pillar 3rd Pillar Plant & Equipment Moves China & China & Recyclables Moves India India Scope of our Partnership is Global and evolved step-by-step
UTi Logo Jointly Creating Supply Chain Competitive Advantage Paradigm Shifts for Dow Corning Local Buying Internal Expertise Multiple Providers Port-to-Port Costs Scattered Reporting Global / Local Buying “Out” Source Single Global Provider Global / Local Reporting Door-to-Door Costs Multiple Processes Local Service Optimization Carrier Pricing Models Focus on Enterprise Business Unit Optimization Global / Local Optimization Single Process Per Kg. Charges Extended Enterprise Global / BU Optimization
Single source International Transportation and Brokerage. Statistical Process Control to create a Predictability Index Gain transparency to transportation costs (open book approach and Shared Ocean Solution) UTi Logo Jointly Creating Supply Chain Competitive Advantage Single Sourcing Drives Innovation
First Chemical company to link to UTi’s global uTrac system that tracks the status of all UTi shipments. First company to break 5000+ queries per month from uTrac. SAP tied to a single source of transportation data (uTrac) equals increased data integrity. UTi Logo Jointly Creating Supply Chain Competitive Advantage Visibility Is Important
IT Integration EDI interfacing E-invoicing SAP access UTi Logo Jointly Creating Supply Chain Competitive Advantage System Connectivity via EDI • EDI interfacing for: • Delivery information • Goods issue • ADD capturing • SAP Access • UTi staff working on DC SAP • Electronic invoicing • UTi supplies Dow Corning with a monthly e-invoice (excel file) containing data-elements as agreed with Dow Corning. • The file permits Dow Corning to automatically upload the cost information into SAP linked to the cost centres in SAP. • The e-invoice together with the Freight Rate Database (FRD) facilitates the invoicing check for Dow Corning • Quality of the data-entry is continuously monitored.
132.512 tons dispatched 79.785 Delivery line items received 85.290 Deliveries dispatched Houdeng Warehousing & Freight Management 28.203 Deliveries received 200.043 Delivery line items dispatched 129.886 tons received 294.066 Picking transactions UTi Logo Jointly Creating Supply Chain Competitive Advantage Beyond Freight Forwarding • Gain share warehouse (Houdeng) • Consistent cost savings / avoidance or service improvement every year since the beginning of the contract. GMP SEVESO II ISO 9001/2008 QS 9000 Responsible Care
Jointly developed an emergency response plan as a 6 σ project. UTi actually provided Green Belt training to Dow Corning employees during this project. UTi Logo Jointly Creating Supply Chain Competitive Advantage Six Sigma Approach Introduced UTi to a 6 sigma approach to quality
Dow Corning Global Supply Chain UTi Logo Jointly Creating Supply Chain Competitive Advantage Basic plants in Carrollton, KY / Barry, Wales UK / Zhangjiagang, CN. Basic plants produce & ship intermediate building block chemicals to finishing plants and regional warehouses. There are also specialty plants that ship to the end customers or regional warehouses. Raw materials & Indirect material UTi handles Silicon metal shipments To the Barry basic plants Local finishing plants complete the mfg process and package final product in to consumer packs. Final shipments are sent to DCC clients. Regional warehouses store and then fill orders going to both DCC plants and directly to customers. These warehouses consolidate shipments whenever possible. UTi handles the European Warehouse. From this warehouse, regional customers receive their deliveries via truck. DCC locations and direct customers receive their shipments via Air or Ocean. Recyclables To China & India
UTi Logo Jointly Creating Supply Chain Competitive Advantage
Communication Structure for a Global Partnership UTi Logo Jointly Creating Supply Chain Competitive Advantage • UTi Account Management structure facilitates teamwork • UTi Global • Joint UTi-Dow Corning Regional Management Teams • Joint UTi-Dow Corning “local” review meetings • Joint UTi-Dow Corning communication matrix in order to guarantee effective communication on all levels
Considerations for Selecting a Global Partner 1) Reach / Presence (how global) 2) Knowledge 3) Team set up to serve your company 4) IT capabilities 5) Risk mitigation 6) Costs and value UTi Logo Jointly Creating Supply Chain Competitive Advantage Dow Corning Approach Structured Approach to Implementation sponsorship and ownership senior level involvement & drive management and coordination execution 20
UTi Lessons Learned UTi Logo Jointly Creating Supply Chain Competitive Advantage • Think like the client • Set joint goals • Learn to speak the same “language.” • Cultural fit is important • Never Rest – pursuit of continuous improvement • Seek Feedback and Problems - Quick Resolution Process • Dedicated team – starting from the senior level going to the desk level