DECISION TEAM

1. Roadmap for Sourcing February 06, 2003 PHASE 2 SOURCING STRATEGY DEVELOPMENT. RFP PREPARATION, HIGH LEVEL NEGOTIATION STRATEGY PHASE 1 IDENTIFY AND ASSESS SOURCING OPPORTUNITIES PHASE 3 SUPPLIER SELECTION, NEGOTIATIONS AND CONTRACT DEVELOPMENT PHASE 4 SOURCING IMPLEMENTATION AND INITIATE SUPPLIER RELATIONSHIP PHASE 5 SUPPLIER RELATIONSHIP DEVELOPMENT AND MANAGEMENT Stop, Hold, Recycle Stop, Hold, Recycle Stop, Hold, Recycle Stop, Hold, Recycle Re-source Decision Review Board (DRB) Guidance Review Team may also be established by DRB Decision Review Board (DRB) Guidance Review Team may also be established by DRB Decision Review Board (DRB) Guidance Review Team may also be established by DRB Decision Review Board (DRB) Guidance Review Team may also be established by DRB Decision Review Board (DRB) Guidance Review Team may also be established by DRB DECISION TEAM Approval of Analysis, Refined Business Case & Sourcing Plan All enabling actions taken to achieve estimated run-rate savings? Approve Supplier List, RFP, Sourcing Strategy and Negotiation Plan Suppliers meeting performance expectations and providing competitive value? Contracts and Implementation plans acceptable? Phase 3B Phase 3A Phase 1B Phase 1A Negotiation successful? Reduce Total Cost of Ownership through use of Strategic Sourcing Process. Approval Scope, Business Case • Analyze spend data, market intelligence and supplier performance data to identify potential sourcing opportunities • Implementation teams • Supplier integration • Supplier relationship development • Metrics defined • Supplier management plan • Supplier performance assessment • 12 critical success factors • Issue Resolution Process • Competitive assessments • Market analysis • Savings tracking • Identify Sourcing Strategy • Identify Technical and Commercial Alternatives • RFP Preparation • High Level Negotiation Strategy • Evaluate suppliers • Negotiations • Business Case refinement • Implementation planning • SBU buy-in Joint Business Execution Plan Implementation Rollout Lessons Commodity and supplier analysis, Performance Measurement, Gap Closure Plan Charter & Scope, Timeline, Stakeholder Analysis DELIVERABLES AT MAJOR REVIEWS Negotiation Strategy, Sourcing Recommendation TCO Model, Sourcing Strategy RFI, Business Case, RFP, Negotiation Plan Supplier Agreement, Implementation plans Signed Agreements, SM&I Transition Plan, Lessons Learned, Cost Savings Model Business Assessment & Business Assessment Summary WORK TEAM Supplier Management and Integration Team Sourcing Team Sourcing Team Sourcing Team Implementation Team • Phase 4A • Utilize agreement • Local-specific terms in place • Expectations communicated to all customers • Transition to new supplier - if applicable • Ensure new agreement being utilized as intended • Ensure / Verify / Report savings results • Verify business case • Ensure forecasted savings are being realized • Identify and resolve gaps • Implementation Look back & transition to Supplier Management • Review and document lessons learned in implementation • Ensure key performance issues resolved • Recognize, reward and publicize completion of implementation • Jointly draft charter for supplier relationship team • Phase 4B • Form and Charter SM&I Team • Global and Local team sized and structured appropriately, sponsors named, charter validated • Develop Joint Business Plan with Supplier(s) • objectives, strategies, goals (win/win), metrics, tactical plans • Identify / prioritize TCO and Operational Excellence opportunities • Ensure High Performance Behaviors • Measure and monitor behaviors • Utilize 12 critical success factors • Core Relationships expected to be level 3 or higher for each • Strategic relationships to be level 4 or higher for each • Utilize issue resolution process • Measure and Ensure Results • Routinely track and report metrics aligned with 4+1 • Include TCO savings & Operational Excellence • Evaluate value of Relationship • Cost Benefit analysis • Competitiveness • Health of relationship • Use of resources • Team and support structure • Degree of integration • Additional opportunities Phase 3A • Supplier Selection criteria developed, RFP sent, responses evaluated • Select suppliers for negotiations • Detailed negotiation plan/strategy and scope • Develop contract terms & conditions/Negotiate with suppliers • Engage stakeholders & Validate Relationship categorization • Phase 3B • PREPARATION FOR IMPLEMENTATION • Complete negotiations with suppliers • Communicate Business Case, Agreements & Obtain Buy-in • Clear overall and Local-Specific Business Case • Global/local implementation plan • Dialogue with Local/Local buy-in for implementation secured • Identify Implementation Team & implementation Plan • Team members / sponsors at Global / Local levels named, Team to see new agreement(s) through implementation, Name Supplier representatives to implementation team • Develop Specific Implementation Plans • Develop detailed global and Local implementation plans, • Validate Supplier categorization (strategic, core, preferred) • Set expectations, performance metrics and supplier management activity • Change management and Supplier Management plan is acceptable to Opcos / Locals, develop & deploy CPDEP for Change Program (if warranted) • Resources are ready, All hand-offs addressed • Develop TCO model • Develop, evaluate & recommend technical alternatives (Demand-side) • Develop, evaluate & recommend commercial alternatives (Supply-side) • Complete Market Analysis/Assessment • Develop & send RFI and pre-qualification questionnaire to suppliers (if required) • Refine stakeholder analysis and execute engagement plan as appropriate • Refine commercial / operational risks to sourcing effort • Develop / execute risk mitigation plan • Evaluate RFI responses and develop short list of suppliers • Refine Sourcing Strategy • Identify potential Supplier Categorization • Develop Request For Proposal (RFP) • Select suppliers for RFP participation • Develop Business Case • Review and apply applicable Lessons Learned • Capture new Lessons Learned Phase 1A • Develop team charter • Identify scope of sourcing effort • Establish timeline • Identify & analyze key stakeholders including communications plan • Collect data • Current spend / usage volumes by Opco/BU • Estimate of potential savings • Significant commercial / operational risks to sourcing identified • On-going negotiations & current agreements Phase 1B • Continue data collection / further definition • Identify current processes/specifications • Identify benchmarks, best practices & lessons learned • Perform Initial Market Assessment including SBSD and local content • Identify Sourcing Strategy • Develop high level business assessment (TCO & first cost savings opportunities, “cost to change” assessment) • Obtain Opco / User endorsement to proceed • Plan for Phase 2 including Schedule, Costs, Funding, Deliverables, Required Personnel • FOCUS AREAS & FOCUS ITEMS • Areas team needs to consider • Specific tasks to get information needed to make the decision