Sense and Response Capturing The Knowledge Using SCOR September 19, 2002

1. Sense and Response Capturing The Knowledge Using SCOR September 19, 2002

2. Presentation Sections • Sense and Response • Solution Overview • Value of Time and Business Continuity • Capturing The Knowledge • Conclusion • Q & A

3. An organization’s ultimate success depends on its ability to execute and innovate. • Execution can either be insured using costly assets or ensured with the capability of “Sense and Response.” • Effective “Sense and Response” is based on the proactive ability to: identify trends and exceptions; alert and deploy key resources armed with critical knowledge to make informed decisions, collaboratively. • Critical Knowledge, in turn, requires controlled access to distributed internal and external policies, processes and enterprise planning information, employing appropriate technologies and communication standards. • As a “Sense and Response Enabler,” the Digital Enzyme™ solution provides instant detection of mission critical trends/exceptions combined with specific knowledge delivered immediately to responsible people in context of their own unique process

4. "Adapting To Supply Network Change," emerging technologies will enable manufacturers to sense and respond proactively to unanticipated variations in supply and demand -- and transform their static supply chains into adaptive supply networks.“ Web Services Extended Internet Agent-based software Supply Chain Market Forecasts Gartner “by 2005, 60 percent of supply chain management functionality will be provided outside of the enterprise’s four walls.”

5. "I never perfected an invention that I did not think about in terms of the service it might give others"    -Thomas Alva Edison, GE Founder Sigma: A measure of process capabilitycalculated by Identifying opportunities for exceptions/defects in a given product or process, counting the actual number of defects that occur per million opportunities for defect and translating that total into a Sigma rating using the Sigma table. Customer Satisfaction Results Focus Business Objectives Support Systems Operations Processes The Major Hurdle Has Been….. The Ability to Measure/Monitor Critical Processes Corrective Action Process Continuous Process Improvement Continuous Process Innovation “Sense and Response” Response Has a Clear Focus on Process • The Six Sigma approach to quality is also: • A vision of product and service excellence • A tool for improving processes and products • A goal for competitive strength • A value to customers

6. Key Element of Response Knowledge The SCOR model represents a sound standards basis for ongoing development of both internal and shared Supply Chain processes.

7. Solution Overview

8. Quality Issue 15” LCD Digital Enzyme Contract #123 Instructions ……….. ……….. ……….. • Check List • Step 1…. • Step 2…. • Step 3…. Laptop Brand CEO Global Value Network Scenario : Laptop Global Value Chain 15” LCD Digital Enzyme Digital Enzyme Supplier B Customers Digital Enzyme Wholesale Distributors Event Occurs Supplier A (LCD Mfg) Digital Enzyme The Digital Enzyme monitors critical systems, machines, sensors, news feeds or other sources of information, generating alerts to key people in context of shared and distributed/internal processes for resolution.

9. Customer Real-Time Event Notification Dependent on the Quality of Manual Transactions and the Integration and synchronization of All the Applications Portal Plan Intranet Global or Local Process Mobile Internet Supplier B Supplier C Supplier A Data Level ETC… Local Processes Contracts Data Warehouse Data Warehouse Local Processes/Contracts Purchasing Purchasing Transaction Applications MRP MRP Event Occurs Event Occurs Machines Traditional Approach To Visibility

10. Procure Instant Notification of “Time-Critical”Information Independent of Application Integration or Local Infrastructure Plan Intranet Global or Local Process Mobile Internet Supplier B Supplier C Supplier A Data Level ETC… Local Processes Contracts Data Warehouse Data Warehouse Local Processes/Contracts Purchasing Purchasing Transaction Applications MRP MRP Event Occurs Event Occurs Machines Digital Enzyme Approach To Sense and Response OEM

11. Exception Sense and Response: • Distributed Process Integration • Collaboration • The Unanticipated • “When every second counts.. • Who needs to know? • What do the need to know?” • Continuous Improvement/ Innovation • …. • Execution Process Real-Time Visibility: • Status/tracking • Transaction Detail • Planning Data • Product Data • Reporting • Optimization • Reconciliation • ….. The Right Tool For The Job..

12. Response • Global Network • Ability to Monitor Trends in Global Value Metrics • Ability to Generate Alerts to Key People in Context of Shared and Distributed/internal Processes for Resolution • Supports Multiple Languages • Common Business Process Standards Templates Provide the Basis and Response in Defining Offshore Operations • Supports International Regulatory Compliance • ISO 9000, QS 9000, FDA Validation • Organization Perspective • Helpmate Provides Organization Charts and Job Descriptions That Support Notification Escalation • Job Descriptions Link to Business Workflows And/or Work-statements • Training, Testing and User Help • Workflows Indicate Process Ownership • SCOR Process Modules (Plan, Source, Make, Deliver, Returns) • Process Elements • Workflows and Work-statements • Multiple Models and Views Are Provided • Benchmarks & Best Practices (SCOR Level 1-3) • Operating Processes & Procedures (SCOR LEVEL 4) • Regulatory Compliance - ISO 9000, QS 9000, FDA Computer Systems Validation • Process Cost • Gap Analysis • Defining Costs and Elapsed Time At: • Workstatements • Workflows • Determining Supply Chain Thread Cost and Elapsed Time • Integrate • Enterprise and Desktop Knowledge Source Application Integration, Launch and Help • New Product, Process and Systems Implementation Project Plans

14. Value of Time

15. Failure Customer Problem: Ability to Sense and Respond Time CEO of a Tier 1 Supplier “the issue is one of Sense and Response to supply chain issues that impact our customers and our bottom-line” Large Raw Material Producer“One occurrence can cost $7-8 million to fix.” “Question of Capability” QuestionCapability Market SecondaryImpact Cost When seconds count… Who needs to be notified?…. What information do they need? Global Local Control MonitorMeasure Act Trend Avoid the “Ripple Effect”

16. (Results on Investment) Information, Product and Cash Are the Basic Elements of Value Created in Any Supply Chain. Execution can either be insured using costly assets or ensured with the capability of Sense and Response……….Information

17. Sense and Response to Trends or Exceptions in Global Metrics

18. 18 What is Business Continuity? • Often confused with IT Disaster Recovery when it is, in fact, only a portion of the polices and procedures required to ensure Business Continuity • It is the ability of an organization to sense unanticipatedvariations,disruptions, or other threats to the critical processes and respond in such a manner that the organization’s ability to execute is ensured.

19. 19 Sources of Supply Chain Exceptions • Daily Exceptions • Planning: • Customer Requirements • Capacity • Design Issues • Marketing Programs • Cash Management • Compliance • Information system • …. • Execution: • Process Quality • Equipment failure • Logistics • Sales Programs • Design Issues • Information system • Transactional Errors • …. Major Exceptions Business Interruption: Power Failure Plant Flood/Fire Compliance Information Systems Labor Issues …. Political Events: Trade Sanctions Regional Conflicts …. Natural Disasters: Hurricane Andrew Mississippi Flood Taiwan Earthquake …. Transactional Errors – Independent Audits of Inventory Cycle Counting programs typically produce “First Pass” Accuracies of between 30% and 50% - KPMG

20. 20 Capturing The Knowledge

21. 21 Supply Chain Operations Reference-Model (SCOR)

22. 22 Intra-enterprise SCOR processes And enablers

23. 23 Network Perspective

24. 24 Internal and Shared Processes

25. 25 Conclusion • An organization’s ultimate success depends on its ability to execute and innovate. • Execution can either be insured using costly assets or ensured with the capability of “Sense and Response.” • Effective “Sense and Response” is based on the proactive ability to: identify trends and exceptions; alert and deploy key resources armed with critical knowledge to make informed decisions, collaboratively.

26. 26 Q & A Jim McGwinPresident & CEOCollaboration Catalyst CorporationOffice: (401) 884-4802jmcgwin@ccatalyst.com Larry Gray VP, Manufacturing Markets COBRE Group 610-630-7579 larry@cobre.com www.ccatalyst.com

27. 27 Presenter’s Backgrounds Jim McGwin, President and CEO of Collaboration Catalyst Corporation,has over 20 years of international business experience with an emphasis on execution of innovation in products and processes across organizational boundaries. This focus has lead Jim to develop both methodologies and technology tools including: the Digital Enzyme, a web service/extended Internet “Sense and Response” tool; a practical collaboration methodology that balances value creation with partner behavior and process capability and the IPC metric that compares information, product and cash cycles across a supply chain. McGwin has authored presentations and articles on a range of supply chain, collaborative commerce, optimization, partnering, manufacturing, business and systems topics. McGwin’s experience includes senior roles at a start-up medical device company that was sold to Johnson & Johnson, an eCommerce start-up acquired by IntelliMark, and a lead in the development of the New England and International supply chain practices for KPMG. McGwin is also a member of international independent industry groups such as: the Supply Chain Council (SCOR), where he has taken a lead in initiating international research to identify the impact of Service, eCommerce and collaboration on Supply Chains (SC), specifically the SCOR model; the American Production and Inventory Control Society (APICS) where he assisted in the development of CIRM, a multi-discipline certification program; National Association of Purchasing Managers, as well as former Board member of the i2 User Group. Larry Gray, Vice President, Manufacturing Markets of The COBRE Group. He has over thirty years of supply chain and manufacturing experience in industrial engineering, materials management, information services, and consulting. He is a founding member of the Supply Chain Council and has served as MAKE committee chairman, e-Business committee chairman, and Vice Chair of the Integration committee. Mr. Gray’s prior experience includes: JGI Product Manager where he lead Product development of ERP Implementation Methodology, IS0/QS 9000 and FDA Computer System Validation. At Unisys Corporation he held senior roles as Aerospace & Defense Marketing Manager, Shop Floor Control Systems Marketing and Product Manager. Larry is a certified member of APICS and has held chapter positions as President, Executive Vice President, VP of Education, and certification instructor. He has authored several articles and presented at numerous APICS and Supply Chain World Conferences. Larry is a certified member of APICS and has held chapter positions as President, Executive Vice President, VP of Education, and certification instructor.