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Federal-Mogul Program Everest

Federal-Mogul Program Everest. October 2007. Sales: $6.3 Billion Employees: 45,000 Globally Global 109 Manufacturing and 21 Distribution sites worldwide Locations: operating in 35 countries Research & 15 Globally-Networked Technology Centers in North America, Development: Europe and Asia

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Federal-Mogul Program Everest

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  1. Federal-Mogul Program Everest October 2007

  2. Sales:$6.3 Billion Employees:45,000 Globally Global 109 Manufacturing and 21 Distribution sites worldwide Locations:operating in 35 countries Research &15 Globally-Networked Technology Centers in North America, Development:Europe and Asia Key Industries:Automotive, light commercial, heavy-duty truck, off-highway, agricultural, marine, rail and industrial Company at a Glance

  3. Global Business Sales by Geographic Region Global Sales $6.3 Billion $6.3 Billion OE 60% Asia Pacific* 8% Light Vehicle$2.2 Billion EMEA 40% Aftermarket$2.5 Billion Industrial &Heavy-Duty$1.6 Billion Aftermarket 40% Americas 52% *Includes 100% of sales through minority held Joint Ventures

  4. Pistons and Rings Bearings Valve Seats and Guides Friction Sealing OE Global Market Position

  5. North America Friction Chassis Gaskets Engine Wipers Plugs #1 #1 #1 #1 #1 #2 Aftermarket Market Position Europe Friction Chassis Gaskets Engine Wipers Ignition #1 #1 #1 #1 #3 #3 5

  6. Original Equipment Customer BaseOPTION 1 Each of the logos/trademarks shown above are the properties of their respective owners.

  7. Original Equipment (OE) Global Aftermarket (GA) Customer BaseOPTION 2 Each of the logos/trademarks shown above are the properties of their respective owners.

  8. IS and Business Units: Friend or Foe? Achieving the Goal • First, agree on where you are going • Agree on barriers to success that can be influenced • Align each function with that vision and ensure that the strategies are translated into coordinated tactical plans that break the barriers • Get the right team and focus on execution It’s About Teamwork

  9. Strategic Alignment Comes First Path to Global Profitable Growth Global Profitable Growth Agree on where you are going, what barriers need to be broken and align all departmental strategies

  10. Driving Global Profitable Growth The Target is to Satisfy Customer, Employee and Stakeholder Expectations • Develop a global leadership team to achieve breakthrough performance • Anticipate customer and market requirements to accelerate delivery of value-added solutions to the marketplace • Provide leading technology and innovation in products and services to improve vehicle performance and exceed customer expectations • Create a global lean enterprise with world-class engineering, best cost manufacturing, sourcing and supply chain • Grow global profitable business and develop long-term sustainability The Drive for Global Profitable Growth is a Must, not an Option

  11. Investments focused on strategic projects Standard enterprise solutions A buy vs. make approach to software development SAP integration across the business Intellectual capital maintained in the function Selective sourcing of non-strategic assets/activities Global IS Strategy

  12. Current Environment • Heritage of multiple acquisitions • Chapter 11 • Intensive scrutiny • Customer diversity • Distribution channels • Technology leader • Global player

  13. Constraints to Business Change • Federal-Mogul’s stand-alone systems, archaic point-to-point interfaces, and off-line analytic tools result in high maintenance costs and multiple single points of failure • Islands of information across the company result in a need for hundreds of company IS and Business staff to maintain, adjust, report, reconcile, reformat, and re-report • Business processes are not uniform and consistent across the enterprise, a barrier to rapid decision making • Multiple data sources from disconnected systems lead to duplication of effort to synchronize critical business information (customer, supplier, materials master data)

  14. THE IS SITUATION AS OF SEP. 2005 … … AND THE IMPACT ON THE BUSINESS Historically F-M has operated in a very decentralized manner from both a business and technology perspective. This has resulted in a very fragmented application landscape. Limited ability to serve the business and improve customer satisfaction 1 Lack of integration and visibility across the supply network 2 # applicationinstances # SAPenvironments # uniqueapplication # Master data bases 633 382 690 11 Lack of consistent, common, accurate, business measurement ProcessProliferation 3 Business Continuity Risks, Compliance 4 Master DataProliferation Stifled innovation and poor capability to follow business growth strategy 5 Technology Proliferation High IS costs, high complexity to manage, low IS effectiveness 6 See the Appendix for details Where We Moved From… In 2005 IS was not representing an adequate lever to enable the priorities set by the new management

  15. Federal-Mogul currently uses approximately 633 different master data bases: The IS Situation as of Sep. 2005 Master Data Proliferation MASTER DATA FILES CUSTOMER #81 PRICING #67 PART #76 ITEM #84 SUPPLIER #55 INVENTORY #54 LOCATION #14 ORDER #64 FIN. ACCT #47 EMPLOYEE #48 PRODUCT #43 Back

  16. The IS situation as of Sep. 2005 Process Proliferation (Order To Cash) • Federal-Mogul operates multiple distinct order to cash processes/systems that differ by business and geography • The diversity is a result of a historically autonomous business unit alignment, with a decentralized approach to IS (i.e, IS was a friend at the BU level) • System platforms have developed as non-integrated enhancements within themselves. Roll-outs within the Business Units are based on proprietary knowledge • Information reporting above the business unit level is difficult due to inherently different system logic and lack of drill down capabilities (i.e., IS was a Foe at the corporate level) Back

  17. Align Investments and Teams Path to Global Profitable Growth Global Profitable Growth Focus investments on achieving the goal Align organizational structures Develop and enforce a strong governance model

  18. Business- ISValue Map Roadmap to the Global Enterprise Revenue Enhancement and SG&A reduction IS Investment Business Process Standardization Information Integration HR & Finance Processes Order Fulfillment processes Bid to cash processes Common product customer codes Comprehensive Global Information repository Real Time business intelligence Cost Savings Infrastructure Standardization Hardware Consolidation E-mail Desktop Environment PCs LAN/WAN Knowledge Systems L.Notes ,Sharepoint Server Consolidation Data Center Consolidation Regional Help Desk Time

  19. SAP as the New Systems Backbone It is the industry leader in global ERP applications, including automotive ONE SAP FOR ONE FEDERAL MOGUL SAP offers “best in class” functionalities We already used it (and paid for it) SAP guarantees continuous evolution Most Competitors and Customers do the same SAP is the perfect base to build a Corporate environment that spans multiple regions of the world, has diverse business units and is oriented to have an organization and business processes that adapts quickly to emerging business needs.

  20. Program Everest GOAL, APPROACH AND PHASES Global Model Designfor the core corporate processes (Finance, Sales, Material Management) Goal Phase 0 Implement common, global business processes utilizing SAP as the ERP application for the entire corporation Phase 1 • APS Distributions Centers Solution Extension (pricing, rebates, commissions, warehouse management, …) Approach Design Phase 2 • Manufacturing • Solution Design and Prototype • Implementation Conceived to manage complexity, minimizing costs and risks Pilot Roll-Out Phase 3 Asia Pacific Deployment in some selected facilities (SPG Japan, Wuhan, Quingdao, …) Launched in late 2005, it represents one of the biggest investments of the corporation

  21. Program Everest: The Challenge THE CHALLENGE BEHIND PROGRAM EVEREST A quantum leap for the business Homogenize business practices Reduce complexity, manage risks, ensure compliance Increase efficiency and effectiveness Improve Business Control A quantum leap for the IS function Demonstrate the capability to successfully manage a complex program Provide the ability to manage and govern the new platform Reduce complexity and costs, increasing the service level Managing Program Everest means to manage a huge change both from a business and a IS perspective

  22. Strong Governance Model Strong management and governance over a smaller number of projects drive improved performance Manage the demand for IS services Measure performance and particularly on-time delivery Focus Resources on the Goal

  23. IS Organization IS Business Unit Leaders report directly to the CISO and sit on the staff of the Leader for each Business Unit • Responsible to understand • Business Unit and Product Strategies • Business Plan • Tactical business requirements and IS support needs

  24. Everest Program Organization Information Systems Business Leadership Executive Committee Key Users Local Leadership Business Experts Support Central Team Deployment Core IS Roles: Central Team (Everest Core Team, Business Unit Manager and PEGs, Security, Infrastructure) Deployment Local SAP consultants Support Organisation (T-Systems, Change Board, Security, Legacy Systems ) Business Roles: Business Experts (BPOs, BPLs, SMEs, Central Functions, e,g. Finance) Local Leadership Team (Site Director and his direct reports) Key Users* (from deploying site and future deployment locations) * Resourcing business activities (testing, training, data validation) with key users from future deploying sites will accelerate those deployments and decrease resource strain on currently deploying site

  25. Execution Path to Global Profitable Growth Global Profitable Growth Focus investments on achieving the goal

  26. Program EverestGlobal Business Organization

  27. Our Achievements BusinessCoverage • Everest is now supporting a significant portion of the F-M business 1 New Integrated Processes • New, common and integrated processes are now in place 2 TechnologyPlatform • Several legacy applications have been switched off • A new, unique and standard system architecture is now in place 4 ISOrganization • A complex program organization is now capable to manage quickly different streams in parallel • A single organization is supporting all our users 5 Success of the initiative evaluated from different perspectives PROGRAM EVEREST RESULTS Master Data • A unique, cleansed, consistent and centrally managed repository is available 3

  28. CURRENT EVEREST BUSINESS SCOPE Business Units APS BE Kontich (CH Geneve) APS IT Verona APS IT Mondovì (R&M) APS ES Madrid (Espana) APS ES Barcelona (Iberica) APS FR Boulogne (Gif) APS UK Bradford APS DE Marienheide APS CZ Kostelec SPG Japan Countries Locations Legal Entities SAP Users Business Units 9 21 10 719 10 See the Appendix for details Business Coverage The F-M Business currently supported by Everest is significant after only 18 months

  29. Integrated Process The Everest solution enabled to manage in the same environment a full set of integrated business processes EVEREST PROCESS COVERAGE Solutionsets • To support the different business models, different “solution sets” were implemented inside Everest: Large CDC, Medium LDC, Small LDC, Local Commercial Agency, “Light” Manufacturing Facility ProcessScope andIntegration • A wide range of processes (OTC, PTP, SCE, FIN) are supported by Everest • A unique degree of integration is ensured within SAP and with other external applications Degree ofsophistication • A significant degree of sophistication and automation was introduced to improve the core business processes, especially in the SCE and OTC area

  30. Source Lists Contracts Vendors Customers(Sold-To) Pricing & Discounts Materials 11 K 3 K 5 K > 12 M 117 K 912 K Master Data They are the cornerstone of the system as they drive the process behavior MASTER DATA REPOSITORY A common, sharedrepository • All relevant master data are stored in the same environment (with a single naming convention) and shared by the business across the different countries and business units CentralizedManagement • SAP enabled the centralized management of our master data, to ensure consistency, stewardship and flexibility Migration • The data migration task represented a critical task for Everest in terms of: • management of high volumes of data • ensuring the proper cleansing activities

  31. InterfacedApplications Switched OffApplications MigratedApplications 13 >10 20 Technology Platform We introduced a sophisticated, lean architecture based on our new SAP backbone INFORMATION SYSTEM ARCHITECTURE ApplicationArchitecture • Everest brought a drastic simplification of our application map • We switched off several applications, stopping their maintenance costs • The IBM Mainframe (POPIMS) Platform is no longer needed to support the Business • SAP has been interfaced with several different application to ensure reporting and extended supply chain capabilities Infrastructure Architecture • Together with the introduction of the new SAP based application layer, also our technology infrastructure made a quantum leap towards innovation and standardization • We integrated several components to build a sophisticated architecture New SAP Data Center New Global Network (Nexus) New Xerox Printers New RF Technology

  32. IS Organization We increased our ability to manage the project and the maintenance cycle OUR IS ORGANIZATION EVOLVED TO MANAGE COMPLEXITY ProgramEverestOrganization • From … • One Project Team • One single stream • One Prime Contractor • Strong presence of external consultants in the key positions • A new, not consolidated methodology to run the project • 8 months to manage the 1st roll-out • … To • > 10 Project Teams • 6 parallel streams • 4 Consultancy Companies • F-M internal resources in key management positions • A Standard and run-in approach to manage the deployment phase • 5 months to manage the UK roll-out Service DeliveryOrganization • More than 700 users in 9 countries are now supported by the same organization (powered by Dell and T-Systems), adopting a global procedure and ensuring local business (language and time) coverage • Our infrastructure team (located in Southfield and Manchester) is committed to a 7x24 availability of our network and data center and support the other components of the Everest technology (RF, printers, desk-tops)

  33. Managing the Change Organizations Work Together Business, functions, and employees can leverage a world wide dimensionand face the market as a Corporation • Build Knowledge • Spread Corporate Culture • Share Experiences Processes Work Together Design and implement uniform and lean business processes, oriented to customer (internal or external) loyalty • Reduce Lead Time • Improve Change Readiness • Increase Customer Service Data Work Together Data is unique, updated real-time, and aligned • Increase Data Availability and Accuracy • Improve Analysis Capabilities • Accelerate Decision Process • Reduce System Costs and Investments • Improve Customer Support • Faster Deployment of New Solutions Systems Work Together Move to a system environment, with specialized, flexible modules

  34. Concurrent Change - Desktop & Networking We increased our ability to accelerate deployments of Program Everest by standardizing and simplifying many components of the overall IS solution F-M DESKTOP & NETWORKING STRATEGY Federal-Mogul 2006 TARGET BENEFITS • New features & collaboration based services • Alleviate user frustration • Raise the workforce capability • Eliminate redundancy & overlapping expense • Part of broader strategy that facilitates enterprise mgmt. Migration to Microsoft products providing seamless, integrated technology platform for the desktop and network. Legacy desktop and network technology platform was unnecessarily complex, with redundant components and poor system integration performance.

  35. Business Priorities and Trends - Emerging & Developing Technologies Automotive suppliers will continue to focus on the integration of internal and external operations. A number of new and emerging technologies are helping to drive that trend. These include: Source: Strategies For Profitable Growth - SAP 2004

  36. Way Forward “Ex-e-cu-tion (ek si kyoo shun), n. 1. The missing link. 2. The main reason companies fall short of their promises. 3. The gap between what a company’s leaders want to achieve and the ability of their organizations to deliver it. 4. Not simply tactics, but a system of getting things done through questioning, analysis and follow-through. A discipline for meshing strategy with reality, aligning people with goals, and achieving the results promised. 5. A central part of a company’s strategy and its goals and the major job of any leader in business. 6. A discipline requiring a comprehensive understanding of a business, its people and its environment. 7. The way to link the three core processes of any business - the people process, the strategy and the operating plan - together to get things done on time. 8. A method for success discovered and revealed in 2002 by Larry Bossidy and Ram Charan in Execution: The Discipline of Getting Things Done”

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