LOral Supply Chain Diagnostic,March 18, 2004,1,Presentation Agenda,Project Scope and Activities Overview of Our Supply Chain Findings Processes Inventory Review Maturity Profiles Organization/ People and Culture Technology Supply Chain Roadmap Discussion of Next Steps,2,Our Project Approach,Over the past three weeks, we have: Interviewed 5 Executives of LOral Canada Facilitated two cross-functional process workshops Collected and analyzed data Conducted a high level maturity assessment Compared LOral process and performance to CPG best practice Identified key business issues and areas of improvement Summarized our findings in this presentation document,Project Kickoff,Data Collection,Interview with Executives,Process Workshops,Model Review & Validate Base Case,Review Metrics,Identify & Consolidate Issues & Opportunities,Opportunity Prioritization,Benefits Assessment,Findings/ Recommendation Development,Present Recommendations,Discuss Next Steps,3,Cross-Functional Participants,Senior Management - Supply Chain Laurent Venot (Project Sponsor) Jean Valois Pierre Massicotte Valry Mayer,Sales Dominique De Celles Isabelle Genest Anne-Marie Nelson Dion Gemmity,Customer Service Eli Bengio Patricia Raposo,Logistics & Procurement Valrie Lacerte Yves Dub Naity Jacel,Information technology Pierre Journel Marcelyne Craft,Finance Martin Deschnes,4,Presentation Agenda,Project Scope and Activities Overview of Our Supply Chain Findings Processes Inventory Review Maturity Profiles Organization/ People and Culture Technology Supply Chain Roadmap Discussion of Next Steps,5,Processes,Demand Planning,Supply Planning,Order Fulfillment,Develop Sales Forecast Maintain Promotional Plan Consider inventory levels, backorder reports, safety stock levels Consolidate and consider external data (POS, Nielsen, Customer data) Reconcile Demand Plan with Budget New Product Introductions,Net Inventory and Lead Times from the Forecast Distributed Requirement Planning Capacity Requirement Planning Customer Allocations Communicate forecast to Suppliers Receive supplier commitment,Process Customer Orders Plan and Manage Finished Goods Inventory Picking and Packing Manage Outbound Product Flow Manage shipping & transportation Generate Invoice Credit management and A/R,(*) Out of scope,6,Demand Planning Issues and Opportunities,Issues,Manual and Inconsistent Processes The forecast process is mostly manual, inconsistent across brands and divisions (due to different levels of maturity) as well as both time and resource consuming There is no formal process for determining which products should be focused on during the forecasting meetings No one department “owns the forecast” There is no mechanism for automatically generating a baseline forecast Too much time is spent on manual processes, data clean-up and generating reports, leaving insufficient time to analyze data and manage exceptions LOral Canadas brand forecasts are not all aggregated up into one forecast limiting visibility and data sharing LOral Canada does not have simulation or “what if” capabilities Many disparate tools are being used to facilitate forecasting - Excel, Valo, SAP and Outils Gestion. Interfaces have been built between the various tools and systems, but manual verification is required and the current technology still does not meet LOral s requirements POS, Nielsen, customer information, promotional and advertising information are not all integrated in one central repository,Opportunity,Process Redesign Spend time forecasting products that give the highest return. Not all product lines benefit from increased attention. Focus on high margin, low volume, big ticket items, high profile items and items with complements to maximize profitability Communicate and reconcile forecast assumptions by conducting a formal review after each planning cycle with all stakeholders. Report forecast error and modify assumptions as appropriate Forecasting Tool/BW Implementing a Forecasting tool will enable the automatic generation of a baseline forecast based on sales history and additional variables. Most packages allow users to select a statistical model, enable the system to determine the model with the greatest fit or employ a composite model The forecasting tool selected should allow for the generation of alerts based on predefined tolerances, highlighting the products that require further consideration and manual intervention Products should be reviewed to determine which ones are critical or high margin to plan in a Forecasting tool, while non-critical or stagnant products may be planned in SAP R/3 The forecasting tool selected should provide “What If” simulation capabilities to demonstrate the impact of a variable change (e.g. price change) Coordinate data collection for all available sources and house it in a central repository such as SAP Business Warehouse,7,Demand Planning Issues and Opportunities,Issues,Opportunity,People Ensure the Planning Team is Cross