The Changing Operational Landscape

1. Managing Variety, Velocity & Visibility FMCG Manufacturing Challenges of the 21st Century The Changing Operational Landscape Tim Sowell VP & Invensys Fellow

2. Understanding the value hierarchy for typical FMCG business Shareholder Value Return on Asset Risk Costs Profit Margin Revenue Financial View Investor View CFO Cost of Goods Sold COGS Cost of Innovation R&D Cost of Sales S- (G&A) CEO R&D Supply Chain View Customer View Sales &Marketing Operations/Supply Chain Plant Manager Plant View Continuously drive down cost Deliver on brand promise attributes

3. Impact on Manufacturing Strategy Strategy visibility R&D: more recipes Procurement:more items! variety velocity Marketing:more choices! Execution Product Portfolio SupplyNetwork Is product moving faster than informationon your factory floor? Consumer Markets

4. It starts with a foundation for real-time visibility… Typical challenges and symptoms • Inability to benchmark/drive manufacturing performance standards • No bird’s-eye view of all plants visibility • Lack of harmonization across manufacturing sites • Delays in feeding enterprise analytics (e.g. SAP MII) • Limited to no process auditability / product traceability • Limited history = limited predictability of production environment • Limited visibility into plant floor events like stoppages& slow-downs slow-downs, waste (ingredients, packaging, energy, water, etc.) • Multiple/disparate/silo MES applications & spreadsheets • Lots of manual inputs  human errors  unreliability of data • Inconsistent data/object definitions across control systems • Data in multiple/disparate automation & process control systems • Lack of detailed measures (energy, water, packaging, waste, etc.) Complete? Accurate? Timely? Secure?

5. Increased Speed of Critical Decisions and Actions due to Velocity of Supply Chain Typical challenges and symptoms • Manufacturing is often seen as the supply chain bottleneck • Stoppages and slowdowns result in lost capacity visibility • Reports seldom result in action due to latency (delay) • No visibility to optimize capacity across plant network • CI/Lean/OpX initiatives fall short due to a lack of reliable data Response • Production Schedule variance as a result of… • Asset / Maintenance related issues • Material / Quality related issues • Utilities / Sustainability related issues velocity • High than expected work-in-process inventories • Manual transfers and delays from paper-based processes Sense • Operator time spent on creating reports, chasing down issues, etc. • Lack of timely action creates waste and/or rework“how much can go wrong if unattended for one minute?” Complete? Accurate? Timely? Secure?

6. Increasing variety (without sacrificing velocity) to gain agility… Typical challenges and symptoms • Limitations in manufacturing responsiveness to market dynamics • Explosion in New Product Introduction visibility • Limitations in deploying on global/master recipe mgmt. strategy • Unable to breakthrough variety / velocity trade-off • Inadequate integration to upstream/PLM/Recipe Mgmt. systems • Operators overwhelmed by frequency of product changes • Inability to meet targets for: • Changeover times (& CIP) • Yield improvement (Syrup, Water, Sugar, etc.) • Time to Quality • OEE variety velocity • Addition of new SKU’s/updating recipes is a challenge(e.g., control recipe creation is complex and time-consuming) • Disparate/equipment-specific HMIs makes training difficult(and prevents moving talent across assets/lines/sites) Complete? Accurate? Timely? Secure?

7. Gen Y 42% workforce 60% tasks, jobs have not been thought of today 1 in 3 project vs. career 2.4 year tenure 2020 40% today’s leaders retired 1 in 4 work virtually “The 2020 workplace will need to be adept at uniting a physically – present tribe of employees with a tribe of offsite, and often transient, staff. The latter will be specifically chosen for their ability to add value to the task or project, regardless of where they are on the globe.” Mike Miselowski Futurist

8. Transformation in Industrial Operations

9. Operational Transformation is Taking Place! Modern Operations Execution/ Management System Requires: Strategy visibility R&D: more recipes Real time Operational Execution Alignment with Business Strategy, Natural Integration Procurement:more items! Operational Teams, with Skill Spread/ Virtual Teams Integration Enterprise Product Spec Management, (PLM) across sites Decisions in the NOW no matter where or what Device Embedded Governance on practices, and KPIS, and accountability People Operational Alignment Across multiple Value Assets variety velocity Model Driven Operational Practices to enable change to support agility and consistency of decision and action over teams and sites Operational Workspace Transition Islands of Expertise/ Control Federation of the End to End Value Supply Chain into an aligned system, and a Virtual One Manufacturing System, while maintain site uniqueness Marketing:more choices! Federation Home Grown MES Operational Transformation Execution Consistency of execution through Standards in process, equipment, actions Heavily customized first generation Agility and Increased Speed on Innovation and Change Many different MES/ operation systems, and Excel • Replacing • Existing Systems • Costly to sustain • Expertise leaving • Limited Agility • No consistency

10. Transformation in Industrial Operations

11. What does the Operational World Look Like in 2020? How do Collaborate? How do I get Experience? Management What Devices? What does the control room look like? • Recipe Mgmt • Operational Mgmt • Process Analysis • Set Points Standards how do I manage, how does “crowd sourcing” practically be used? Engineering What is the Day? What is the Location? What is the collaboration between teams? • Standards • Local • Configuration • Mes/ Process • Simulate Operational Maintain Support How to notify?

12. What Can We Learn from the Leaders? vs. Information vs. Data: Tell me what I need to know.

13. What Can We Learn from the Leaders? Predict future traffic patterns Show and book reservations Re-route based on real-time traffic Do more than show – advise, enable, predict

14. Translation to the Industrial Market • Industrial Connectivity • Broad, Automatic connectivity to systems, sources and devices: beyond the RTU, PLC, DCS; Barcode Scanners, Readers, ERP to LIMS… • DCS becomes more “Appliance” like w/ Software • Industrial Context • Relevance; Information in the context of operations. • Trend – show by batch, shift, alarm, phase… • HMI with Maintenance, Quality, Production Overlay • ASM, Situational Awareness • Advise, Enable, Predict • How to respond to an Alarm, Event • Perform maintenance activity, CIP procedure • Optimize Production based on Crude • Evaluate decision before executing • Predict Fermentation, Refinement • Simulate actions

15. DirectionEvolving Operational Landscape Changing Experience Changing Requirement Trend Operational Control • Role-based to action-based • Transformable Day in theLife • Natural collaboration across roles Agility thru Empowerment Operational Decision Support • Situational awareness • Preemptive practices • To be vs. as is • What If (Future) Knowledge Workers Workforce Transition Real-Time Virtual “Situation Room” Time to Experience • Access to experience • Self training • Understanding the future Operational Work • Work/Action Capture • Moved to Planned Work • Work? Action Consistent with inbuilt SOPs Digital Natives Rotating Roles

16. Empowering the NOW DecisionThrough Exception Based Awareness Ability to Look into the Future “What If” Knowledge Access • Conditional Awareness vs Alarms • Pattern Modeling • Complex Event Engine Situational Awareness Unified Asset Model “Self Aware” understands Intelligence/ Smart with in the Asset Model Standard best practice procedures, that automatically initiate Timely awareness In context of me and location

17. Arcelor Mittal:“Facebook of Arcelor Mittal Blast Furnaces” • Description: • Remote Monitoring, Diagnostics and Standardization • Business Problem: • Require remote experts to be able to advise remote sites and provide expertise • 65 blast furnaces all over the world • Old technology and no standards on measures information • Need to establish a standard way to view blast furnaces, and online community of information across the world • Share Experiences with Live & Historical Data • Instant On-line Information Exchange For Problem Solving • Create a Powerful Knowledge Database • Create a Community For Helping Each Other • Solution: • Used Invensys System Platform with standard objects for Blast Furnaces measures • Auto updates in Near Real-time • Notifications and standard interfaces via web Virtual Community of Experts

18. Transformation in Industrial Operations

19. Synchronizing Strategy and Execution STRATEGY Integrated Control Delay Business Control RevenueGrowth OperatingMargin ROA Production Control Distortion “The Control Gap” Process Control Temp. Pressure Emissions Quarters Weeks Days Hours Minutes Seconds Sub-seconds EXECUTION Slide 19 Invensys Proprietary and Confidential

20. What about SOA for the Manufacturing space? Customer 2 SAP ERP MICROSOFT ERP Customer 1 MES 1 MES 2 MES 3 WHAT IF: Customer1 acquires customer 2 ? WHAT IF: Customer1 outsources part of mfg. to cust. 2,3.? Source 2007 Flexibility through Services and Sustainable Rule Model

21. Embedding Operational Process

22. Model-Driven Operations Mgt. The Foundation for Process Excellence… Framework for Modeling and Sustaining World-Class Processes…

23. Potential Operations Events Interaction Forms Alarms Series of Uis both desk, web, roaming Model Driven Operations Templates Workflow is used to capture your Operational practices Sustainable MES Location Operational / Production Rules Work Scheduling Equipment Objects allow validated / managed Transactional events Interacts with Control Systems Existing Scada Local Platform Control Systems

24. Shift from Code to Activities • Value of a business in Operation Processes in the way activities are executed • Operational Activities now have model/ rule and are service • They link across different MES/ Plant floor and systems • Agility will involve evolving these activities Examples of Operational Activities Quality Specifications Mgmt Composite Applications For Operational Activities Machine Setup Product Changeover Quality Inspection Activity Order Receivals Shop floor Inventory Mgmt Operational Activities/ GUIs Design Operations Composite Activities Framework Operational Activities/ Rules Design

25. Operations (MES) in the Cloud (1) MES summary: As a user, I want to standardize, accelerate, compare and track multiple products across multiple sites with Cloud expectations • Cloud expectations: • Scalability • Managed Proven Services • High Availability • Low impact on internal resources • Speed to set up Mobile Off-Premise On-Premise

26. Operational Excellence Journey Consistency, Repeatability, Predictability • Where do we want to reach? • Empowerment of operators • Culture of performance and accountability • Collaborative and dynamic decision making • Performance information pinpoints everyone’s contribution to goal attainment • Clear transparency • Wide use of analytics • Sense & response Where most organizations are today • Where are we going? • Clear financial and operational metrics mapped to strategy and goals • Business processes streamlined and optimized • Cause and effect fully understood • Dashboards in full use • Trends analysis • Exception handling • Collaboration and accountability across functions • Near real time • Where are we now? • Spreading across depts. • Processes fully defined but not streamlined or institutionalized • Strategic & operational metrics defined but not aligned • Technology in place to support data integration and dynamic reporting but there are gaps • Tools and process based • Near real time • Where have we been? • Departmental approach • Function specific metrics • Use of spreadsheets/ manual processes • Scheduled/timed process • Tools based • Historical focus Stage 4 Stage 3 Stage 1 Stage 2 Driving theMarket Driving Business Reacting to Business Improving Business

27. Operational Transformation is Taking Place! Modern Operations Execution/ Management System Requires: Strategy visibility R&D: more recipes Real time Operational Execution Alignment with Business Strategy, Natural Integration Procurement:more items! Operational Teams, with Skill Spread/ Virtual Teams Integration Enterprise Product Spec Management, (PLM) across sites Decisions in the NOW no matter where or what Device Embedded Governance on practices, and KPIS, and accountability People Operational Alignment Across multiple Value Assets variety velocity Model Driven Operational Practices to enable change to support agility and consistency of decision and action over teams and sites Operational Workspace Transition Islands of Expertise/ Control Federation of the End to End Value Supply Chain into an aligned system, and a Virtual One Manufacturing System, while maintain site uniqueness Marketing:more choices! Federation Home Grown MES Operational Transformation Execution Consistency of execution through Standards in process, equipment, actions Heavily customized first generation Agility and Increased Speed on Innovation and Change Many different MES/ operation systems, and Excel • Replacing • Existing Systems • Costly to sustain • Expertise leaving • Limited Agility • No consistency

29. Model-Driven Operations Mgt. Task-Oriented, End-to-End Configuration Experience… Performance Mgt. MES Design Tasks: General: Package System Settings Workflows Model Products Tools Model Shifts Settings Model Users & Groups MES Configuration Activities: Model Utilization States Performance Mgt Model Reason Codes Recipe Mgt Plant Model: Quality Mgt Model Equipment & Line Classes MES Activities: Model Equipment Performance Mgt Model Lines Recipe Mgt Quality Mgt Reporting & Analytics: Dashboard

30. Model-Driven Operations Mgt. Key Takeaways • Model-Driven Concepts Are… • About coordinating people and applications into intelligent, effective, governed processes that crossover application and organizational boundaries. • Changing the way we develop and deliver “application content” for our Production & Performance applications. • Changing the way our customers configure and extend our applications to meet specific business needs. • Embracing the “computing convergence” by supporting multiple computing platforms (e.g. desktop, tablet, phone).

31. People Excellence is AboutOperational Empowerment Agility is through Decisions in the NOW through Empowerment Future: “edge” / empoweredmindset STRATEGY Past: centralized / ERP mindset Business control Operations control Process control EXECUTION Centralized mindset Empowered mindset