One Company Group, LLC

1. One Company Group, LLC Business Transformation Case Study William J. Cantwell September 14 - 18, 2009

2. Air Products Overview • $11B revenues • A chemical industry safety leader • Operations in more than 30 countries • 50% of sales revenue outside the U.S. • 20,000 employees worldwide

3. Our One Company Focus Simplifying and standardizing global work processes Corporate Vision 3

4. One Company Focus* • Manage work through global work processes • Provide value through one IT infrastructure • Emphasize enterprise value of initiatives • Consolidate / globalize organizations • Visibility of information targeted as strategic * Non-negotiables.

5. Guiding Principles In a few words… Standardization, Simplification and SAP Centricity

6. Elements of the One CompanyOperating Model • Growth • 3 categories of businesses (Growth, Core, Restructure) • Direct R&D and capital into the Growth category • Effectiveness • Standardized global processes • KPI’s/cycle time reductions • Efficiency • Similar things done the same way • Reduce functional costs/IT enablement • Change Management • Active/passive alignment among senior executives • Resource to win/only one #1 priority per operating unit • Rewards/Recognition • Align rewards with new targets (KPI’s) • Targets should differ among categories/functions

7. One Company is the New Model for Operational Excellence Culture • Disciplined teamwork • Standardization vs. empowerment Organization, Skills Processes Measures • Streamlined work procedures • Businesses converge • to a global standard • Supply Chain KPI’s • Productivity • Centralized functions • Global processes Information Technology • Highly automated • Enables key processes

8. Change Management • Need an Enterprise Change Plan that addresses conflict resolution (Trio process) • Need defined change plans to be lead by business unit leaders • Need alignment before implementation • Need a Program Management Office to deal with prioritization and resources around initiatives • Need a governance process with metrics to sustain the business transformation

9. Transition Curve Commitment “Reward” Denial “Inform” Exploration “Encourage” Resistance “Listen”

10. Implementing Change in Organizations

11. Implementing Change in Organizations Leading Change Requires You To: Maintain Persistence

12. Stage 1: Global Processes were the Foundation

13. What is the Enterprise Process Blueprint? The Enterprise Process Blueprint maps out our Enterprise Design It’s the way we choose to run the company Common processes Common tools Includes the converged processes, both manual and IT-enabled Enterprise Design includes the: Complete set of decisions, work process maps, related documents, configuration, and master data These work processes include both SAP and non-SAP functionality

14. Process Principles • Business processes are simple,standardized, and global; enabledby a single instance of SAP • Customer responsiveness, operational efficiency, and cycle times are all important • Value creation is focused on the enterprise versus any individual business (“broad versus deep”) • Collaboration / teamwork will become the norm • Convergence is required by all business units

15. Process GovernanceSurprises, Learnings, Advice • Simpler is better. • It takes longer and costs more. • People do what they believe is right. • Scorecards drive behavior. • It works better than you think. • If you can make it, it feels really good. • The process is never “complete.”

16. Stage 2:SAP was the Tool Single Instance of SAP

17. Reduced complexity, waste, defects Increased speed, agility, efficiency and strategic customer focus What Did SAP Do? • Processes integrated all of our functions and businesses • Provided real-time, online consistent data and information that everyone – employees, customers, suppliers – had access to • Created a one company infrastructure / supply chain (i.e., all steps from production planning to delivery to the customer)

18. Phases of SAP Implementation BENEFITS IMPROVEMENT Business Performance STABILIZATION Identify business transformation opportunities; Perform to one company (convergence) decisions; Identify productivity benefits; implement organization changes RECOVERY Identify & implement inter and intra work process opportunities; Collect and report business and process KPI’s SAP Go - Live Handover Time Analyze & correct data and configuration issues; Identify training and work process issues; Disengage SAP project team

19. SAP Implementation • 7 phases over 4 years by geographical region • Core implementation team reported to the Supply Chain organization versus IT • Common core team moved through all 7 phases • Core team worked with a dedicated regional implementation team • Regional VP drove the efforts of the implementation team

20. Benefits Targeted • Identify potential leverage by process • Change the way we do business • External benchmarks • Categories • Productivity 3X • Balance sheet improvements 30% • Functional cost reductions 20% • Procurement $300MM • Revenue impact $500MM • Soft benefits Customer Loyalty by 15%

21. VOC Plan Source Make Fulfill Single Instance of SAP Customers Suppliers Stage 3:Supply Chain Was The Connection That Drove Productivity

22. EnterpriseSupply Chain KPI’s “Top 5” Focus Areas Customer Master Data Quality Customer Data Quality Supply ChainAttribute Workbook Rejection Rate $ Benefit Area Demand Forecast Accuracy Reliability ForecastAccuracy Production Plan Adherence Revenue (increase) Growth Perfect Order Fulfillment Perfect Order Fulfillment % Orders Rec’d on-time (supplier) Responsiveness&Flexibility Production Master Data Quality Complaints Closed by Target % Complaints Closed by Target Return on Investment (increase) 13% ORONA Cost (decrease) Productivity P&L Impact ProductivityImprovement Cost Net Hard Benefits Cash to Cash Cycle Time Days Sales Outstanding % Faultless Invoices Investment (decrease) Net Assets AssetManagementEfficiency Cash to Cash Cycle Time Average Days Past Terms Average Terms (customer) Inventory Days of Supply Inventory Accuracy Days Payable Owed Supply Chain KPI’sDrive Process Performance 22

23. Other Step Change Performance Opportunities • Creates focus for driving results • Target $100MM opportunities • Resource to win/benefits begin within six months • Transfer of knowledge is critical • Initiative examples • Strategic sourcing • Shared Services (e.g., functional cost reductions) • Price Management • Lean/Six Sigma

24. Strategic Sourcing • Organizationally separate from tactical sourcing • Focus on fewer, longer term relationships for key materials • Look to source global requirements from low cost suppliers/countries • Need a limited number of experienced and motivated sourcing professionals to drive the program • Cost benefits can approximate 25% • Must quantify risk management process

25. Global ProcurementStrategic Sourcing/Business Alignment Process • Process focuses on identifying and prioritizing strategic sourcing initiatives that will enhance the competitiveness of businesses and functions. • Senior leaders of businesses and functions are engaged to gain endorsement and alignment. • Business leaders cannot overrule Procurement decisions. • Creates dialogue on sourcing support ….expectations and service level. • Provides structure to sourcing activities…strategies, objectives, and team accountabilities are defined.

26. Global Procurement “Strategic Sourcing… Defining Success”

27. 3-Year Roadmap for Low Cost Country Sourcing Year #1 Year #2 Year #3 • Full scope of executing strategies and communications of status and results, with focus on sourcing from LCC for the rest of world • Effective supplier relationship and development program implemented • Effectively support regional project executions and plant operations • Broader influence in procurement strategies and processes • Well-defined strategies in the areas of Corporate sourcing, Logistics / Dist. and (Real Estate?) • Integrating country team to corporate. • Successful SAP implementation • Fully integrated into organization, strategies, and processes • Greater and broader confidence and willingness from stakeholders in using low-cost country suppliers. • Global leadership or co-leadership in certain commodity category management. • Organizational change, Country Integration (structure, scope, operating model, and governance), and communications • Strategic sourcing leadership team build-up by Key Market Area. • Well-defined strategies by division. Accelerate implementation, and communications of the strategies • Enhanced collaborations with business units • SAP support

28. FIRST QUARTER SECOND QUARTER SBU Managers Meeting: SBU/Region/FunctionMeetings Senior Mgmt Meeting: E-Pulse Survey: Corporate Executive Committee (CEC) Senior Management Meeting • New FY Initiative Targets • Best Practices Identified • Review of Customer Success Stories • Supply Chain KPI's • SBU/Region New FY Work Plan • New FY Supply Chain Capability Projects • Best Practices to be Implemented • 50 Business and Senior Corporate Leaders • New FY Corporate Scorecard Review • New FY Initiative Priorities • Shared Service • Centers Review • Growth Board/CDO Overview • 3000 Employees • Measure Employee Engagement • Progress on Development of Core Capabilities? • Customer Loyalty Review • Supply Chain Milestone Review • Functional Performance Versus Benchmarks • 50 Business and Senior Corporate Leaders • Procurement Initiatives • E-Connections Review • Customer Testimonials • Portfolio Mgmt. Review • All Business Units • Kick-off SBU Strategy Reviews Corporate Executive Committee (CEC): • Technology Review • HRP Priorities • Process Maturity Assessment Customers Employees Shareholders Sr. Management Meeting Corporate Executive Committee (CEC): SBU/Region/Function Meetings: E-Pulse Survey: SBU/Region/Function Meetings: Corporate Development: • 50 Business and Sr. Corporate Leads • Next FY Challenges • Next FY Initiatives • Prioritized (Business/ • Process Alignment) • Supply Chain Priorities • One Company Accomplishments • Corp. Portfolio • Management Review • Growth Initiative • Spending Target • Hard Productivity • Targets • Corporate Planning & • Commitment Process • Targets • Next FY Operating • Plan Approval • Growth Initiative Spending • HRP Review • Next FY Training Plan Approval • S,G&A Targets • All Business Leaders • Next FY Initiative • Targets Set • Individual Business Operating Plans • Next FY Continuous Improvement Plan • 3000 Employees: • Measure Employee • Engagement • Progress on One • Company Capabilities • Leadership Alignment • 360° Feedback • Alignment Survey • Review of SBU Strategic Plan • Review of Annual Supply Chain Plan • Next FY Economic • Outlook • SBU HRP Review Adapted from GE Model FOURTH QUARTER THIRD QUARTER Rev. 11/08/06

29. Business Results • 4 growth platform businesses increased from 30% to 60% of total corporate revenue • 5 years of double-digit topline growth • 4 years of double-digit earnings leverage • Increased ORONA by 3% • S, G, & A / Sales declined by 3% • Procurement Savings exceeded $300M • Share price doubled

30. Results…A Change in Conduct • Simplification and standardization • Instituted global work processes • Shared service organizations • Underpinned by a single instance of SAP • Consolidated global business and functional organizations under single managers • Increased Customer Loyalty by at least 15% for each business in each region • Tripled rate of hard productivity savings over past 3 years • Resourcing to win

31. Keys to Success • Business leaders responsible for “what;” process owners responsible for “how” through service level agreements • Converge and then document the process before you enable it through software packages • IT spending / prioritization is controlled by process owners versus business leaders • Lean / Six Sigma projects are focused on improving Process KPI's • An integrated process governance model sustains improvements

32. Thank you