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  1. Supply Chain Steering Team Meeting / Overview Supply Chain Summit IV Craig Doiron February 27, 2007

  2. Agenda

  3. Guest Speakers • Dr. Panos Kouvelis Emerson Distinguished Professor Operations and Manufacturing Management Director of The Boeing Center for Technology, Information, and Manufacturing Olin School of Business / Washington University • Dr. Ik-Whan G. Kwon Professor of Decision Sciences and MIS John Cook School of Business / Saint Louis University • Dr. Sergio Chayet Assistant Professor of Operations and Manufacturing Management Olin School of Business / Washington University • Dr. Tava Olsen Associate Professor Olin School of Business / Washington University

  4. Where We Want to BeSupply Chain Summit Team Vision Statement A Demand Driven Supply Chain Leveraging the Entirety of the Enterprise and Aligned with Strategic Imperatives Differentiates Emerson to Deliver Exceptional Customer Satisfaction and Significant ROTC Improvement. Best in Class

  5. Key Supply Chain Initiatives from CPCImportance of a Cross-Functional, Holistic Approach • Organize to Drive Supply Chain Programs throughout Business • Active involvement of all functional groups • Address supply chain organization structure to eliminate communication silos • Develop internal resources and provide educational opportunities • Eliminate Root Causes that Stress the Supply Chain • Improve sales & operations planning and master scheduling • Abolish month-end inventory “managing” practices • Eradicate sales incentives, price programs and freight discounts that exacerbate the bull whip effect • Simplify and Leverage Logistics Network • Ocean / Air / Inter-Continental Programs

  6. Key Supply Chain Initiatives from CPCImportance of a Cross-Functional, Holistic Approach • Digitize the Supply Chain • Emerson Transaction Hub • Logistics Information Network • eKanban • Data Standardization • Optimize Supply Chain Using Tools and Processes • Sourcing Decision Tool • Preferred Supplier List • Supply Chain ROTC • Leverage Regional Sourcing Offices • Drive Supply Chain Programs using New Products as Catalyst

  7. Key Supply Chain InitiativesSetting Ownership and Expectations • OrganizationExec. Leader(s) –DNF/ELM, Paul McKnight • Holistic-Eliminate Silos • Define Project Leadership/Teams/Senior Leaders – Executive Steering Group • GLBLs Full Time w/ Accountability • Org Reviews Focused on Supply Chain Competence • Regional Leadership – IPO to Supply Chain • Sales & Operation Planning/Master SchedulingExec. Leader – Ray Keefe • President-Led S&OP Process • Defined Business Model • Measure Forecast Accuracy • Closed Loop Process • Consistent/Electronic Communication • Digitize the Supply ChainExec. Leader(s) –Craig Doiron/Steve Hassell • Data Steward in Place • Connected to the Hub • Standard Data Transactions • Standard Data Elements • LIN as Analytical & Transportation Management Tool • Leverage Logistics ProgramsExec. Leader – Greg Fromknecht • Connected to Hub • Integrated in Intl. Ocean • Integrated Air, 100% Auctions • Focused Mode Shift Strategy • Expanded Intra-Region Transportation SC-IV Overview_CD 022007 # 7

  8. Key Supply Chain InitiativesSetting Ownership and Expectations • Reduce Supply Base ComplexityExec. Leader – Dennis Sollberger • Preferred Supplier Process • Corporate • Division • Scorecard • Lean Supplier Development • Strategy • Resources • Best Cost Country Alignment • Integration with Regional Procurement Offices • Sourcing Decision Tool • MIN Data Quantity and Quality • New Product Process Is Where Change Needs to HappenExec. Leader – Randall Ledford/Craig Doiron • Metric Performance • Senior Management Commitment • Dedicated Resources/Specialists • Closed Loop Process • Post Launch Review

  9. Executive Steering Process Quarterly Bi-Annually Annually Monser/Peters/Hassell Supply Chain Team Supply Chain Plan. Conf. President/GVPs OCE & BL S&OP/Master SchedulingRay Keefe – VP Manufacturing Supply Base ComplexityDennis Sollberger – VP Procurement Division Best Practices Procurement Advisory Council Outside Consultants Global Commodity Teams Organization Manufacturing Center of Excellence InternationalProcurement Offices ITSS/Project Management Office Lean Supplier DevelopmentElio Fumagalli • Raw Inventory Performance • Data/Forecast Accuracy • % Electronic Supplier Communication • % Degreed Master Schedules • % Preferred Suppliers • Supplier Scorecard Metrics • % Locally Sourced/Best Cost Country Sourced • Sales $ per Supplier Metrics SC-IV Overview_CD 022007 # 9

  10. Sales & Operation Planning, Master SchedulingStop Light Chart to Manage Progress Sales & Operation Planning Master Scheduling SC-IV Overview_CD 022007 # 10

  11. Business Leader Meeting Updates Agenda • December Overview, Programs, Organization, Recommendations • January Demand Planning / Master Scheduling, ETH and Data Standards • April Supply Chain Complexity, New Product and PLM Strategy, Data Standards Update • June LIN, Oracle Transportation Management (g-Log), Penske Pilot Review Results • Organization Will Be Driven Division by Division, One Size Does Not Fit All • GLBLs To Become Full-Time • Logistics Organization to Expand • Air & Ocean Should Have 100% Participation • Demand Planning / Master Scheduling Initiative on Proper Path • We Will Implement ETH & Standardized Data Elements (Timing) SC-IV Overview_CD 022007 # 11

  12. Direct Line Dotted Line A Cross-Functional Organization is Needed to Eliminate Organizational Silo’s Supply Chain Lead Procurement S&OP and Demand Planning Manufacturing and Materials Mgmt Supply Chain Program Management Office Regulatory & Compliance Transportation Warehousing Information Technology • Profit Review Requests • Current State and Future State Supply Chain Organization Chart • An Evaluation of Supply Chain Resources and Internal Development Plans

  13. Corporate Organizational Alignment COO VP Supply Chain VP Manufacturing VP Global Procurement VP Global Logistics Information Technology Lean Supply Teams Teams S&OP Process Master Scheduling Procurement PMO Supply Chain Summit(Steering) TeamOCE Review Process Legal and Regulatory Compliance Regional Supply Chain Centers of Excellence Logistics PMO We Are Clearly Moving in the Right Direction SC-IV Overview_CD 022007 # 13

  14. Aligning the Logistics Organization Globally to Support the Supply Chain Regions North America Latin America Europe Asia Teams Ocean Air Cargo Warehousing Small Package Trucking Brokerage SC Network Optimization GLBLs Process Network Power Tools Climate Industrial Automation Motors Technical Support Information Systems Audit Pay Data Standards ETH LIN OTM Programs will Rely Heavily Upon Divisional Support to Participate in Teams and Pilot Programs SC-IV Overview_CD 022007 # 14

  15. Logistics Team ProcessAn Integrated Process Where Everyone Has a Role to Play • Executive Sponsor • Approval ofStrategy • Marquee Management of • Preferred Providers Executive Sponsor • Emerson Team Leader • Develop Strategy with Each of the Key Divisions • Competitive Tension • LTA’s • Preferred Providers Selection • QBR’s • GLBL’s • Facilitate Divisional • Implementation • Issue Resolution • Review of Program KPI’s • with Divisions • Divisional Org Reviews Team Leader GLBL’s Division Division Division Division Division • Key Divisions • Input Divisional Requirements • Assist in Formulating Strategies • Data Collection and Integrity • Implementation • Communication across the BG Executed Properly Emerson Wins SC-IV Overview_CD 022007 # 15

  16. Relationship of Teams and Programs Global Regional Strategic Programs driven by the Mode Teams deliver long-term sustainable value. Effecting Organizational Processes & Behavior Air Ocean Small Pkg TL LTL Brokerage SCMNO Warehouse Data Systems & Tools provide the visibility required to leverage and manage the supply chain. Dependent upon uniform quality data Audit / Pay eSourcing ETH, LIN, OTM, Data drives the Mode Teams ability to implement and sustain savings SC-IV Overview_CD 022007 # 16

  17. - $410 Million - (504) Carriers - $95 Million – (102) Carriers - $95 Million – (21) Carriers - $35 Million - (171) Brokers Teams Will Manage $945M Provider Consolidation Will Be Critical Ground Div. A Div. B Div. C Div. D Ocean Air Cargo - $135 Million – (145) Carriers Small Package Warehousing - $120 Million Brokerage SCN Optimization - $50M – (1) 3rd Party Provider Initial Focus in North America SC-IV Overview_CD 022007 # 17

  18. Proposed Logistics Organization StructureFebruary 2007 Changes L. Kremer Consultant G. Fromknecht VP Global Logistics LCC Headcount 11 Analyst - MBA (Open) 1 1 1 1 Team Leaders GLBLs Regional Technical Support 8 2 15 12 WHS. Team Leader Open IA Bernie Fiorelli LAPO (Open) Mgr. Data Std. Don Sorg Finance J. Thomson Dir. eBusiness IT R. Hermes Warehouse Analyst T. Wade 9 13 15 Europe M. Cliffe Audit Pay Analyst (Open / GMDC) Audit Pay B. Sher DS Project Analyst Jason Hawk 6/07 3 6 Ground Team Leader R. Palmer Tools (Open) CEEPO Bulazs Hopka 13 I /C M. Noellsch DS Project Analyst (Open) 3 FTL Trucking T. King 14 DS Compliance Analyst (Open / GMDC) Asia Jorge Longa MX Transportation R. Huneidi 3 LTL Pricing Analyst (Open) 16 2 10 Process R. Harris Small Package R. DeYoung SC ETH Analyst (Open) Team Analyst (Open / GMDC) 4 4 Climate D. Knupp Brokerage Analyst MX (Open) 10 Team Analyst (Open / GMDC) 5 5 SCNO Team Leader (Open) MAC Mike Williams Asia Staff * (17) SCNO Mexico D. Nieto 7 ENP (Open) Air Team Leader S. Goeckeler * See Asia Org chart for Changes Ocean Team Leader J. Couilloud SC-IV Overview_CD 022007 # 18

  19. Breakout Team ExpectationsWe Have many Programs In Play • Leaders Will Give Update on Status • Then, They Will Do SWOT Analysis • Team Will Debate & Discuss • Team Will Prepare 30 – 40 Minute Presentations on Recommendations • Can Continue After Dinner & Cocktails ……… Are We on Track? Do We Have Proper Priorities & Resources? Is There Too Much? How Can We Improve? SC-IV Overview_CD 022007 # 19