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John Deere SCRLC Member Spotlight Elizabeth Carroll Bob Smola Austin, TX 18 May 2010

John Deere SCRLC Member Spotlight Elizabeth Carroll Bob Smola Austin, TX 18 May 2010. Agenda. John Deere Corporate Supply Management John Deere Supply Network (JDSN) Current Supply Chain Risk Process Future Supply Chain Risk Process Questions.

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John Deere SCRLC Member Spotlight Elizabeth Carroll Bob Smola Austin, TX 18 May 2010

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  1. John DeereSCRLC Member Spotlight Elizabeth Carroll Bob Smola Austin, TX 18 May 2010

  2. Agenda • John Deere Corporate • Supply Management • John Deere Supply Network (JDSN) • Current Supply Chain Risk Process • Future Supply Chain Risk Process • Questions John Deere Spotlight – SCRLC 18 May 2010

  3. It all started in a blacksmith shop…Integrity – Quality – Commitment – Innovation

  4. John Deere Today • Founded in 1837 • Over 100 Locations • In 28 Countries • Over 56,000 Employees John Deere Spotlight – SCRLC 18 May 2010

  5. Our mission is to distinctively serve those linked to the land • VastlyGlobal: Customers andoperations around the world • IntenselyInnovative: Advanced robotics, navigation technologies and autonomous vehicles • VigilantStewards: Dedicated to our values, legacy, environment and safety of employees John Deere Spotlight – SCRLC 18 May 2010

  6. The John Deere Strategy • Exceptional operating performance • Disciplined SVA growth (Shareholder Value Added) • Aligned high-performance teamwork John Deere Spotlight – SCRLC 18 May 2010

  7. 2009 Net Sales and Revenues: $23.11 Billion Agriculture and Turf 78.4% Construction & Forestry 11.4% Credit 8.4% Other 1.8% John Deere Spotlight – SCRLC 18 May 2010

  8. John Deere Manufacturing Locations John Deere Spotlight – SCRLC 18 May 2010

  9. Parts and Logistics • John Deere replacement parts in transit to dealers

  10. Interim Tier 4/Stage III B engines • A simple solution • A fuel efficient solution • A field proven solution • An integrated vehicle solution • A fully supported solution John Deere Spotlight – SCRLC 18 May 2010

  11. Agricultural Equipment • World’s premier farm equipment manufacturer John Deere Spotlight – SCRLC 18 May 2010

  12. Agriculture and Turf Percentage of population engaged in agriculture Former Soviet Union 6.8% Western Europe 1.7% U.S. 0.9% China 38.5% India 25.4% Brazil 6.4% Argentina 3.7% (Based on data from Food & Agricultural Organization of the United Nations) John Deere Spotlight – SCRLC 18 May 2010

  13. Agricultural Equipment • Emphasis on new products and emerging markets • Brazil • Russia • India • China John Deere Spotlight – SCRLC 18 May 2010

  14. Construction & Forestry Equipment • $2.6 billion in sales in 2009 John Deere Spotlight – SCRLC 18 May 2010

  15. Forestry Equipment • World’s premier producer of • timber-harvesting equipment

  16. What lies ahead for Construction & Forestry? $6 billion Russia $17 billion European Union $17 billion U.S. & Canada $14 billion China $2.5 billion India $2.5 billion Brazil $87 billion global market for the equipment we build John Deere Spotlight – SCRLC 18 May 2010

  17. Turf Equipment • Total solution provider offering products and services for: • Property owners • Professional landscape contractors • Golf course superintendents John Deere Spotlight – SCRLC 18 May 2010

  18. Financial Services • FarmPlan™ in United States • Agline™ in Canada John Deere Spotlight – SCRLC 18 May 2010

  19. John Deere Water Technologies Exciting growth John Deere Spotlight – SCRLC 18 May 2010

  20. John Deere Recognition • 2009 – Ranked 14th globally and 8th in North America on FortuneMagazine’s 2009 list of Global Top Companies for Leaders • 2009 – Ranked among the 50 most admired companies in the world in a survey published by Fortune magazine • 2009 – Chosen again by Ethisphere Institute for its third annual list of the World’s Most Ethical Companies • 2009 – Recognized as a top employer by readers of Minority Engineerand The Black Collegian magazines • 2009 – Ranked second in list of “Top 50 Employers” by readers of CAREERS & the disABLED magazine • 2009 – Recognized as a 2009 Best Diversity Company by Diversity/ Careers in Engineering & Information Technology magazine • 2008 – Chairman and CEO Robert Lane is included on Barron’s list of “The World’s Best CEOs” • 2008 – Ranked 4th – CRO magazine’s “100 Best Corporate Citizens” list John Deere Spotlight – SCRLC 18 May 2010

  21. Value Chain • Warehouse / • Packaging Facility Deere Factory / PDC Dealer / Retail Store Warehouse / Depots Supplier Customer Countries We Buy From: 67 Units Supplied: 56 Part Numbers Purchased: 657,000 John Deere Spotlight – SCRLC 18 May 2010

  22. Value Chain • Warehouse / • Packaging Facility Deere Factory / PDC Dealer / Retail Store Warehouse / Depots Customer Supplier # of Suppliers Direct 9,000 Indirect 29,000 Logistics 1,000 Total 39,000 John Deere Spotlight – SCRLC 18 May 2010

  23. Worldwide Supply Management & Logistics • Decentralized until 2000 • Divisional Directors • Global Strategic Sourcing • Enterprise commodities • Divisional commodities • Co-located globally • Many processes, tools, and legacy systems across the Enterprise John Deere Spotlight – SCRLC 18 May 2010

  24. 2010 Strategic Plan Worldwide Supply Management & Logistics 2010 • Strategic Global • Sourcing • We develop and implement • sourcing strategies to achieve the lowest total cost solutions. • Execute the indirect materials and services strategy • Execute the global logistics segmentation strategy • Execute highly aligned enterprise strategies leveraging our total spend • Mitigate supply chain risk John Deere Spotlight – SCRLC 18 May 2010

  25. John Deere Supply Network - JDSN • Align suppliers to Deere business needs • Achieving Excellence • Deere Business Processes • Provide reliable, accurate, and timely data • Firm and Forecasted orders • EDI • Provide tools to enable supplier success • Capacity planning • Part drawings John Deere Spotlight – SCRLC 18 May 2010

  26. John Deere Supply Network - JDSN John Deere Spotlight – SCRLC 18 May 2010

  27. Achieving Excellence John Deere Spotlight – SCRLC 18 May 2010

  28. Order Fulfillment Readiness Assessment John Deere Spotlight – SCRLC 18 May 2010

  29. The Story Web Class Supplier Awareness Mike Brown, John Deere Supply Management Professional describes the Order Fulfillment Readiness Assessment Connie, calls John Deere Supply Management Mike and Connie discuss the Assessment for potential suppliers Maria explains to Connie how the Order Fulfillment Readiness Assessment works Mike shows Connie the Order Fulfillment Readiness scoring criteria Mike and Connie discuss next steps Order Fulfillment Readiness Assessment Order Fulfillment Readiness Assessment

  30. Daily Security Briefings - continued on next slide John Deere Spotlight – SCRLC 18 May 2010

  31. Daily Security Briefings John Deere Spotlight – SCRLC 18 May 2010

  32. Daily Event Communications John Deere Spotlight – SCRLC 18 May 2010

  33. John Deere Spotlight – SCRLC 18 May 2010

  34. JDSN MAP John Deere Spotlight – SCRLC 18 May 2010

  35. JDSN MAP John Deere Spotlight – SCRLC 18 May 2010

  36. JDSN MAP John Deere Spotlight – SCRLC 18 May 2010

  37. Event with/without Warning Process John Deere Spotlight – SCRLC 18 May 2010

  38. Eyjafjallajokul John Deere Spotlight – SCRLC 18 May 2010

  39. Event Team Mobilization: • Global team members assigned on a full-time basis • Factory, Logistics, Supply Management, Freight forwarders • Supply Management Director acted as team lead • Collaboration teleconferences scheduled three times per day • Communication plan to ensure “One Version of the Truth” • Separate plans for Deere and non-Deere stakeholders • Leveraged existing Supply Risk Share Point Site on JDSN • Read/write access granted to 35 stakeholders John Deere Spotlight – SCRLC 18 May 2010

  40. Daily GLOBAL Communication Plan: • 6:00 AM: Stakeholder conference call to confirm status • 7:00 AM: Logistics/SM meeting to set ongoing priorities • 1:00 PM: Logistics/SM meeting to update daily status • 2:00 PM: SM Director update issued to Deere Leadership • Communication plan enabled: • Live conversation with units (minimal messages) • Timely production planning John Deere Spotlight – SCRLC 18 May 2010

  41. John Deere Spotlight – SCRLC 18 May 2010

  42. Share Point Communication Template: John Deere Spotlight – SCRLC 18 May 2010

  43. Team Actions: • Rerouted material to open airports • Leveraged 3PL relationships to reserve space on existing flights • Established charter flights • Identified alternate methods to acquire material • Pull parts from Spare Part Depots • Use alternate suppliers to manufacture parts • Product Engineering deviations to use similar products (bearings) John Deere Spotlight – SCRLC 18 May 2010

  44. Lessons Learned: • Appropriate team leadership/structure to drive performance • Prioritize decisions based on enterprise business needs • Access to appropriate enterprise/3PL leadership • Appropriate understanding of business processes & operations • Team approach supported by global Senior Leadership • Process gaps identified to ensure rapid deployment for future events • Expertise and simple tools drove business results • Cell phones, Share Point web site, email, time-zone calendars John Deere Spotlight – SCRLC 18 May 2010

  45. John Deere Online Publication: John Deere Spotlight – SCRLC 18 May 2010

  46. Supply Chain Risk Management Market Segment Country Risk Capacity Risk Financial Risk Natural Disaster John Deere Spotlight – SCRLC 18 May 2010

  47. PARTS BUSINESSWITH JD TOOLING DISTANCEJD <-> SUPPLIER(Reaction time) • Criteria(s) : • Number of JD parts • Effort to Resource • Run without • Complexity / Flexibility • Criteria(s) : • SINGLE- or MULTI-unit/divisional/regional • PDP Involvement • JD spend & proportion of supplier’s total business • Supplier’s dependencyon market segments • Multiple-tier supplier • # of served platforms &indicator for high SVA product-line suppliers • Criteria(s) : • Tooling ownership • Redundant tooling • Tooling leadtime • Tooling cost • Criteria(s) : • Local(Truck) • Regional(Train, truck) • Global(Ship, aircraft) Part portfoliorelatedcriticality Distance / Reaction timerelatedcriticality Businessrelatedcriticality Toolingrelatedcriticality + + + Total Supplier Criticality Risk Assessment Risk Management - Criticality Rating (Dimensions) John Deere Spotlight – SCRLC 18 May 2010

  48. MARKETSEGMENT FINANCIAL (SUPPLIER) COUNTRYRELATED RISK(S) SUPPLIERPERFORMANCE • Criteria(s) : • Supplier’s dependencyon market segments(focus: critical industries) • Criteria(s) : • Rating results- public owned- private owned • Financial constraint indicators- Change in payment terms • Request for advances- Creditor/debtor to a bankrupt company- Plant restructuring- Ownership or management change • Criteria(s) : • Event driven risk(s)- Natural events- (Geo) poltical events- Pandemic- Transportation strikes- Terrorism/attacks, etc. • Rating results- Political & economic i.e. economic & financial prospects - “Business Climate” • Criteria(s) : • Quality & delivery • Warranty claims • AE Rating • Downtimes (customer) • Audit compliances • Capacity • Supplier specific events • # of drop-in orders Marketrelatedrisk Performancerelatedrisk “Financial health”relatedrisk Event / Countryrelatedrisk + + + Total Supplier Risk Risk Mitigation Risk Management – Risk Assessment (Dimensions) John Deere Spotlight – SCRLC 18 May 2010

  49. Supplier Risk Scorecard Supplier Name Company ABCDEF Supplier# 123456 Location - Country USA Location - City Austin Turnover(JD TOTAL FY 2008) 120,000,000 USD Relationship Owner(s) A.B. Smith (A&T) C.D. Chen (JDPS) E. F. Kumar (C&F) G. H. Gonzalez (Enterprise) Add Info 1 Text Add Info 2 Text Previous Risk Level Current Risk Level FinancialRisk MarketSegment Supplier Performance Event/CountryRisk John Deere Spotlight – SCRLC 18 May 2010

  50. Public Financial Analysis

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