Logistic Service Providers. 7 yrs 1 yr 7 yrs 5 yrs

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2 Who am I? Gerben Potters Director Supply Chain Age: 43 Married, 2 kids Logistic Service Providers Projects & Recruitment Philips Healthcare Lely 7 yrs 1 yr 7 yrs 5 yrs Disclaimer: I have tried to make reference to all data that you will see, some of the pictures and data are taken from the internet, books or other media. If you see any copyright issues please contact

3 Who are we?

4 Sales 2016 Number of Investments in Founded employees R&D from our 1948 product turnover 502 mln fte 6% Number of living Number of Number of Number of patents R&D units production units markets > 60

5 A family run company with farming in its DNA

6 Our history

7

8 We are the inventors of the robotic milking system, acknowledged by dairy farmers to be the invention of the 20 th century

9 Our portfolio at a glance

10 Movie: Lely vision on farm management

11

12 Situation during 2012 Had a total service performance down in 2011! Mixed responsibilities Non matching supply chains and products MRP one size fits all Conflicting incentives Lacking knowledge on planning Focus to increase inventory and inventory locations

13 AND Supply Chain Aftermarket: Not discussed on board level isn t that warehousing and transport? Can be done by everyone (see where the put the nonperformers!) but every mistake is a commercial excuse! Is only a cost center; and the costs are too high!!

14 Starting point: make a plan! SPR Vision 2013 Network design& supply chain integration 2013 Q3-4 warehouse Transition 2014 Focus: Warranty Ops exc 2015 WHS consolidation OTIF Stock mngnt Global optimized End to End Network

15 Alignment and sponsorship Present your plan to board, stakeholders, employees customers?? Get budget Start Frequent Reporting And Repeat the story

16 Get back in control Reporting Stock ownership Transport management system Reach out, participate in product development discussions, purchasing, product management, commercial

17 Cash is locked up in Inventory

18 Step 1 organization and education

19 Step 2 take control Source: Marshall Fisher, What is the right supply chain for your product, Harvard Business Review, March-April 1997

20 Step 3 - Segmentation

21 9-box setup of Inventory

22 Spare Parts and Forecasting What is the nature of spare parts? Difficult to predict Intermittent demand Not having parts costs probably more than the costs of the parts Shortening life cycle (Clock Speed) parts, service life cycle remains the same

23 Step 4 implementation segmentation Developed hybrid solution between Infor ERP and Excel review and calculation Monthly process of update safety stock, Economic Order Quantity and Forecast

24 Step 4 implementation segmentation Give planners visual tools to review past and future Needs knowledge of ERP settings

25 Results Inventory reduction of 6.7 mio Euro ~28% Increased inventory availability 91% 96% Increased average inventory turn 2,5 3,8 As a result now financial review is standardized

26 Changing the Lely organization INNOVATION OPERATIONS SALES Finance INNOVATION CUSTOMER SOLUTIONS CUSTOMER CARE SALES Finance & services

27 Future Challenges Expand the planning throughout the network of Lely Spare Parts Segmentation on order types and transport services Further implement new forecast techniques and criticality Design a planning cube Spare Parts Purchasing different ball-game Automate KPI monthly presentation Balance knowledge of employee continue training Promote and educate other departments

28 Objectives Improve On Time In Full On time delivery of all ordered parts over the whole supply chain Target setting for critical 93,5% and for non-critical 88,5% Create a Responsive supply chain - Agility React quickly on changing market conditions Create agreements so SPR can meet the requirements to do so Improve Inventory Turn Ratio Managed by 9-box quadrant setting Lower inventory value with 46% in Main Hub (Duiven) Improve Customer Experience Simplified warranty process and fast delivery Measured by touch time and cycle time (new measurement) Improved Employee Satisfaction Are the employees satisfied by working for SPR Sickness rate, employee tenure, performance management, yearly questionnaire Steer on Operating Ratio Measure the supply chain costs against the Integral gross Margin G&A divided by IGM, target is 40%

29 KPI matrix

30 Lessons learned (So Far) Even with focus.lacking of (internal) marketing Challenge to get the correct people Takes more time than expected follow your planning but be patient as well

31 all the way from grass...to the glass!!

32

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