Building a Fast and Flexible Consumer-Driven Supply Chain

Wilfred Eijpen – Director, Supply Chain

Johanne Tsui – Manager, Supply Planning

Company Overview

Strategic Roadmap

Consumer Driven Supply Chain – Benefits

Sales & Operations Planning (S&OP)

Production & Sales Inventory (PSI)

Sales & Demand Management (SDM)

Next Steps

Agenda

Division of Stanley Black & Decker formed in 1989

– Acquired Kwikset 1989

– Acquired Price Pfister 1989

– Acquired Weiser Lock 2003

– Acquired Baldwin 2003

– Merged with Stanley National Hardware 2010

HQ in Lake Forest, CA in 2001

Sales over $1B annually

Company Overview

Grow through Innovation

Denison, TX

Reading, PA

Charlotte, NC

Mira Loma, CA

Mexicali, MX

Nogales, MX

Lake Forest, CA

Burnaby, CN

Brockville, CN

Xiamen, China

Corporate headquarters

Manufacturing & Assembly

Distribution

Global Sales Force

Our Operations

Our Operations

Key Challenges:

• Lengthening supply chain

• Multi-site dependencies

• Cross Functional Communication

• Promotional Activities

• Commercial Alignment

Fast & Flexible Consumer Driven

Supply Chain

Our Objective

Our Strategic Roadmap

People

Process

Systems

2007

Revised 9/25/08

2008 2009 2010

Customer Service Integration

Channel Focused Teams

Establish CPFR presence

Supply Planning Collaboration Teams

CPFR with Retail Customers

SDM for Non-Retail

S&OP Revamp

Demand Planning for all accounts

Master Planning for Major Manufacturing Plants

Fulfillment for Supply Planning

S&OP Reporting

Production Sales & Inventory Planning

Customer Order Prioritization

Constrain demand at multiple levels in the Supply Chain

Full visibility throughout the Supply Chain (Order to Production)

Connectivity of Supply Chain Systems

Manage by Exception

Improved Productivity

Reduction in workload

Our Soft Benefits

Over x% Service Improvement to our Customers

11.42% reduction in components and finished goods inventory

19 ppt forecast accuracy for Canada & Weiser

10.4% improvement in forecast accuracy for US market

Over 60% reduction in planning cycle times

Over 80% reduction in financial estimate planning times

Our Hard Benefits

Fast & Flexible Consumer Driven

Supply Chain

Strategic

Tactical

Operational

Sales & Operations

Planning

Production Sales &

Inventory

Supply Demand

Management

Our Processes

UNAWARE

• Management review of

the past – retrospective

• Siloed meetings – data

handoffs – limited/no

integrated planning

• Mid-level management

involvement

• Balance-of-year view

AWARE

• Follows basic structure

of the S&OP process

• Medium forecast view –

12-18 months

• Supply and demand

balancing with

alternative generation

• Senior management

involvement

• Storming and “norm”ing

FUNCTIONAL

• Valuation of gaps and

alternatives – scenario

presentation

• Emergence of balanced

scorecard

• Issue-tracking and

elevation expectation

• Decisions and directions

are built into the cycle

• 18-24 month planning

horizon

• Team development

• Metrics evolve with goals

SKILLED

• Plans drive budgets

• Strong integration

of strategy with tactical

planning – guidepost

setting

• Broad project

management and

strategic tracking

• Optimization

is the message

• Exceptions are refined

• Reporting shows

granular progress to

corporate goals

• Executive ownership

TIME

Process Maturity Template

PR

OC

ESS

MAT

UR

ITY

S&OP Process Maturity Scale

– Portfolio Review

– Demand Review

– Supply Review

– Pre-S&OP Review

– Executive Review

– Continual Measurement

Our S&OP Model

Definition

• Balance Forecast versus Inventory

• Inventory versus Production

• Unconstrained versus Constrained Demand

Primary Goals

1. 98% + fill rates

2. Achieve Inventory Targets

3. Minimize Plant Variances

Gap Closure

• Service Risk Mitigation

• Customer Collaboration

Our PSI Process (Supply Review)

PSI

Customer Orders

Forecast

Safety Stock

NPI/Promos

Firm Production

Actual Production

Inventory On-Hand Leveled

Production

Resource Reqmts

Materials Reqmts

Background Reqmts

Inventory Estimate

PSI Inputs & Outputs

U

N

C

O

N

S

T

R

A

I

N

E

D

C

O

N

S

T

R

A

I

N

E

D

Consumer Driven Supply Chain

Handshake Meetings

Constrained Demand Review

Unconstrained Demand Review

PSI Process Overview

PSI Challenges & Improvements

• Special Event Management

• Weekly Tracking – Demand & PSI Trends

• Summarize by PSI CategoriesCommunication

• Service

• Working Capital

• Production SmoothingTeam Alignment

• Standardize Process

• Running Rules

• Frequent Updates

Exception Management

Supply Demand Management (SDM)

7 day LT

commitment

High Sku

Count

Long LT on

Asia

Products

Customer

Complaints

on Long LT

Long LT on

Asia

Components

No Stocking

Strategy

The Challenge: Provide high service, in short lead times, to a fragmented,

high mix market

SDM

Weekly Adjustments

7 Day Lead Time

254 SKUs

CoreSystem Generated

7 Day Lead Time

1,738 SKUs

Tier 1 No Forecast

Strategy

28 Day Lead Time

676 SKUs

Tier 2

How? Collaborated w/ Sales & Marketing – Segment Product Offering Developed Exception Management Tools – Weekly Forecast & SS Tackled Past Due Backlog – Order by Order, SKU by SKU

Frequent review & measure Smaller changes

Use visual tools

Highlight big deviations fast

Highlight trends over time

Review category assignment over time

New SKUs start in Tier 1 and earn Core status over time

SDM Principles

Track & Measure

Core Availability Report SKU Health Report

Next Steps

S&OP Revamp for Entire Business

Dedicated Product Life Cycle Management Resource

Weekly Forecasting

Weekly PSI report

Inventory Balancing (Raw/WIP versus FG)

Billing Debrief Meeting

Standardize Reporting

Thank you!

Questions?