Analogic Link08 Presentation

LINK 08 November 18 – 20, 2008

Tracy GalvinDirector – Corporate Supply Chain Mgt

Analogic Corporation

Arnie RadwichConsultant

Zanett, Incorporated

Mike ConnaughtonManager – New Products Introduction

Analogic Corporation

Lean Replenishment Engine

Oracle Applications User GroupLINK 08 November 18 – 20, 2008

Hilton Resort on Mission BaySan Diego, CA


• Overview of Analogic

• Transforming Supply Chain

• Lean Replenishment Engine

• PID Replenishment

• Current Status

• Learning’s From the 7.5 to 9.0 Upgrade

• Questions

Topics

Peabody, MA, USAFounded 1967Revenues (2008) $413 millionEmployees – 1650

Engineering Staff – 460• Scientists, Physicists & Mathematicians• Design Engineering

Facilities – U.S., Canada, Denmark & the U.K.

Analogic Corp. (NASDAQ: ALOG)S&P SmallCap 600 IndexRussell 2000 Index

Analogic is a growth-oriented, high-technology imaging and signal processing company, providing products and services to Original Equipment Manufacturers (OEMs) and end users in high-growth medical diagnostics and security markets.

We are recognized worldwide for advancing the state of the art in

• Computed Tomography

• Magnetic Resonance Imaging

• Ultrasound

• Digital Mammography

• Patient Monitoring

• Automatic Explosives Detection

• Advanced Signal Processing

Analogic conceives, develops, and manufactures some of the world’s most advanced electronic systems and subsystems for applications in…

Health and Security

Core Competencies

• Signal Acquisition & Conditioning• High Speed Signal & Image Processing • High Performance Computing• Precision A/D Conversion• Detector & Transducer Technologies• X-Ray Beam Technology• Ultrasound Technology/Transducers• Complex Mechanisms• Precision Power Systems• Complex System and Application SW• Mechanical Engineering

Health Technology

Medical Imaging Subsystems for OEMs

World’s Leading OEM Supplier of:

• CT Data Management Systems (DMS)• Integrated DAS (Data Acquisition

System)/Detector Assemblies

• Magnetic Resonance Imaging (MRI) Power Systems• RF Amplifiers• Gradient Amplifiers

• Direct Digital Radiography Detectors

• Clinical Ultrasound Transducers

(OEMs) Original Equipment Manufacturers

Fluorescence Molecular Tomography (FMT)

• Small Animal Optical Imaging Instrument•Developed for Start Up company – area of expertise in fluorescentmarkers and chemistry

Molecular Imaging

Security Technology

Checked & Checkpoint Luggage Screening

• A leading developer and manufacturer of advanced security imaging systems for checked and checkpoint luggage. Received 5 TSA development contracts

• All systems provide automatic detection, 3-D imaging of bag contents and

network capability

• New systems under development provide:

Higher throughput

Higher detection rates

Lower false positive rate

Faster threat resolution

Full Service OEM Partner

Concept and Specification Phase• Product Requirements/Preliminary Specs• Development Plan• Schedule• Proposal

Design Phase• Risk Analysis• Detailed Specs• Design/Interface/Manufacturing/Procurement/Test

Prototype Phase• Alpha/Beta• EMC/Safety Testing/Certifications• Customer Clinical Trials• Manufacturing Documentation• Test Reports

Centralized Planning & Procurement

Low-cost sourcing

Centralized Planning & Procurement

Low-cost sourcing

Supply Chain Integration Supply Chain Integration

Top Line Revenue Contribution from Supply Chain Relationships

Top Line Revenue Contribution from Supply Chain Relationships

Physical

Transformation

Physical

Transformation

Process

Robustness

Process

Robustness

Competitive

Advantage

Competitive

Advantage

Valu

eV

alu

e

Decentralized to Centralized TransformationDecentralized to Centralized Transformation

Tracy Galvin, November 2006

Supply Chain TransformationCapability Evolution

ERP CommunityERP CommunityLegacyLegacy CollaborationCollaboration AdaptabilityAdaptability

•Cross Functional Integration

•Common Data for Inventory and Costing

•Standardized Business Processes

•Greater insight into business process and data issues

•Internal Automation

•“One size fits all” planning

•Cross Functional Integration

•Common Data for Inventory and Costing

•Standardized Business Processes

•Greater insight into business process and data issues

•Internal Automation

•“One size fits all” planning

•Functional Focus

•Disjointed processes

•Manual Data Correction Points

•Functional Focus

•Disjointed processes

•Manual Data Correction Points

•System Integration from Customer to Suppliers

•Responsibilities shared with Suppliers on replenishment and inventory levels

• Advanced Planning

Lifecycle

“What if” Modeling

Configurable

Material Type

•Real Time Inventory Allocation

•System Integration from Customer to Suppliers

•Responsibilities shared with Suppliers on replenishment and inventory levels

• Advanced Planning

Lifecycle

“What if” Modeling

Configurable

Material Type

•Real Time Inventory Allocation

•Process Integration from Customer to Supplier

•Constrain and Rule Based Planning and Execution

•Dramatic Working Capital reduction

•Sustainable new alliances, products, networks

•Process Integration from Customer to Supplier

•Constrain and Rule Based Planning and Execution

•Dramatic Working Capital reduction

•Sustainable new alliances, products, networks

Pre 2008Pre 2008 Post 2008Post 2008


Supply Chain Transformation

PostponementMaster Schedule

Payment on ConsumptionInvoice

Distributor PartnershipsComponent Suppliers

Design For execution, Life Cycle Management

New Product Launch

Advanced SC PlanningMaterials Requirements Planning

Customer LoyaltyProduct Quality

Global LogisticsOrder Execution

Build/Configure to OrderBuild to Stock

High Value - Modular Assembly Box Build

Post-2008 Analogic Supply Chain

Pre-2008Analogic Manufacturing


Supply Chain TransformationProcess Capability

• More accurate and flexible supply chain• Increased planning frequency• Component based planning – JIT/Kanban• Materials Flow Technology – Lean Manufacturing• Capacity based planning – Configure To Order• Simulation and Exception Based Planning – Cost

Structure• Install Base Service Parts Planning

Supply Chain transformation requires fundamental changes and upgrades to Analogic’s current planning process and tool to ensure realization of targeted benefits


Current 7.5Current 7.5 9.0/ASCP9.0/ASCP

WeeklyWeekly

ManualManual

ManualManual

InfiniteInfinite

ManualManual

Any frequencyAny frequency

IntegratedIntegrated

AvailableAvailable

Rules BasedRules Based

IntegratedIntegrated


Supply Chain TransformationPlanning Transformation

NoneNone OptionalOptional

• Extended Supply Chain due to outsourcing• Collaborative Planning – Process Partnership• Event Management – Outsourcing Control• Transport Load Builder

• Leverage Subsidiaries/Peabody supply chain consolidation to establish Global Planning process

• Single Planning Ownership• Inventory optimized globally

» Safety Stocks» Lead Times

• Sales Order based Global Inventory Availability and Allocation



Current 7.5Current 7.5 9.0/ASCP9.0/ASCPNoneNone AvailableAvailable

NoneNone AvailableAvailable

NoneNone Automatic RequestsAutomatic Requests

DisintegratedDisintegrated IntegratedIntegrated

NoneNone AvailableAvailable

RegionalRegional GlobalGlobal


Supply Chain TransformationPlanning Transformation (continued)

• Oracle ASCP is the Oracle solution to Advanced Planning Systems related business requirements

• Currently Analogic is using Peoplesoft (Oracle) 7.5 with RedPepper for Demand and Supply Planning. Oracle effectively stopped supporting the RedPepper MRP in 2005.

• ASCP provides advanced functionality required to support Supply Chain Transformation strategy and Demand & Supply optimization

• Peoplesoft 9.0 is the best planning/procurement tool with robust integration to current and future Oracle applications.

• Analogic already owns Oracle licenses


Supply Chain TransformationWhy Oracle Advanced Supply Chain Planner (ASCP) and Peoplesoft upgrade?

Transforming Supply Chain• Transforming Supply Chain

– Moving from a decentralized model to a more centralized model

– Fewer local suppliers (strategic, IP protection)– Increased outsourcing (lower materials cost)– Need to increase automation of repetitive

business processes– Need to standardize business processes

across all lines of business.


Hybrid SCM Solution• Needed a seamless fusion of the best of MRP and JIT to

support:

– Replenishment and traditional supply of discrete production manufacturing

– JIT schemas for DFT configured assembly lines – Rolling component level forecast for replenishment

vendors– A high mix of products and product types across the

enterprise– High volume of engineering change orders– New products, engineering projects


Hybrid SCM Solution

• Why not Flow Production?– Transforming Supply Chain (significant amount of

inventory value moving away from local suppliers)

– Bin-sizing calculation required– Item replenishment attribute data needed to

be populated– Needed supply planning for forward look at

dynamic component level demand


Lean Replenishment Engine (LRE)

• LRE uses planned demand at the component level to dynamically re-calculate replenishment requirements for buy items.

• The requirements are netted against real time on hand and on order quantities, a desired order frequency and result in a Trigger Quantity.

• The Trigger Quantity is rounded up to an item’s order multiple, staged as a requisition request, processed into purchase orders and dispatched using PO Auto-sourcing.

• The process can run daily


Lean ReplenishmentMonte Carlo Simulation DEMO


Lean Replenishment Algorithms• Trigger Quantity (TQ) = If the Quantity available + PO Remaining

Balance + Open Requisition Qty- ROH > 0, then 0 Else ROH + TPQ – Quantity available- PO Remaining Balance-Open Requisition Qty. – Where Quantity Available, PO Remaining balance and Open Requisition

Quantity are calculated in real time. Then the Trigger Quantity is rounded up to the order multiple and inserted in the Requisition Staging Table.

• Required on Hand (ROH) = Sum of Demands<= Today + LEAD_TIME (in calendar days) * RA

• ROH equals the sum of past due and future demands for an item, up to the item’s lead time in days, times its risk adjustment factor. For example if an item has a lead time of thirty days, its ROH would equal the sum of all past due demands as well as any demands that fall between the current date plus thirty days, times the risk adjustment factor.


Lean Replenishment Algorithms

• Target Pull Quantity (TPQ) = Sum of Requirement within a date range + 364/OF (days)

– TPQ is the sum of an item’s demands from a starting date equal to today’s date + lead time days + one day. From that starting date sum the items demands for a number of days forward equal to lead time days + 364/OF, where OF equals order frequency expressed in number of days.

– For example, if an item had a lead time of ten days and was an “A” item with an order frequency of fifty two and today was the first of the month. Then the starting date would be the 12th and we would sum the from the 12th through the 28th (10 days + 7 days (364/52))


Lean Replenishment Engine Order Policy Page


Lean Replenishment


PID Replenishment

• Is a variation of Lean Replenishment– Nets requirements of PID component lists

• Firmed and beyond• Current scheduled quantity minus pending Issues

– Captures spot shortages and recent ECO activity– Nets PID requirements against available inventory and on order

quantities. – Result is rounded up to each items order multiple and is staged – Staged requisition is converted to a PO via PO Auto Sourcing– PO is dispatched to suppliers via EDX


PID Replenishment


Current Status

• Basic mechanics work fine• Some fine tuning of the application was required• Piloting 2K items across two distributors• Initially exercising the run controls manually• Cleaning up master data relative to PO automation and a

new planning model• Near term goal is to include a significant % of spend in

this process• Able to run either process as needed within a business

unit.


Learning’s From the 7.5 to 9.0 Upgrade

• Upgrade– Two step migration path– Time

• New Fields • Frozen Fields• Hybrid Implementation: pure upgrade VS new

functionality• Old customizations and reports


Questions?


Zanett Commercial Solutions

• $50 M in Revenue – over 200 delivery professionals• Over 300 successful implementations and upgrades

– Wide range of complexities served – Emerging Businesses to Fortune 500

– Wide range of industry-specific expertise including:• Life Sciences (Pharmaceuticals and Medical Device)• Health Care• Manufacturing (CPG / Industrial / High Technology / Job Shop)• Wholesale Distribution• Transportation / Logistics• Retail• Business Services

• Part of Zanett, Inc., based in New York, NY– NASDAQ: ZANE

Zanett Service Offerings• Strategy & Business Transformation – Zanett

propels organizations to world-class operating levels with proven tools and techniques that take boardroom visions to full realization – enabling you to maximize effectiveness, efficiency, and ROI.

• Enterprise Applications – Zanett professionals are experts in the entire Oracle Applications Family – E-Business Suite, JD Edwards and PeopleSoft.

• Business Intelligence – Zanett is a leading provider of Business Intelligence solutions from Oracle and Cognos. You will have visibility into your business.

• Technology – Regardless of you technology needs – custom development, portals, BPEL, SOA, ID Management, Access Management – Zanett can help you manage your IT infrastructure better and at a lower cost.

• Managed Services – Whether hosting your data in our state-of-the-art data center or maintaining it remotely, Zanett provides a cost-effective, worry free way to support, maintain, and monitor your environment.

Our Oracle Relationship• Certified Advantage Applications Partner

– Systems Integrator & Reseller for Oracle E-Business Suite, JD Edwards EnterpriseOne and World, and PeopleSoft Enterprise

– Oracle Accelerate Industry Solution Provider for A&D, Manufacturing, Professional Services, Hi-Tech, and Life Sciences

• Certified Advantage Technology Partner– Systems Integrator & Reseller for Business Intelligence,

Fusion Middleware, Database, Oracle Enterprise Manager (OEM), Application Servers

• Oracle Managed Services Provider– Fully hosted or Virtual Administration of Oracle ERP

applications or technology-based environments

• Oracle University Partner– Reseller of Oracle Training– Training Facilities

ZCS PeopleSoft Supply Chain Optimization

• PeopleSoft Practice led by experts from the PeopleSoft Development group

• Demand, Inventory Policy and Supply Planning projects to optimize supply chains

• Custom built, reusable finite capacity planning tools for the shop floor

• Custom built, reusable analytic tools for:– Managing forecast performance – Predictive inventory planning– Managing schedule adherence– Managing Plan-Over-Plan schedule stability

• Integration to Distribution, Procurement and Manufacturing Execution

• Helping customers achieve significant inventory reduction, improved customer service, plan stabilization

Documents

Analogic Link08 Presentation