BIOTECH SUPPLYBIOTECH SUPPLYBIOTECH SUPPLYBIOTECH SUPPLYOctober 8-9, 2012

Crowne Plaza, Foster City, CA

Sales & Operations Planning

Kevin Pegels – Oct. 9, 2012

Introduction – Kevin Pegels (Kevin.Pegels@bayer.com)

• Presentation Title • Date

•Work History:• 3/2011 – Current: VP SCM Bayer Healthcare-Biotech• 3/2009 -3/2011: Sr. Director SCM Bayer Healthcare – Medical Devices• 6/2004 – 6/2009: Sr. Director SCM Clorox Company• 6/2002 – 6/2004 – Director SCM Levi Strauss & Co.• 6/1997 – 6/2002 – Director SCM in CPG Industry Deloitte Consulting• 6/1988 – 6/1995 – Manager Clorox Company•Education:• 1997: MBA Harvard University• 1988: B.S. Chemical Engineering Cornell University•Certifications/Publications• CPIM Certified• Published in Harvard Business Review & Supply Chain Exec. Board

Agenda

1. S&OP – quick definition

2. S&OP at Bayer Healthcare-Biotech

3. S&OP – how to secure Sr. Management support

4. Q&A

04/19/23 3

Sales & Operations Planning ProcessDemand Review Supply Review Category S&OP GM S&OP

S&

OP

Ch

arac

teri

stic

sS

&O

P F

ou

r S

tep

Pro

cess

Demand ReviewAnalysis

· POS Trends· POS Forecast· Shipments· Orders· Inventory· Marketing Plans· Sales Plans· Forecast Accuracy

Supply Review

RCCP· Capacity· Materials· Transportation

Item Review· Close-in execution· Plant Schedule· Transportation· Shipping Dates

Business Update

· Demand Summary- Major Drivers of Change- Key Events

· Consumption Trends· Key Customer Updates· KPI Review· Supply Summary· Risks & Opportunities

Demand ReviewAlignment

KCDP Call· Key Customer

Plans & Activities· POS Trends· Events

Consensus Mtg· Business Update· New Products· Category Trends· Key Customers

Events

AlignmentAlignment AlignmentAlignment

Key Characteristics of S&OP Process· Cross-functional and integrated business process· Planning… proactive and forward looking· Data driven… decision making on risks/contingencies· Single common plan

Business Update

· Demand Summary- Major Drivers of Change- Key Events

· Consumption Trends· Key Customer Updates· KPI Review· Supply Summary· Risks & Opportunities· P & L Update

Sales & Operation Planning - General

S&OP Process Key Principles

• Key objective of process is to deliver optimal service to end customers/countries and meet commitments to the Business

• “One” demand forecast drives financial and supply chain planning. Budget forecasts and S&OP forecasts should be “aligned” at each quarterly RF update..

• Identify potential risks/challenges early and develop contingency plans as required

• Need to make timely decisions based on solid analytics and be committed to decisions.

• Single source of the truth, data visibility and decision rationale clear across the organization

• Clear to organization that S&OP process improves performance and adds value (KPIs)

Single Forecast

Customer First

Be Proactive

Decision Making

Transparency

Proven Process

Biotech S&OP Process by MajorProduct Line

STEP 3

Supply Planning

(Production Scheduling)

Tuesday-Thursday

STEP 4

Pre-Executive Meeting

Thursday before Step-5 meeting

KPI Review, Capacity review, Launch Review, Identify escalation topics

Last Thursday of every mth.

STEP 5

Executive Meeting

KPI Review, Business Review, Capacity Review, Regulatory Review, Resolve escalation topics

Weekly Monthly

STEP 1 Data Gathering

(APO)

Saturday-Sunday

Affiliate

STEP 2

Demand Planning

(Supply Network Planning)

Monday-Tuesday

Communication / Verification

Highlights:1.S&OP process is co-owned by Supply Chain and Commercial Organization2.S&OP process integrates weekly and monthly planning3.Forward looking, normally 0-18 months4.Focused on delivering KPIs, aligning supply/demand, and resolving business issues5.Implemented in less than 6 months

S&OP – how to secure Sr. Management Support

1. Develop and “Sell” Business Case: improved customer service, reduced inventory, reduced scrap, and aligned supply and demand to support business growth

2. Leverage improved forecast accuracy as critical metric and link to strong S&OP process

3. Cross-functional nature of process and shared process ownership among commercial and supply chain requires Sr. Management leadership

4. Leverage industry benchmarks and best practice case studies5. Secure top Sr. leadership who can drive ownership top down

through the organization

04/19/23 7

Typical S&OP Benefits

04/19/23 8

Global S&OP process has driven substantial benefits over the past few years

12

9.5

6

0

2

4

6

8

10

12

Jun 2009 Dec 2009 Jun 2010

Inv. <=12 Mths.

Inventory DOH are decreasing Excess/low shelf life inventory is decreasing

In addition, customer service for the US and Europe has been above 98% target level in 16 out of past 18 months