Improving Your Supply Ability Throughthe Eyes of Your Customers

Theo Zwygers

Vice President, EAI Supply Chain

Lyondellbasell Industries B.V.

LogiChem 2010

Dusseldorf, Germany

Improving Your Supply Ability Through the Eyes of Your Customers 2| www.lyondellbasell.com |

Industry-wide Reduction in Stocks creating Pressure on Supply Chain Performance

Polymers Industry Stock Development Index View

(Jan. 2008 = 100%)

0%

20%

40%

60%

80%

100%

120%

01 0

802

08

03 0

804

08

05 0

806

08

07 0

808

08

09 0

810

08

11 0

812

08

01 0

902

09

03 0

904

09

05 0

906

09

07 0

908

09

09 0

910

09

11 0

912

09

Improving Your Supply Ability Through the Eyes of Your Customers 3| www.lyondellbasell.com |

The New Environment

• Approximately 25-30% lower inventories held by polymer producers

– Lower working capital targets, further rationalized product portfolio

– Faster cycling on the plant, more demanding operational management

– Balancing long supply chain imports with local production efficiencies

– A changed business model

• Converters and end-users hold reduced inventories

– End-use markets in disarray, future demands reduced and unclear

– Financial strain, planning and product demands passed down the chain

– Economic recovery very likely slow, but in many cases erratic

It is becoming harder to differentiate.

Improving Your Supply Ability Through the Eyes of Your Customers 4| www.lyondellbasell.com |

Differentiation From Competitors in Commodity Markets

• Our concerns:

– Customer loyalty during downturn

– Consolidation of price position

• Broad goals

– Improved image of LyondellBasell with customers

– Volume loyalty and/or better price

– Minimizing loss of sales opportunities

– Cost leadership - including WC

– Market position

Success will be determined by how well we operate our supply chain.

Improving Your Supply Ability Through the Eyes of Your Customers 5| www.lyondellbasell.com |

Strong Deviation Between our Self-assessment and Voice of the Customer

• Own monitoring of delivery performance

– Own metrics confirm excellent delivery performance

– Close to 100% reliability based on ECTA-coding

• Delivery of performance through the eyes of our customers

– Deteriorating performance since 2003 based on PTAI survey

– Average or sub-standard performance in delivery reliability

Improving Your Supply Ability Through the Eyes of Your Customers 6| www.lyondellbasell.com |

Driving Supply Chain Performance Through Customer-centric Approach to Logistics

� Quantify customer supply reliability requirements

� Identify internal causes and root causes of the failure to deliver to key customers in quantities and time

�Reduce gap between Requested Delivery Date (RDD) and initially Confirmed Delivery Date (CDD)

�Identify improvements in planning, stock and production management

�Reduce delays between initial Confirmed Delivery Date and Actual Delivery Date (ADD)

�Root-cause analysis

� Establish a control dashboard and drive improvements

Structured improvements are possible with measurement.

Improving Your Supply Ability Through the Eyes of Your Customers 7| www.lyondellbasell.com |

Analysis of All Parts of Supply Chain Process

Ensure product is available

Ensure on-time delivery

Forecast SalesPlan

Order Intake

Order Confir-mation

Organize

Transport & Shipping

Delivery

to Customer

MRP-System

Customerexcellence

Customerexcellence

Processefficiency

WorkingCapital &

Sales

Customerexcellence

Processefficiency

WorkingCapital &

Sales

Improving Your Supply Ability Through the Eyes of Your Customers 8| www.lyondellbasell.com |

Teams Nominated Along Entire Supply Chain

ForecastMRP-

SystemSalesPlan

Order Intake

OrderConfir-mation

OrganizeTransport

& Shipping

Delivery

to Customer

Information to Customer

Customer Priority

Unavailability and Rush Orders Root Causes

Distribution platforms

Measurement and KPI

Improve Forecast Review of MRP-tool

Process Clarification

Transport Capacity

Groups were nominated

to address specific areas

Lead Time and Transit Time

Improving Your Supply Ability Through the Eyes of Your Customers 9| www.lyondellbasell.com |

Example: Mismatch Between Customer View and Own Perceptions

• Different internal KPIs and some inconsistencies discovered:

– Ability to confirm Requested Date to the customer

– Ability to deliver on time

• Based on Haulier Feedback and ECTA Codes

• This monitors haulier performance, not our performance vs. the customer

• Contrary to expectations, the link between both KPIs was actually not as strong as required. Some inconsistencies include:

– A significant number of delivery dates are changed upon customerrequest during the process, which is not reflected in the system

– Orders which were not confirmed upon customer requested date were organized by shipping office for the requested delivery date

Improving Your Supply Ability Through the Eyes of Your Customers 10| www.lyondellbasell.com |

Define Relevant Data for KPI Measurements

Requested

DDConfirmed

DD

- Availability

- Allocation

- Credit

- SAP Lead and Transit Times

Transport Planning

During planning process:

- Customer Request

- Haulier Request

- LyondellBasell Issue

Initial Planning:

- Meet Customer RDD

Actual

Delivery- Haulier Issues

- Force Majeure

- Customer Requests/Issues

- LyondellBasell Requests/Issues

Delivery Reliability vs. Confirmed Delivery Date

86%

88%

90%

92%

94%

96%

98%

100%

01

06

02

06

03

06

04

06

05

06

06

06

07

06

08

06

09

06

10

06

11

06

12

06

01

07

02

07

03

07

04

07

05

07

06

07

07

07

08

07

09

07

10

07

11

07

12

07

01

08

02

08

03

08

04

08

05

08

Not covered

Close to100%

- Haulier Issue

- Force Majeure

- Customer

- internal

Delivery Performance vs Customer Requested Delivery Date

PO

60%

65%

70%

75%

80%

85%

90%

95%

100%

01 07 02 07 03 07 04 07 05 07 06 07 07 07 08 07 09 07 10 07 11 07 12 07 01 08 02 08 03 08 04 08 05 08

Ability to confirm Requested Date

Haulier Performance

Gap to100%

Improving Your Supply Ability Through the Eyes of Your Customers 11| www.lyondellbasell.com |

2008/1 2008/2 2008/3 2008/4 2008/5 2008/6 2008/7 2008/8 2008/9 2008/10 2008/11 2008/12 2008

Haulier & FM

LBI

Customer

According to Transport Order

Delivered as promised

Second Chance

Perfect Delivery

New Measure: Supply Chain Performance From the Perspective of Our Customers

Perfect Delivery

Ability to confirm and deliver to the Customer on Requested Delivery Date (RDD)

2nd Chance Delivery

Non-ability to confirm the Requested Delivery Date, but delivered on RDD.

Delivered as promisedNon-ability to confirm the RDD, but delivered on Confirmed Delivery Date.

On time according to Transport Order

Customer Reason

LyondellBasell Reason

Haulier and Force Majeure

Improving Your Supply Ability Through the Eyes of Your Customers 12| www.lyondellbasell.com |

Customer Excellence Improvements

• Customer view and LyondellBasell KPIsaligned

• Improved communication of delivery date to customers

• More orders confirmed upfront on requested date

• Increased level of product availability

• Updated lead time table

Improving Your Supply Ability Through the Eyes of Your Customers 13| www.lyondellbasell.com |

Process Efficiency Improvements

• Ensured more orders confirmed on customer requested date at order entry

– No rework of the confirmed date by shipping office

• Increased opportunity to select the optimal (lowest cost) transportation (intermodal or best haulier)

• Improved transparency of planned delivery date for CSR

(less communication issues)

• Reduced rush orders

Improving Your Supply Ability Through the Eyes of Your Customers 14| www.lyondellbasell.com |

Working Capital and New Sales Opportunities Improvements

• Reduced lead time means less product frozen - reduction of

Working Capital (Initial impact: several KT)

• Reduced lead time means

increased potential to grasp a sales opportunity for customers short in material

Improving Your Supply Ability Through the Eyes of Your Customers 15| www.lyondellbasell.com |

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

70,0%

80,0%

90,0%

100,0%

2008 Jan 09 Feb 09 Mrz 09 Apr 09 Mai 09 Jun 09 Jul 09 Aug 09 Sep 09 Okt 09 Nov 09 Dez 09 2009

Delivery

Reliability

0

5

10

15

20

25

30

35

40

45

Days o

n H

and (D

oH

)

Stocks/DOH Perfect delivery Delivery as planned

Sustaining Customer Service Levels Despite Reduced Inventory and Production Capacity

- 30%

+ 3,5%-points

+ 2,0%-points

Thank you for your attention

DisclaimerAll information (“Information”) contained herein is provided without compensation and is intended to be general in

nature. You should not rely on it in making any decision. LyondellBasell accepts no responsibility for results obtained by

the application of this Information, and disclaims liability for all damages, including without limitation, direct, indirect, incidental, consequential, special, exemplary or punitive damages, alleged to have been caused by or in connection with

the use of this Information. LyondellBasell disclaims all warranties, including, but not limited to, the implied warranties of merchantability and fitness for a particular purpose, that might arise in connection with this information.