Supply Chain Transformation - What You Need to Succeed - Susan Lasecki-Corio, Head of Strategy Performance, Group Supply Chain at Anglo American

Supply Chain Transformation:What You Need to SucceedSusan Lasecki-CoiroHead of Strategy Performance, Group Supply Chain

Who We Are at a Glance• One of the world’s largest mining companies• Focused on the following commodities: • Platinum – Iron ore • Diamonds – Metallurgical coal • Copper – Thermal coal • Nickel• Employees: 107,000• Market cap. (LSE): ~$68.3bn• Performance 2011 • EBITDA $13.3bn • Operating profit $11.1bn • Underlying earnings $6.1bn

Topics for TodayI Supply Chain transformationII What you need to succeedIII Where to nextIV Local supplier: La Fancy Kay

I. Supply Chain Transformation Anglo American Metals & Mining Industry Masters in Procurement Mining Peer Best in Class 100% 94% 93% 90% 83% 84% 87% 89% 86% 83% 81% 75% 69% 64% 64% 64% 59% 56% 53% Score 50% 53% 54% 46% 48% 43% 38% 25% 0% Procurement Sourcing & Category Requisition Supplier Relationship Workforce & Technology Strategy Management to Pay Management OrganisationSource: Accenture analysis (2008)

I. Supply Chain Transformation• Vision: becoming the industry leader and global benchmark for supply chain value creation• Target: create $1 billion of additional value by 2011• Plan: • Deploy new operating model and deliver value through category management and strategic sourcing • Develop and apply consistent processes, governance and performance management framework • Improve capability through better teamwork and individual competencies

I. Supply Chain TransformationFrom ToBU Supply Chains 2008 2009 2010 2011 an integrated New operating model Supply Chain Platinum 1 Organisation change Diamonds Copper $1bn of value Nickel Strategic category management by end 2011 Iron Ore & Wave 1 Manganese 2 Wave 2 Become Metallurgical Wave 3 industry Coal leader and Wave 4 Thermal Coal global Other Mining Processes and systems benchmark for and Industrial 3 supply chain Define Enablers Implement Enablers value creation 4 Capability development and Change management

II. What You Need to Succeed New Operating Model 2008: Decentralised Procurement 2011: Centre-Led Team Group Group Group Group SC SC Strategic Category Management BU Supply Chain Platinum Platinum Projects & Services Projects & Services Met. Coal Met. Coal Thermal Coal Thermal Coal Mining Production Mining Production Platinum Platinum Coal Coal Ferrous & Ferrous & Base Base Nickel Nickel Industries Industries Metals Metals Copper Copper Processing & transportation Kumba II O Proc. Proc. Proc. Proc. Kumba O Support services IIO Brazil O Brazil Support services & equipment O M & II OM& Governance Strategic Category Boards Financial Policy Benefits Measurement Tool AA PLC ExCo Business General Management sub-Committee 1 Opportunity Idea Initiative 2 Approved Project 3 as Usual 4 Strategic Log initiative in Achieve approval f or plan Update and approve implementation Track delivered Category Strategic SCB 2 Strategic SCB 3 Strategic SCB 4 BM Tool benef its Commodity Board (SCB) 1 Commodity Commodity Board Board Board Spend Area 1 Projects & Spend Area 2 Mining Processing & 2 Spend Area Support Services Production Transport Services & Equip Cross-Functional Group Category Teams Crushing - Temporary - BU Services Fuels & Lubes Mining Supply BU Supply BU Supply Personnel Chain Council Chain Council EPCM Tyres Chain Council & Grinding IM Base Structural Steel Coal HME KIO Conveyors Electricity

II. What You Need to Succeed Strategic Category Management Category Planning Analysis Recommendations HIGH LEVEL SPEND MARKET INTERNAL INTERNAL & STRATEGIC OPTION HIGH LEVEL SUPPLY & DEMAND PROFILING & COST MODELING POSITION FUTURE TECHNICAL ASSESSMENT AND CATEGORY IMPLEMENTATION MARKET DYNAMICS SEGMENTATION ASSESSMENT REQUIREMENTS ASSESSMENT STRATEGY PLAN Strategic Sourcing Data Collection & Analysis Opportunity Development & Negotiation Implementation Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7 Identify Develop Category Develop Identify Selection Conduct Develop & Opportunities Value Creation Factors & Screen RFP / Negotiate Implementation Profile Strategy Suppliers Auction Agreements Sources of Value TCO Arbitrage Low Cost Country Sourcing Mine level Activity level (eg, load & haul) Equipment level (eg, truck) New equipment Hardware ($/hr) Total life-cycle Components cost ($/hr) + ($/hr) Energy Parts Total operating Fuels, electricity ($/hr) + cost ($/hr) ($/hr) Tyres Fixed costs ($/hr) Labour and overheads ($/hr) Unit cost ($/Ton) ÷ Engineering Installed Throughput Utilization = x availability x capacity (Tons/hr) (%) (%) (Tons/hr)

II. What You Need to Succeed Process and Systems Collaborative procurement Spend Analysis Master Data Management1 Sourcing & Contracts Strategic Sourcing Contracts Management ERP’s (SAP + Ellipse)2 Spend Analysis Spot Order Goods Service Invoice Remittance Order RFQ Status Receipt Confirm Response Advice3 Master Data Mgmt. Source4 Requisition to Pay Centre5 E-catalogues Ariba Network + Catalog6 Spot Sourcing Order Advance Order Service Suppliers Quote Status Ship Invoice Suppliers Response Entry Response Notice

II. What You Need to Succeed Capability Development Capability Accelerator Action Learning Cycle L=P+Q • Learning • Programmatic Knowledge • Insightful Questioning Change Management Communications & Feedback Engagement Loops Facilitation

III. Where to Next Supplier Relationship Management Integration of Supplier Collaboration with BU Strategy & Operations Customer Supplier LEVEL 4 Current Maturity Collaboration,Level of engagement behaviors, and (Beyond Supply Chain) LEVEL 3 capabilities are embedded in Value delivered Enterprise-wide processes that LEVEL 2 SRM / involve /affect collaboration with key suppliers One or more links to business Programs at strategy SRM Programs LEVEL 1 BU level integrated with key supplier Ad-hoc activity Ad-hoc Systematic, relationship - reciprocal no formal targeting / Supplier Account SRM measurement specific targeting & measurement Management Programs of opportunities programs to create value of value SRM Program Maturity Copyright © 2011 by Vantage Partners, LLC. All rights reserved.

III. Where to Next Local ProcurementLocal Procurement policy COORDINATEhas driven integration WITH LOCAL PROCUREMENT INITIATIVESbetween SupplyChain, business units and Key enablers: Policy, Ring-fencing Enterprisefunctions Development Contract Terms, KPIs, Relevant Categories Definitions, Reporting of SpendInitiatives are improving: Social Investment Local Supplier Country Strategies Programmes Development for Local • Community relations Micro-credit Programmes Procurement Initiatives • Project approval times Integrating Local and Stakeholder Supplier Parks China sourcing • Competitive advantage engagement

III. Where to Next Case Study

Supply Chain Transformation - What You Need to Succeed - Susan Lasecki-Corio, Head of Strategy Performance, Group Supply Chain at Anglo American

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Supply Chain Transformation - What You Need to Succeed - Susan Lasecki-Corio, Head of Strategy Performance, Group Supply Chain at Anglo American Presentation Transcript