Bill Stankiewicz Copy Scope 2010 Tyco Sourcing And Transportation


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Scope conference 2010 in Florida, Bill Stankiewicz attended.

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Bill Stankiewicz Copy Scope 2010 Tyco Sourcing And Transportation

  1. 1. Tyco International Chris Corrado Scope Supply Chain Conference 12 April 2010
  2. 2. About Tyco International  A diverse portfolio of market-leading businesses in electronic security, fire, safety services and products, valves and controls, and other industrial products  2009 annual revenues of more than $17 billion  Present in more than 60 countries  Strong global businesses in attractive market  Strong balance sheet, cash flow generation and financial flexibility  Investing to grow our businesses – Emerging markets – Technology and innovation
  3. 3. Tyco‟s Five Business Segments Safety Products Electrical and ADT Worldwide Metal Products World‟s largest security and Fire Suppression, Electronic Galvanized steel tubes, alarm monitoring provider Security and Life Safety ol armored wire & cable and more World leader Flow control fire and life products and safety heat-tracing solutions Fire Protection Services Flow Control
  4. 4. Market-Leading Businesses in Growing, Global Industries 2009 Revenue = $17B Electrical & Metal Products $1.3B ADT WW Flow Control $3.8B $7.0B Safety Products Fire $1.5B Protection $3.4B
  5. 5. Strong Positions in Large, Global and Fragmented Industries Global Electronic Global Fire Global Industrial Valves Security Industry Industry & Controls Industry $72+B Market $32+B Market $40+B Market Expected Market Expected Market Expected Market Growth = 5-6% Growth = 3-4% Growth = 4-5% Tyco 11% Tyco 12% Secom Tyco 5% UTC Siemens Emerson Honeywell Cameron UTC GE Flowserve Thousands Thousands of Siemens Thousands of Others Others of others ~75% ~75% ~85% Industry Growth + Market Share = Growth Opportunities Source: Freedonia, McIlvaine, Industry and Management Estimates
  6. 6. Balanced Geographic Presence Other Americas 8%  >50% of our revenue is Asia generated outside of the United Pacific States 15%  Emerging markets represent ~ 15% of revenue and grew 20% Europe 29% organically in 2009 United States 48%  We operate in more than 60 countries and serve customers in over 100 countries  110,000 employees Emerging Markets Provide Revenue and Earnings Diversification
  7. 7. …Have Achieved Market-Leading Positions Global leader in security alarm monitoring Global leader in anti-theft systems Global leader in fire alarms and services Global leader in fire suppression systems U.S. leader in emergency breathing systems Global leader in video and access control Global leader in industrial valves and controls U.S. leader in electrical conduit A Global Market Leader in Most of Our Businesses
  8. 8. Our Business Segments
  9. 9. ADT Worldwide Global provider of residential and commercial security systems 2009 revenue of $7.0B  67% Commercial, 33% Residential  52% recurring revenue 7.2 million customers globally Broad geographic reach  55% NA, 30% EMEA
  10. 10. ADT Has Locations and Monitoring Centers for Superior Security Service Worldwide More than 20,000 Service Technicians 40+ Monitoring Centers Worldwide Countries with ADT coverage Countries without ADT coverage
  11. 11. Fire Protection Services  2009 revenue of $3.4B; 46% service revenue  Market-leading industry position  Strong global presence  Diversified customer base  Broad offering of fire products and services
  12. 12. Fire Protection Services Product Lines End Markets Electronic Institutional Fire alarms, mass notification,  Schools/Universities hospital nurse call,  Hospitals integrated systems  Defense  Government buildings  Airports Sprinkler Commercial Sprinklers, engineered  Hotels solutions, special hazards,  Retailer water spray, foam,  Office buildings gas systems  Shopping centers  Financial institutions Industrial Suppression  Oil & gas Fire extinguishers,  Manufacturing specialty systems  Marine  Mining
  13. 13. Safety Products  2009 revenue of $1.5B  Market leading provider of Fire Suppression, Electronic Security, Life Safety Products  Strong market position with leading technologies  Attractive markets with good growth  Focus on emerging market growth
  14. 14. Safety Products Product Lines End Markets Fire Suppression Institutional Protecting people and  Schools/Universities valuable assets from the  Hospitals threat of fires  Defense  Government buildings  Airports Electronic Security Commercial Securing homes and  Hotels businesses from  Retailer unauthorized intrusions  Office buildings  Shopping centers  Financial institutions Industrial Life Safety  Oil & gas Protecting our  Manufacturing firefighters so they  Marine can protect you  Mining
  15. 15. Electrical & Metal Products  2009 revenue of $1.3B  Market leader in steel tubes and pipes, armored cable and electrical conduit products  Strong, well-known brands  Purchases and processes over one million tons of steel per year
  16. 16. Electrical & Metal Products Business Lines Customers •Electrical Wholesale Electrical Distribution Infrastructure •Home Improvement Retailers Solutions •Wholesale Steel Tubular & Distribution Roll Formed •OEMs Products •Metal Service Centers •Wholesale Distribution Metal Framing •General Contractor Solutions •OEMs
  17. 17. Tyco Flow Control  2009 revenue of $3.8B  Global leader in valves, controls and related products  Well-known market- leading brands  Geographic and end market diversity  End market diversity – serves a broad range of industries and customers
  18. 18. Tyco Flow Control Product Lines End Markets •Distribution Water •Storage Applications •Treatment •Chemical/Pharma •Food & Beverage Process •Mining & Mineral Applications Processing •Oil & Gas Energy •Power Applications •Generation
  19. 19. Tyco‟s Focus Areas  Technology and innovation – R&D centers in emerging markets – Flow Control engineering centers in India, China and Holland  Building service capabilities – ADT service delivery transformation – TSP – enhanced customer analytics – SimplexGrinnell – building a services-led culture – Flow Control – new service centers near our customers
  20. 20. Expanding in Emerging Markets  Revenue in Emerging Markets – $2.6B in 2009  15% of Tyco revenue in 2009  Solid growth potential  Investing in products and people
  21. 21. Environment, Health & Safety  Joined Climate RESOLVE program in September 2007 – Set 25% reduction goal of our emissions of greenhouse gasses – 50% of greenhouse gasses emitted through our fleet – Introducing hybrid vehicles into the fleet in 2010 – Utilizing GPS to drive savings • Improved routing • Reduced idle time
  22. 22. Types of Globalization  Tyco is a global company with a presence in more than 60 countries throughout the world. We are made up of five segments whom all have varying needs from a globalization effort!  Our globalization models include: – Establishing plants in low-cost countries and utilizing the local and regional supply base to support regional and global customers – Cross-segment and segment IPO Offices in China and India – Development of suppliers in LCCs…this includes large multi-national and regional players – Development of assembly shops in LCCs to leverage labor & skills – Utilization of top tier contract manufacturers
  23. 23. Global Sourcing International Procurement Offices (IPOs) (Offshore Sourcing Teams) China, India, Eastern Europe, Latin America
  24. 24. Global Sourcing Products & Services Business IT Enabled Products Components Process Services Outsourcing Make Buy Buying IT Software Outsource Call Decisions Components Development Center To India For In-House High Level Assembly ERP Back Office Tasks Assemblies To India, Canada, Localize Web Applications Philippines Finished Goods Components In OEM Products LCC plants Network AP/AR/Payroll Examples: Management Accounting Own Plants or Resource Plastics parts Contract From USA to China Engineering Service - Help Resource Metal parts from Manufacturing India Services - CAD Desks Current Focus Leverage Global Cost & Capabilities
  25. 25. OpEx Organization - Sourcing Tyco Operational Excellence Strategic Sourcing / Supply Chain Real Estate IT Indirect Direct Ops Strategy Logistics Planning & Portfolio Mgmt Fleet / Fuel Fleet / Fuel Electronics Globalization Fleet / Fuel Fleet / Fuel Transportation Mgmt Business & Facilities / Facilities / Facilities / Facilities / Trade Facilities Metals Outsourcing Prog. Mgmt Energy Energy Energy Compliance Energy Transaction Corporate IT IT / Telecom / Packaging Contract Mfg Warehousing Mgmt Services Office Equip IT Leadership Temp Labor Pro Services Distribution Council HR / Legal HR / Legal Plastics Finance & Analysis Travel Chemicals Travel Marketing / Print e-enablement Office Supply / MRO
  26. 26. Strategic Sourcing Philosophy 7-Step Strategic Sourcing Process: Select Generate Select Negotiate Operationali Profile the Sustain the Sourcing Supplier Implementati and Select ze Supplier Category Results 1 2 Strategy 3 Portfolio 4 on Path 5 Suppliers 6 Integration 7  Understand  Create “go to  Open supply  Decide most  Conduct  Operationalize  Monitor market internal spend market” base and appropriate aggressive supplier and supplier and external approach identify all execution negotiations agreements performance market viable suppliers strategy and select suppliers Focus on Tyco’s Spend Supplier Engagement Implementation and the Market & Negotiations Common Approach Deployed Across Tyco
  27. 27. Global Sourcing Regions & Commodities Asia • Electronic components • Cables/Harnesses • Stamping • Molded parts / Tooling Eastern • PCB / PCBA Europe • Textile • Contract mfg. - Hi Volume • Raw material • Castings • Metal parts fabrication • Castings China • Tooling India Mexico / Latin • Molds & Dies, Molded Parts America • Metal parts / Machining • Chemicals / Resins • Metal parts • IT & ITES • Cable Harnesses • Textiles • Assemblies • Castings & Forgings Selecting Regions Based on Core Competencies, Total Cost, Quality, Delivery & Logistics
  28. 28. Offshore Sourcing Teams - IPOs 2004-05 2006-07 2008-09 C H I N A Team Process/Tools Supplier Strategy • Development of functional strength • Standardize Sourcing Process • Execution • Focus on major commodities • Standard tools / metrics •Optimize supplier base • Supplier identification • Audit credibility • Develop strategic alliances • Global Sourcing only • Talent development • Consolidate sourcing teams I N D I A Developing Leadership Talent and Core Competency 28
  29. 29. LCC Sourcing Organization Roles & Responsibilities ‘Pitching’ ‘Catching’ ‘Catching’ Leaders In Leaders In Each Commodity Teams HCC LCC In LCC •Build LCC funnel / Business case •Build Country funnel / •Commodity Expertise Business case •Cross functional interface •Price Negotiation •Ensure supplier capability/ •Ensure cross-functional readiness •Supplier Audits / Development resource allocation •Qualification /Phase in/ •Project Execution •% LCC Spend target overlap •Part of Global category •Total LCC savings target •% LCC Spend target teams •Budgeting – Tooling, Switching •Total LCC savings target •%LCC by category cost •Six Sigma / Transfer process •% savings by category •Manage phase out of pitching suppliers • Program EXECUTION •Delivery, Quality metrics Segment Specific Common Across Segments Project execution Financial Analysis and Report, Logistics Support/management, Support IT,Admin. Global Business team Needs, Quality Systems/Support, Supplier Selection / Development, Negotiate Interface Contracts, Compliance, Six Sigma / Corrective Actions, Part of global category team, Drive Savings E Auctions – Tools/Training, Supplier Score Card Accountability & Goal Alignment
  30. 30. Transformation To IPOs  Created shared service IPOs & Integrated  Individual Tyco businesses “doing their local teams - similar structure in all IPOs own thing”... literally meeting in supplier‟s lobbies.  Developing talent - Career path  Duplicating supplier management Audit/selection/development  Global Best in class processes used by all  Adding business to suppliers with poor IPOs - Developed with the Business performance  One face to suppliers – Annual Supplier  Missing volume leverage day  Conflicting priorities – confusing suppliers  Global linkages - Visibility  Qualification processes , monitoring and management programs ranged from  Emerging Markets - Organic Growth none to near Best-in-Class. engines
  31. 31. IPO Structure Regional Director IPO China / India / EE / LatAM Sourcing Local sourcing Teams PM PM PM Quality Flow Control Flow Control Safety Products PM Thermal Control supporting local manufacturing EMEA & Asia NA & LA TEMP Logistics China RCM Program Managers dedicated Shanghai, Pudong, Shenzhen Commodity Teams and accountable to business India: Chennai, Halol, Bangalore units Supplier Excellence Funded by BU/Programs Local Sourcing Teams Quality Team Disbanded /Merged Centralized Functions with specific Logistics Team expertise, Can be dedicated to BU based • on volume Bring Synergy across product line • Consolidation of Volume across PM – Sourcing Transfer Program product line & across plants. Managers Reporting/Analysis Services • Common Processes. RCM – Regional Commodity managers
  32. 32. IPO Services  Transfer Project Management – Supplier Selection RFP, RFQ, Pilot Run to Production – Specification review and supplier technical communication – Drawing review  Commodity Management – Supplier Rationalization – New Supplier Development  Supplier Performance – Quality Systems Auditing (including financial background checks), part inspection etc – Supplier OTD, quality tracking – expediting etc – Logistics & planning
  33. 33. IPO Supporting A Global Business Unit Functional Leads In IPOs Global Global Programs / BU Commodities Engineering Global Business Unit Support Transfer Teams Castings / Forgings USA Metals / Fab. / Machining EMEA Electronics – Asia Components, PCBAs Program Manager in BU Functional Leaders Tooling Finished Goods / IPO supporting a Engineering Assemblies Manufacturing Particular BU Sourcing Quality Global Suppliers Order Management & Logistics US/EU/Asia Global Quality Shared Commodity Expertise – Dedicated Program Management
  34. 34. Logistics Team Helps Execution ! - Weekly order status - Order follow up - OTD Improvement - Supplier coaching - Weekly Con-call - Pre-production status review - Physical on-site Check - Manage Freight Forwarder IPOs - Supplier capacity /Planning - On time delivery - Custom/Tariff issues - Payment Chasing - Shipment Consolidation Ordering & Payment Tyco Suppliers Plants Confirm, Shipment & Invoice Providing In Region Support to all Tyco entities 34
  35. 35. Established Technology Centers To Accelerate Sourcing Accelerating Growth With Centers of Excellence (COE)  Shanghai COE opened April „08 – 75 engineers with 100 planned  Bangalore COE opened Nov. ‟08 – All Tyco entities co-located – Team of 45 now in place – ADT and TSP working together to identify market opportunities  NPI, Value Engineering, Supplier changes, regulatory approvals and
  36. 36. Tyco Supplier Expectations Capabilities Processes Social Responsibility  Core competency in  eSourcing  Integrity technology  Six sigma  IP protection  Global Logistics  Lean  Global safety & - On time delivery regulatory compliance  Superior Quality ( ISO, CE… ) - Warehousing  Cost competitive  Trade compliance  Capacity  Comply with Local regulations  Financial strength World Class Supply Base 36
  37. 37. Overall Benefits  Share & optimize resources – Leverage commodity expertise and across divisions – Infrastructure COST  Common supplier base - Volume leverage – Product COST  Robust processes with global acceptance – Supplier selection, audits, quality, transfer processes – Global Credibility  One face to the supplier – Load distribution – Become a key customer to a fewer suppliers  Monitoring supplier performance – common score card  Leverage regional / co-located technology centers  NPI, Value Engineering, Supplier changes, regulatory approvals and qualification  Talent development, Training – Create a „best in class‟ team  Global visibility – Career path – Retention  One TYCO team identifying, communicating and addressing RISKs in the region
  38. 38. Overcoming Challenges  Demonstrate Value / ROI – Credit to business units  Initial resistance from business leaders  Dedicated program managers accountable & – „Control‟ and „Credit‟ reporting to the business units  Accountability - Focus / Priority  Engage business units in talent selection &  Local vs. Global needs – quality / performance reviews regulatory  Drive global standards & processes : Avoid  Local supplier relationships – hard to A team/ B team break  Global supplier base : Opportunity to  Cost sharing existing suppliers to develop  Hiring & developing talent - Cost  Fair cost allocations  Language  Hire the best : multi-national /Multi lingual –  Lack of support : Execution/ speed – Salary adjustments Frustration / retention  Global ownership People/Projects – regular program reviews with all key stakeholders
  39. 39. Global Sourcing Growth EM Sourcing EM $ Spend $450M Headcount 81 Growth 68 $390M 50 $280M India China Czech Rep Mexico 2007 2008 2009 2007 2008 2009  Shared Service IPO – Most HC in Asia  Most spend to date is in Asia  Adding HC in E. Eur. and Latin AM  Growing link with the market growth  Commodity Center of Excellence  Looking beyond China and India in Asia  Compliance Training  Exploring E. Europe & Latin AM – in 09  Complimented by Technology Team  Internal Resistance remains in pockets Shifting Role - From Global Sourcing / Cost Reductions To Enabler of Regional Market Growth
  40. 40. Some of the projects……… 40
  41. 41. …..Shipment of 20 Ton Casting Pick-up Logistics Support Supplier • Selection/Negotiation with Freight Forwarder and obtained Pick up from cost avoidance of nearly US$ Casting Supplier Custom Clearance and 200K Loading at Delhi Airport • Developed Packing requirements • Optimized the Routing OFF loading from Aircraft • Flawless Execution of project. at Destination Airport and Custom Clearance M/C Supplier in ITALY Ground Transportation from PARIS to ITALY
  42. 42. Key Takeaways  Hire the best talent – Coach /mentor and link them to the global team.  Communication  Leadership  Content  Do not compromise on suppliers - Need to pick technology & growth partners  Financial readiness  Technology readiness  Execution excellence  Establish a disciplined internal operating mechanism  Shared commodity management – BU dedicated program management  Communication & share best practices Demonstrate Value And Deliver Results
  43. 43. Thank You Questions?