Chemical Supply Chain

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DOW Business Services…
Accelerating Success
Powering up to serve Dow Businesses and JVs

By Niklas Meintrup

LogiChem 2011 will be the event's tenth anniversary and an opportunity for the most senior chemical supply chain & global logistics directors from the European chemicals community to come together once again share experiences, make new contacts and benchmark the latest chemical supply chain initiatives.

Not only will LogiChem 2011 be a chance for the chemical industry to reminisce about the last ten years but an opportunity to shape the next decade. To celebrate a decade of LogiChem, there will be an exciting three day programme filled with networking opportunities in our new location, Antwerp.

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Chemical Supply Chain

  1. 1. DOW Business Services… Accelerating SuccessPowering up to serveDow Businesses and JVsNiklas MeintrupDirectorDow Business Services Pacific
  2. 2. Our IndustryTurning Feedstocks intoEssential Products Building & Construction Salt Gas Electronics Agriculture Oil Coal Wire & Cable CoatingsBiomass Recycle Automotive
  3. 3. Dow’s Global Supply Chain: Fast Facts 9,000 global employees in Business 26,000 railcars – second largest Services fleet in the world 45,000 customer ship-to locations Shipping sites in 200 countries 2.5 million shipments each year To-thirds of volume by land; one-third by marine 20% of shipments involve international border crossings with Customs clearance 80% not hazardous; 1% highly hazardous 99.97% incident-free Comprehensive Sustainability Strategy for Supply Chain and Purchasing. 300 warehouses & 122 terminals
  4. 4. Dow’s Evolving Business Model Operating Margins 0% 10% 20% 40% Selling, Admin, R&D Expenses % of Sales Highly 30% Differentiated Market- 20% Driven Performance 10% Basics 0% 10% 20% 30% 40% 50% 60% Gross Margin % of Sales
  5. 5. Dow’s Business Model – Three Integrated Parts Highly Differentiated Health & Agricultural Sciences Market Driven Electronic & Specialty MaterialsTechnology Differentiation Coatings & Infrastructure Performance Systems Performance Performance Products Basic Plastics Basics Basic Chemicals Hydrocarbons & Energy Customer Intimacy
  6. 6. Dow’s New Operating Segments Advanced Materials Electronic & Coatings & Infrastructure Specialty Materials $6.2 $5.7 Health & Agricultural Sciences Health & Agricultural Sciences $4.6 Performance Products & Systems Performance Systems Performance Products $8.2 $13.1 Basics Basic Plastics Basic Chemicals Hydrocarbons & Energy $14.2 $4.3 $9.0 Note: All figures represent 2008 pro forma sales, in billions of dollars
  7. 7. Business Services …Gearing Up to Power the New Dow Operating Margins 0% 10% 20% Selling, Admin, R&D Expenses % of 40% Highly Differentiated 30% Market- Sales 20% Driven Performance 10% Basics 0% 10% 20% 30% 40% 50% 60% Gross Margin % of Sales Drive Agility Drive Customer focus Improve Profitability Enhance Flexibility Enable Innovation
  8. 8. Business Services Business Services announced late 2008 Supports Dow’s operating model Capitalizes on strong foundation of functional excellence Organized around service capabilities delivered by: Customer Service, Supply Chain, Environment Health & Safety, Purchasing, Information Technology, Facilities Management, Six Sigma, Process-focused elements of Finance and HR
  9. 9. Business Services Vision “Dow Business Services offers a leveraged model that enables Dow businesses and JVs to run faster, safer, leaner and more profitably than any competitor in the industry.”To achieve this vision, we are:Organizing around our businesses and JVs • Adopting a new, more flexible, market-competitive approach • Listening to better understand and meet client and their customers needsEmphasizing operational excellence • Increasing service integration and leveraging best practices • Changing how Dow performs daily operational activities • Allowing businesses and JVs to focus on strategy and customers
  10. 10. Understanding the Pieces of the Puzzle… Dow Businesses align to 3 Operating Models Dow Corporate Center provides governance and oversight Dow Business Services provides service capabilities to all 3 operating models and JVs Performance Products Dow AgroSciences Chemicals, Plastics & Feedstocks Advanced Materials Performance Products JVs & Basics Market-Driven Corporate Center
  11. 11. Focus on the customer Flexibility to bring capability that meets the growth demands of Dow’s businesses and JVs and their customer Continue to increase productivity, whileDow Businesses & JVs maintaining scale and Client Interface / Service Management lowering cost to serve Business / Finance Office Maintaining required Business Consulting & integration throughout Asset Project Process Operations and Expertise Business supply chain Services Services Services Support Center Work Center Process Bring competitive advantage to Business Business Services Operating Unit Models Units
  12. 12. Business Services Organization Model Corporate Center Leveraged Business Units Independent Business Units JVs & Non-Affliated Basics Performance Market Driven Service Management Business / Finance Office Customer Service Business Consulting & Supply Chain Business Process Asset Project and Expertise Services Center Operations Support Center Services EH&S Services Work Process Purchasing IT Facilities Mgmt Six Sigma Business Services Operating Unit Models Process-focused elements of Finance and HR
  13. 13. Business Services Organization Model Corporate Center Leveraged Business Units Independent Business Units JVs & Non-Affliated Basics Performance Market Driven Service Management Client Interface and Service Management Business / Finance Office • Creates a portfolio of services for Dow businesses and JVs and establishes contracts. • Manages overall DowAsset Business business / JV engagement. Consulting & Project and Business Process Expertise • Portfolio management of all services provided or channeled through Business Services. Services Center Operations Support Center Services Services Work Process • Manage service lifecycle • Introduce new services and retire obsolete/low value services • Improve existing services where they fall short • Ensure services are capable and competitive • Measured by service satisfaction, metrics and benchmarks Business Services Operating Unit Models • Ensure that services are delivered in alignment with agreements • Contracts and/or Service Level Agreements (depending on the client) • Manage “cost-to-serve” of the services
  14. 14. Business Services Organization Model Corporate Center Leveraged Business Units Independent Business Units JVs & Non-Affliated Basics Performance Market Driven Service Management Business / Specializes in mature, well understood work, Business Office Finance / providing consistent Finance Office work process execution and lower costs to businesses and JVs. Business Consulting & Business Process Asset Services are provided and Consulting functions, Services Work Project to businesses, & Expertise and JVs Business Business Business Services Center Asset Operations Support Center Project and Services Process Expertise Process Services Work Process Services Center Has processes in Center Operations Supportplace to accomplish significant work that requires Services Process Services Center judgment and know-how, is expanding scope beyond the transactional. Partners with third-party suppliers to provide cost-effective, flexible resourcing with capabilities required to meet demand, at significant cost savings to the Company. Business Services Operating Unit Models Employs a global network of strategic locations (Midland and Mumbai) Business Services Operating Unit Models and satellite locations (Sao Paulo, Shanghai and Terneuzen) to provide uninterrupted, high-quality service.
  15. 15. Business Services Organization Model Corporate Center Leveraged Business Units Independent Business Units JVs & Non-Affliated Basics Performance Market Driven Service Management Business / Supply Chain Finance Office Operations These –units full list the operational arms of Etc click for are Business / Business IS Operations theConsulting & functions Finance Office Asset Project and Consulting & Business Process Asset EH&S Expertise Business Services Center Operations Support and Project Operations Center Expertise Services Services Work to assets. Services require a physicalWork Services link Operations Support Center Services Process Project and −Examples include carrier logistics Communication Process Business Asset Services Support Center Services Work management, site security and Operations Lab and Facilities Process Management emergency response, IT field services, Emergency and Security Services building maintenance and property management. Accountable for delivering low cost and Business Services Operating Unit Models high quality service that meets Operational Level Agreements (OLAs)
  16. 16. Business Services Organization Model Corporate Center Leveraged Business Units Independent Business Units JVs & Non-Affliated Basics Performance Market Driven Service Management Business / Finance Office Business / Delivers Finance Office against the prioritized needs Consulting businesses, JV customers, of Dow & Business Project and Expertise corporation in executing Business Asset Support Center Project and and the Consulting & Services Work Business Process Project and Services Expertise that create or improve work Services Center Operations Support Center projects Services Process Services Work Support Center Process processes – typically with IT enablement. Provides cross functional capabilities at lower than market competitive pricing. Business Services Operating Unit Models Meets variable business demand. • Centers in Michigan (Midland/Saginaw/Southfield), Philadelphia, Shanghai
  17. 17. Business Services Organization Model Corporate Center Leveraged Business Units Independent Business Units JVs & Non-Affliated Basics Performance Market Driven Service Management Chain Consulting Supply and Expertise Services Purchasing Strategic Sourcing Advertising Business / Finance Office Functional expertise that the ES&S Expertise customer or client will pay for Business Business Consulting Consulting & Product Stewardship & Business Process Process Asset AssetProject andProject andExpertise Expertise Services Work Services Center knowledge, expertise, Center IT Consulting Provides Services Center Support Operations Operations Support Center Project andServices Services Process advanced technology and Support Center Consulting & Expertise solutions consultation to Dow’s Safety Expertise Center Services corporate center, businesses, Environmental Technology Center major integrated manufacturing Health Services and Services for the sites and JVs. Epidemiology Corporation Six Sigma Consulting Remediation Advocates externally forOperatingOperating Expertise Business Business Services Unit Models Models Services sound and Unit public policy consistent with Toxicology and Auditing & Compliance Environmental Research Dow’s business objectives. and Consulting Sustainability IT Security
  18. 18. JVs are a fourth business modelwe serve from BusinessServices
  19. 19. Value PropositionDeliver services for at least 20-30% lower cost than what a businessunit can achieve by acquiring independent services or executing theseservices on its own. Provides for quicker start up of new businesses, which: Mitigates risks (with proven processes and technologies) Accelerates operational stability and ability to sell products Drives competitive advantage through value delivery Accelerates workforce and world-class operating performance
  20. 20. SummaryThe new DOW requires a customer focusedservice model with profitability emphasisStrong foundation of functional excellenceand cost controlBusiness Service and its 4 operating unitsare providing a market competitive, flexiblemodel for delivery of services andcapabilities for Dow Businesses and JVsNew DOW businesses and JVs benefit fromproven Business Service capabilitiesthrough quicker start up with lower riskand cost

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