1. Integrated Business Planning Summit
March 29 & 30, 2012 - The Alexander Hotel - Miami, Florida
Dan Dodd, Vice President of Operations and Supply Chain

2. My Background
15+ years in operations
• Princeton engineering
• Systems Engineer at PB Farradyne
• Michigan dual MBA and ME in Manufacturing
• Supply chain strategy across Lucent
• Two operations turn-arounds, including
– implementing S&OP across $6B Cooper Industries
• Operations management at three start-ups
– implemented S&OP at all three
What %
here is ops?

3. Presentation Structure
• The value of S&OP
– And operational excellence
– At Cooper and OIC
• The challenges
– General guidelines
– Personal experiences
Please make this interactive

4. Operational Excellence – Two Keys
5
24 month Demand,
Supply, & Inventory
plans
Management
Business Review
Demand
Review
Supply
Review
Product
Review
Finance IR
Review
Start
(Begin Month)
MRP
• Executive led
• One plan aligned
with financials
Doing the Routine Routinely
Sales & Operations Planning
Modern operational excellence is 75% lean
and 25% S&OP in terms of effort/focus, but
S&OP comes first because it sets the direction

5. How Well Does It Work?
Danaher stock significantly outperforming:
• General Electric
• Berkshire Hathaway
• Dow Jones
• Even Microsoft
Cooper Industries prior to Danaher
attempted acquisition, underperforming to
Dow Jones
Cooper tracking to Danaher since
…significant value creation
Who has heard of
Danaher?

6. Are There
Opportunities
in Healthcare?
Why wait for the
government to deal
with it?

7. 1.1 2.3 2.5 1.1 3.6 1.9 1.2 2.9 42.6 15.3 7.8 5.9
0
2
4
6
8
10
Inventory Turns
The Opportunity in Med Device
The opportunity for operational excellence is significant
Medical device/orthopaedic companies, avg=2.1  ||Other

8. = =
Stabilizing Technology
80% are commodities
• A screw, is a screw, is
a screw
• One 510k after
another

9. The Barriers/Current Focus
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Gross Margin
A relationship-driven industry (sales reps)
These great margins are going to SGA (37%) and R&D (6%)

10. Is the SG&A and R&D paying off?
Market share is stable – is it all hot air?
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2004 2005 2006 2007 2008 2009 2010
Other(1)
Zimmer
Wright
Stryker
Smith&Nephew
DePuy
Biomet

11. And The Margins Aren’t Sustainable

12. Historical Key Industry Dynamics
Cost
Delivery
Quality
Cost is
#1 for
High-
tech,
CPG,
etc
Med
Device
Regulations (FDA)
define the
industry:
• Slow-moving
• Not cutting
edge

13. A Changing Landscape
Operational excellence is coming
• 55% of practices are now
hospital owned (up from 30%
in 2003)
• IP for 75% of devices
expired/ing
• More outpatient and
commodity surgeries….don’t
need the rep in the OR

14. Next Steps In Medical Device
S&OP • X 1
Lean Six-
Sigma
• X 3
• Significant value
Operational
excellence has meant
life or death in other
industries

15. What Is S&OP?
18+ month Demand,
Supply, & Inventory
plans (units & $)
Management
Business Review
Demand
Review
Supply
Review
Product
Review
Finance IR
Review
Start
(Begin Month)
MRP System
• Executive led
• One plan aligned
with financials
Routine and obvious

16. #1 Reason For Lackluster S&OP
More than one plan!...which is relevant to all industries
Executives not
understanding
IBP

17. #2 Challenge
Routine=boring
• The right amount of relevance/detail
• The plan for the business should be of great interest

18. A Quick Point
Sales
Marketing
Two significantly different demand communities:
– Require different processes and systems
– Sales is about targets and confidence levels
– Marketing is more of a model
– The assumptions are always the key: you can only guarantee the
plans will be wrong
How to
deal with
optimism?

19. Cooper Industries
• Cooper: $6B diversified retail/industrial
• Drove S&OP across all nine divisions
– Developed Cooper S&OP playbook
– Inventory, forecast accuracy, delivery improved
– Interesting differences by industry:
• In the S&OP process
• Importance of high forecast accuracy
• Never added up all nine divisions

20. TranS1
• Spine startup that reached a high of $35M
• Hired after supply chain was established
• Implemented S&OP
– Too much push with lead times ~ 12 weeks
– Sales input too optimistic, and not used
– Developed a good marketing plan (sales rep model)
• Put implants on kanban
• Significant sales downturn was foreseeable and hit hard
– Reacted far too slowly in the plans -> too much inventory
– Implants fared best

21. Orthopaedic Implant Company
• Progress to date:
– Decent input from sales (50% accurate)
– Fully comprehensive monthly Integrated Business
Planning (will we run out of cash?)
– Shared every month with suppliers
• Enabling
– Consignment and kanban across the board
– Raising funding
Operational excellence

22. Thank you!
Dan Dodd
Vice President of Operations and Supply Chain
p: 775-636-8281 x105
e: dan.dodd@orthoimplantcompany.com
Questions?