© UGS Corp. 2006. All rights reserved. © UGS PLM Solutions Inc. 2003. All rights reserved.© UGS PLM Solutions Inc. 2003. All right reserved.

Value Chain Synchronization

“ Realizing the potential of your value chain as a strategic weapon in the battle for profitable growth with Best Practices ”

© UGS Corp. 2006

What is Value Chain Synchronization?

Synchronizing your product development efforts

Product

Customers

Partners&

Suppliers

Manufacturer

• Specific Expertise• Proximity to Markets &

Customers• Lower Cost Alternatives

• Align to Customer Requirements

Shorten Product Lifecycles Increase Quality

• New & Growing Markets• Increasing demands for

Innovation• Increasing Service Levels

• Commercialize Innovative Products

• Leverage Globally Distributed Teams

• Manage Product & Process Knowledge

with your customer requirements, and closer supplier relationships,

to increase product innovation and add customer value.

Best Practice = Creating a Global Innovation NetworkBest Practice = Creating a Global Innovation NetworkBest Practice = Creating a Global Innovation NetworkBest Practice = Creating a Global Innovation Network

© UGS Corp. 2006

Why you need Value Chain Synchronization?

Business IntegrationBusiness Integration Global strategic coordinationGlobal strategic coordination

Supplier relationship Supplier relationship managementmanagement

Value chain integrationValue chain integration

Local ResponsivenessLocal Responsiveness

Differing consumer tastes Differing consumer tastes

Distribution channels and sales Distribution channels and sales practices practices

Economic and political demandsEconomic and political demands

Value Value chainchain innovators innovators - Leaders… - Leaders… Invest more thanInvest more than 2X 2X more to connect them with strategic partners and more to connect them with strategic partners and

suppliers as their competitors suppliers as their competitors CaptureCapture 4x4x the information about their overall spending, enabling them to the information about their overall spending, enabling them to

respond to opportunities more efficiently and effectively, respond to opportunities more efficiently and effectively, Operate Leaner and see more than a Operate Leaner and see more than a 30%30% reduction in finished goods reduction in finished goods

inventory inventory Realize a Realize a 25%25% improvement in on-time delivery improvement in on-time delivery Source – AMR Research

Design Anywhere, Build Anywhere

© UGS Corp. 2006

Profitable Growth Through Value Chain Synchronization

“… readily translates into an extra 5 -10 points of gross margin in the first year…”

“…has helped them generate profit margins up to 73% greater than those of other manufacturers.”

“…is paying dividends…

Product cost reduction of nearly 18%.

10% to 20% improvements in time-to-market cycles”

Value Chain Synchronization…Value Chain Synchronization…

© UGS Corp. 2006

How Do You Synchronize Your Value Chain?

“The focus must extend beyond the single enterprise to enhance collaboration and strategic partnering across the supply chain. It requires tight synchronization of business processes across both procurement and engineering organizations.”

Collaborative Product Development Associates, LLC

Supplier Relationship Management

“Manufacturers should align processes, organizations, and metrics to bring sourcing knowledge and decision-making closer to the point of design. In addition, companies should support integrated processes with the appropriate enabling technology, including integrated sourcing and PLM solutions.”

Jim Brown, AberdeenGroup

© UGS Corp. 2006

How Do You Synchronize Your Value Chain?

“Supply chain performance is all about integration – integration of strategy, processes, organization, and information systems.”

Gordon Colborn, PRTM

“We need to stop thinking of supply chains and value chains as different entities, but, rather, should integrate the two. Product design should be fully integrated with production capability, delivery processes, and information about customer demand.”

Andrew Feller, Dr. Dan Shunk, and Dr. Tom Callarman ‘Value Chains Versus Supply Chains’, BP Trends – March 2006

Value Chain Integration

© UGS Corp. 2006

SupplierRelationshipManagement

Challenges addressed by Best Practices for Value Chain Synchronization

ValueChain Integration

Create and sustain a superior supply chain by synchronizing with procurement & product development processes

Synchronize the processes of innovation across the product lifecycle

Globally dispersed suppliers

Supplier Performance

Increasing Supply Risks

Quality Issues

RFQ Accuracy/Errors

Engineering Changes

Shorter product lifecycles

Cost of late cycle change

Scrap, & wasted inventory

Spare parts not available

Increasing service costs

ChallengesStrategy Best Practice

© UGS Corp. 2006

SupplierC

SupplierA

SupplierB

Procurement

Engineering Mfg

Supplier Relationship Management

Sourcing Automation Robust tools to improve procurement productivity

Sourcing Integration w/ PLM Leverage PLM to improve sourcing accuracy

Supplier Collaboration Connect global teams earlier in the design process to design cost out

Supplier Management Instant access to supplier capabilities to make better design/sourcing decisions earlier

“ Create and sustain a superior supply chain through tighter integration with procurement & product development processes “

© UGS Corp. 2006

Mfg 2

Mfg 1

Sourcing Integration with PLM

RFQ Pkg

Part Part

RFQ Pkg

Program 1OEM 1

Program 2OEM 2 Assy

CR

Buyers need accurate product data Need business data

But products can be complex….

Easy access to managed data saves

time & reduces errors

SupplierC

SupplierB

SupplierA

0

10

20

30

40

50

60

70

80

Time Spent Value Added

New Programs Changes

But buyers add little value to these

Buyers need access to PLM

And most RFQs are due to change….

Part Part

© UGS Corp. 2006

SupplierC

SupplierB

Procurement

Engineering Mfg

Supplier Collaboration

RFQ Pkg

Connect teams w/ suppliers earlier

Evaluate cost & schedule impact

Review issues in real-time

Capture and route issues for greater visibility & quicker resolution

Changes need to be considered…

Part Part

Assy

Make Better Decisions FasterMake Better Decisions Faster

Reduce Travel CostsReduce Travel Costs

Design Cost Out of ProductsDesign Cost Out of Products

Bring Teams Together Digitally

© UGS Corp. 2006

PartPart

Program 2OEM 2

Program 1OEM 1

Mfg 2

Mfg 1

CR

Supplier Management

RFQ Pkg

Part

Manage supplier data to improve performance & reduce sourcing

riskQuote

St. LouisHi-Capacity Hi-Quality

TaiwanLow-Capacity

OK Quality

SupplierC

SupplierB

SupplierA

Comm.Part

And Supplier information needs to be accessible….

Manage Supplier data (capabilities, quality, location, etc.)to make better sourcing decisions

Manage multiple commercial P/Ns representing commodityparts for flexible supply

RFQ Pkg

Assy

Mfr 2 P/N XYZ

Distr.

Mfr 1 P/N ABC

Mfr 3 P/N 123

Quote

Part

© UGS Corp. 2006

Development IntegrationSynchronize Teams

Teamcenter

Lead Site

Remote Clients

Mfg Supplier

SupplierSystem

Single source of up-to-date product knowledge Shared with distributed partner locations Remote clients for secure, real-time connectivity Secure package exchange for partners with no PLM software Synchronize requirements, product, and process data

Immediate access across organizational and geographic boundaries

Synchronize Synchronize

Package Exchange

Partner/Supplier Site

Teamcenter

© UGS Corp. 2006

Manufacturing IntegrationValue Chain as an Extension of the Business

SynchronizeSupplier Data Include partners & suppliers as part of core

“team” for true concurrent development

Synchronize product Bills of Material (EBOM, MBOM), processes (BOP), & “As-Built” configurations

Monitor & manage supplier production to control compliance, quality, & inventory

Catch issues before they make it to production

WorkInstr.

Oper

Oper

Oper

Oper OperOper

Bill Of Process

WorkInstr.

DesignRequirements PrototypeBuild

Production In-Service

10

100

1000

10,000

CO

ST

(e10

)

1

Cost of ChangeCost of Change

Supplier

© UGS Corp. 2006

Capabilities

SupplierRelationshipManagement

Summary - Value Attained

ValueChain Integration

Development Integration

Manufacturing Integration

Service Integration

Strategy Value

Sourcing Automation

Supplier Collaboration

Supplier Management

Sourcing Integration w/ PLM

Synchronize Global SuppliersSynchronize Global Suppliers

Better Sourcing DecisionBetter Sourcing Decision

Reduce Sourcing RisksReduce Sourcing Risks

Improve RFx AccuracyImprove RFx Accuracy

Reduce Direct Material Costs Reduce Direct Material Costs

Improve Product QualityImprove Product Quality

Shorten Product LifecyclesShorten Product Lifecycles

Reduce Impact of ChangeReduce Impact of Change

Reduce Inventory ShortagesReduce Inventory Shortages

Ensure Availability of PartsEnsure Availability of Parts

Reduce Service Cycle TimesReduce Service Cycle Times

© UGS Corp. 2006. All rights reserved. © UGS PLM Solutions Inc. 2003. All rights reserved.© UGS PLM Solutions Inc. 2003. All right reserved.

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