April 27, 22009

MOHAWK INDUSTRIES INC.I t lli f C i Ti1 Intelligence for Crises Times1

Presented byOssama El Badawy

CONTENTSC O i t ti

Ap

Company OrientationSummary ProfileVisionMilestones

pril 27, 2009

MilestonesMarketOrganization

Business Intelligence & Decision MakingBusiness Intelligence & Decision MakingAutomationIntelligenceFactors Affecting Decision Makingg g

Problem and SolutionProblem IdentificationDecision:

IntelligenceDesignChoiceI l i & R l 2Implementation & Results

Used DSS Tools

2

COMPANY ORIENTATION: SUMMARY PROFILE April 27

World number one flooring

supplier

7, 2009

36,200 employees

More than 30,000 business

Customers

More than 229 Sales Centers

More than 250 distribution

locations

More Than 1000 Trucks

M Th 80 W h 3More Than 80 Warehouses

Source: Mohawk Ind. Inc., Annual Reports

3

COMPANY ORIENTATION: VISION April 27

“Becoming the Total Flooring “Becoming the Total Flooring

7, 2009

Becoming the Total Flooring Becoming the Total Flooring Company in North America, and Company in North America, and p y ,p y ,afterwards all over the Globe”afterwards all over the Globe”

4

Source: Mohawk Ind. Inc., Annual Reports

4

COMPANY ORIENTATION: MILESTONES April 27

1992 to 2000: Focus on soft surface acquisitions

2000: Added hard surface sales force with sourced products

7, 2009

2002: Acquired Dal-tile –leading ceramic flooring position

2005: Acquired Unilin –leading laminate flooring positionq g g p

2007: Acquired Columbia Wood Flooring –leading wood flooring

positionposition

5

Source: Mohawk Ind. Inc., Annual Reports

5

COMPANY ORIENTATION: MARKET (1/2) April 27

By Market Segments

7, 2009

2008

6

Source: Mohawk Ind. Inc., Annual Reports

6

COMPANY ORIENTATION: MARKET (2/2) April 27

By Product Segments

7, 2009

7

Source: Mohawk Ind. Inc., Annual Reports

7

COMPANY ORIENTATION: ORGANIZATION

8

Source: Mohawk Ind. Inc., Annual Reports

8

BI AND DSS: AUTOMATION April 27

Purchasing E-invoicing

7, 2009

Shop Floor Automation

Virtualization

Commercial Projects ManagementCommercial Projects Management

E-commerce

Others …9

Source: Vendors’ Published Customer s’ Case studies

9

BI AND DSS: INTELLIGENCE (1/3) April 277, 2009

Sol

utio

n S

olut

ion

DI

Atl

anti

s D

I A

tlan

tis

10

Source: Vendors’ Published Customer s’ Case studies

10

BI AND DSS: INTELLIGENCE (2/3) April 27

According to Howard Hughes ; Mohawk, IT Project Manager … an example of DI Atlantis was mentioned as follows:

7, 2009

• “The purpose of our sales models is to improve efficiency by helping us

make better sales decisions. For example; with just a few clicks of thep ; j

mouse, we can analyze our data and know who are the customers we need

to contact based on whether their sales are up or down.

• “From our inventory models, we can access the position of warehouse

inventory levels by categories and subsets of that inventory data, such as

tit f ti l ll l th t ifi h ”quantity of a particular roll-length, at a specific warehouse”.

• "Using the claims model, we are able to look at claims information to

determine where the majority of claims are coming from.” 11j y g

Source: Vendors’ Published Customer s’ Case studies

11

BI AND DSS: INTELLIGENCE (3/3) April 27

Key advantages in DI Atlantis as mentioned by Mohawk executives:

7, 2009

• Drilling-down: Mohawk’s staff can narrow it down to a regional area that has a majority of claims or narrow it down to districtsarea that has a majority of claims, or narrow it down to districts

• Presentable: Detailed reports and graphs are easily created

• Accessibility: Data models are then viewed from theAccessibility: Data models are then viewed from thedesktop, using the DI-WebDiver client

• User Friendly: Users with varying degrees of technical i bl “di ” i h d l d il i experience are able to “dive” into the models and easily retrieve

answers to the questions that are critical to their department or region

12

Source: Vendors’ Published Customer s’ Case studies

12

BI AND DSS: DSS TECHNOLOGIES April 27

Two main types of DSS tools are used in Mohawk:

7, 2009

• Dashboards• Dashboards

• Alerts

1313

BI AND DSS: FACTORS AFFECTING DECISION MAKING

S l f ff d i i ki d l i i M h k I d h i f

April 27

Several factors affect decision making and planning in Mohawk Ind., the main factors are stated in the official filings by the company and include:

Environmental factors:

7, 2009

‐ Changes in economic or industry conditions‐ Regulations and Trade Regimes

‐ Currency Fluctuation‐ Currency Fluctuation

‐ Interest rate and cost of capital

Boundaries Inputs Process Outputs

Environmental Factors

‐ Competition Dynamics

‐ Consumer Trends

‐ Raw material and energy costs

Outcomes from environmental factors 

and boundaries

Plan

Source

Make

Deliver

‐ Suppliers’ business developmentsMake

14Assumptions 14

PROBLEM & SOLUTION: PROBLEM IDENTIFICATIONA

pril 27, 20

6 0007,0008,0009,000Mohawk Ind. Started to feel the

effects of the current crises starting

009

1,0002,0003,0004,0005,0006,000

2007 especially considering that the

crises began from the US

2004 2005 2006 2007 2008Net Sales 5,880 6,620 7,906 7,586 6,826

-2,000-1,000

0crises began from the US

housing, and then the company was , , , , ,

Gross Profit 1,624 1,768 2,231 2,115 1,738Operatin Income 639 672 839 750 -1,124

completely affected in 2008.

Net sales down

Operating loss including one time Operating loss including one-time

charges

Excluding these charges, operating 15

income was also down

Source: Mohawk Ind. Inc., Annual Reports

15

PROBLEM & SOLUTION: DECISION MAKING, INTELLIGENCEA

p

Management team had gone through an

intelligence exercise to completely understand

the problem and its root causes with view to

pril 27, 2009

the problem and its root causes with view to

organizational objectives and external

environment dynamics.

Intelligence was mainly based on three

categories of analytics:CRM Analytics (and to a great extent it’s assumed to

include all market and competition dynamics also)

Financial AnalyticsFinancial Analytics

Operational Analytics ( and to a great extent it’s

assumed to include supplier and general sourcing

l i ) 16analytics) 16

Assumptions

PROBLEM & SOLUTION: DECISION MAKING, DESIGNA

p

Management realized that the only possible way

out of the critical situation faced by the company

is to downsize the operations

pril 27, 2009

is to downsize the operations

This means unlimited number of alternatives given the huge size of the company. However according to management team However, according to management team staments, two main general rules:

Meeting the customer trends by stopping the most

ff i d t (d d t d )suffering products (demand trends)

Moving production to more efficient and profitable

locations

1717

Assumptions

PROBLEM & SOLUTION: DECISION MAKING, CHOICEA

p

9 manufacturing locations were closed during 2008:

pril 27, 2009

Closure Product

Dahlonega, Ga Filament Yarn

Dillon Spun YarnDillon Spun Yarn

Fort Oglethorpe Synthetic Fiber

Georgia Carpet Tufting and Finishing

Dalton Carpet Tufting

Armuchee Carpet Tufting

Hiwassee Carpet TuftingHiwassee Carpet Tufting

Shannon Synthetic Fiber

Lavender Drive Carpet Tufting18

Source: Floordaily.comHometextilestoday.com

18

PROBLEM & SOLUTION: DECISION MAKING, IMPLEMENTATION & RESULTS

Ap

The immediate results of the implemented

closures are:Reduced staffing 18% 6 000 FTE

pril 27, 2009

Reduced staffing 18% - 6,000 FTE

Eliminated 1.25 million sq ft of warehousing

Reduced working capital approximately $100 million

(immediate injection to cash flow)

$30 million restructuring charges

However the implemented closures are foreseen to However, the implemented closures are foreseen to

have positive impacts over the coming two year

especially as the market not showing signals of y g g

recovery

19

Source: Mohawk Ind. Inc., Annual Reports

19

PROBLEM & SOLUTION: USED DSS TOOLS

M ili d h DI d hb d

Ap

Dashboards Dashboards Management team utilized the DI dashboardsfacilities in order to visualize – with high accuracyand timely information – the business results

diff t b i it thi ld bl

pril 27, 2009

across different business units, this could enablethe management team to:

Determine which location suffering the most during the crisis (impact of customer trends through CRM Analytics).Determine which has the lowest efficiency levels (e.g. utilization ratios through operation analytics)Determine which location achieves the worst financial outcomes (e.g. profitability through financial analytics)

2020

Assumptions

Appril 27, 2009

Thank You for Your TimeThank You for Your Time

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