john deere scrlc member spotlight elizabeth carroll bob smola austin, tx 18 may 2010
TRANSCRIPT
John DeereSCRLC Member Spotlight
Elizabeth CarrollBob Smola
Austin, TX18 May 2010
John Deere Spotlight – SCRLC 18 May 20102
Agenda
– John Deere Corporate
– Supply Management
– John Deere Supply Network (JDSN)
– Current Supply Chain Risk Process
– Future Supply Chain Risk Process
– Questions
It all started in a blacksmith shop…Integrity – Quality – Commitment – Innovation
John Deere Spotlight – SCRLC 18 May 20104
John Deere Today
– Founded in 1837
– Over 100 Locations
– In 28 Countries
– Over 56,000 Employees
John Deere Spotlight – SCRLC 18 May 20105
Our mission is to distinctively serve those linked to the land
Vastly Global: Customers andoperations around the world
Intensely Innovative: Advanced robotics, navigation technologies and autonomous vehicles
Vigilant Stewards: Dedicated to our values, legacy, environment and safety of employees
John Deere Spotlight – SCRLC 18 May 20106
The John Deere Strategy
Exceptional operating performance
Disciplined SVA growth (Shareholder Value Added)
Aligned high-performance teamwork
John Deere Spotlight – SCRLC 18 May 20107
2009 Net Sales and Revenues: $23.11 Billion
Agriculture and Turf 78.4%
Construction & Forestry 11.4%
Credit 8.4%
Other 1.8%
John Deere Spotlight – SCRLC 18 May 20108
John Deere Manufacturing Locations
Parts and Logistics
John Deere replacement parts in transit to dealers
John Deere Spotlight – SCRLC 18 May 201010
Interim Tier 4/Stage III B engines
– A simple solution
– A fuel efficient solution
– A field proven solution
– An integrated vehicle solution
– A fully supported solution
John Deere Spotlight – SCRLC 18 May 201011
Agricultural Equipment
World’s premier farm
equipment manufacturer
John Deere Spotlight – SCRLC 18 May 201012
Agriculture and Turf
U.S. 0.9%
WesternEurope 1.7%
Brazil 6.4%
Argentina 3.7%
Former Soviet Union 6.8%
India25.4%
China 38.5%
(Based on data from Food & Agricultural Organization of the United Nations)
Percentage of population engaged in agriculture
John Deere Spotlight – SCRLC 18 May 201013
Agricultural Equipment
Emphasis on new products
and emerging markets
• Brazil
• Russia
• India
• China
John Deere Spotlight – SCRLC 18 May 201014
Construction & Forestry Equipment
$2.6 billion in sales in 2009
Forestry Equipment
World’s premier producer of
timber-harvesting equipment
John Deere Spotlight – SCRLC 18 May 201016
What lies ahead for Construction & Forestry?
$2.5 billionIndia
$87 billion global market for the equipment we build
$2.5 billion Brazil
$14 billion China
$6 billion Russia
$17 billion European Union $17 billion
U.S. & Canada
John Deere Spotlight – SCRLC 18 May 201017
Turf Equipment
Total solution provider offering products and services for:
• Property owners
• Professional landscape contractors
• Golf course superintendents
John Deere Spotlight – SCRLC 18 May 201018
Financial Services
FarmPlan™ in United StatesAgline™ in Canada
John Deere Spotlight – SCRLC 18 May 201019
John Deere Water Technologies
Exciting growth
John Deere Spotlight – SCRLC 18 May 201020
John Deere Recognition
2009 – Ranked 14th globally and 8th in North America on Fortune Magazine’s 2009 list of Global Top Companies for Leaders
2009 – Ranked among the 50 most admired companies in the world in a survey published by Fortune magazine
2009 – Chosen again by Ethisphere Institute for its third annual list of the World’s Most Ethical Companies
2009 – Recognized as a top employer by readers of Minority Engineer and The Black Collegian magazines
2009 – Ranked second in list of “Top 50 Employers” by readers of CAREERS & the disABLED magazine
2009 – Recognized as a 2009 Best Diversity Company by Diversity/ Careers in Engineering & Information Technology magazine
2008 – Chairman and CEO Robert Lane is included on Barron’s list of “The World’s Best CEOs”
2008 – Ranked 4th – CRO magazine’s “100 Best Corporate Citizens” list
John Deere Spotlight – SCRLC 18 May 201021
Value Chain
Supplier
Deere Factory /
PDC
Warehouse /
Packaging Facility
Dealer / Retail Store
Warehouse / Depots
Customer
Countries We Buy From: 67
Units Supplied: 56
Part Numbers Purchased: 657,000
John Deere Spotlight – SCRLC 18 May 201022
Value Chain
Supplier
Deere Factory /
PDC
Warehouse /Packaging Facility
Dealer / Retail Store
Warehouse / Depots
Customer
Direct 9,000
Indirect 29,000
Logistics 1,000
Total 39,000
# of Suppliers
John Deere Spotlight – SCRLC 18 May 201023
Worldwide Supply Management & Logistics
• Decentralized until 2000
• Divisional Directors
• Global Strategic Sourcing
– Enterprise commodities
– Divisional commodities
– Co-located globally
– Many processes, tools, and legacy systems across the
Enterprise
John Deere Spotlight – SCRLC 18 May 201024
Strategic Global Sourcing
We develop and implement sourcing strategies to achieve
the lowest total cost solutions.
— Execute the indirect
materials and services
strategy
— Execute the global logistics
segmentation strategy
— Execute highly aligned
enterprise strategies
leveraging our total spend
— Mitigate supply chain risk
20102010
2010 Strategic Plan Worldwide Supply Management & Logistics
John Deere Spotlight – SCRLC 18 May 201025
John Deere Supply Network - JDSN
• Align suppliers to Deere business needs
— Achieving Excellence
— Deere Business Processes
• Provide reliable, accurate, and timely data
— Firm and Forecasted orders
— EDI
• Provide tools to enable supplier success
— Capacity planning
— Part drawings
John Deere Supply Network - JDSN
John Deere Spotlight – SCRLC 18 May 201026
Achieving Excellence
John Deere Spotlight – SCRLC 18 May 201027
Order Fulfillment Readiness Assessment
John Deere Spotlight – SCRLC 18 May 201028
29
The Story
Order Fulfillment Readiness Assessment
Web Class Supplier Awareness
Mike Brown, John Deere Supply Management Professional describes the Order Fulfillment Readiness Assessment
Connie, calls John Deere Supply Management
Mike and Connie discuss the Assessment for potential suppliers
Maria explains to Connie how the Order Fulfillment Readiness Assessment works
Mike shows Connie the Order Fulfillment Readiness scoring criteria
Mike and Connie discuss next steps
Order Fulfillment Readiness Assessment
Daily Security Briefings
John Deere Spotlight – SCRLC 18 May 201030
- continued on next slide
Daily Security Briefings
John Deere Spotlight – SCRLC 18 May 201031
Daily Event Communications
John Deere Spotlight – SCRLC 18 May 201032
John Deere Spotlight – SCRLC 18 May 201033
JDSN MAP
John Deere Spotlight – SCRLC 18 May 201034
JDSN MAP
John Deere Spotlight – SCRLC 18 May 201035
JDSN MAP
John Deere Spotlight – SCRLC 18 May 201036
Event with/without Warning Process
John Deere Spotlight – SCRLC 18 May 201037
Eyjafjallajokul
John Deere Spotlight – SCRLC 18 May 201038
John Deere Spotlight – SCRLC 18 May 201039
Event Team Mobilization:
• Global team members assigned on a full-time basis
— Factory, Logistics, Supply Management, Freight forwarders
— Supply Management Director acted as team lead
• Collaboration teleconferences scheduled three times per day
• Communication plan to ensure “One Version of the Truth”
—Separate plans for Deere and non-Deere stakeholders
• Leveraged existing Supply Risk Share Point Site on JDSN
—Read/write access granted to 35 stakeholders
John Deere Spotlight – SCRLC 18 May 201040
Daily GLOBAL Communication Plan:
• 6:00 AM: Stakeholder conference call to confirm status
• 7:00 AM: Logistics/SM meeting to set ongoing priorities
• 1:00 PM: Logistics/SM meeting to update daily status
• 2:00 PM: SM Director update issued to Deere Leadership
• Communication plan enabled:
— Live conversation with units (minimal messages)
— Timely production planning
John Deere Spotlight – SCRLC 18 May 201041
Share Point Communication Template:
John Deere Spotlight – SCRLC 18 May 201042
John Deere Spotlight – SCRLC 18 May 201043
Team Actions:
• Rerouted material to open airports
• Leveraged 3PL relationships to reserve space on existing
flights
• Established charter flights
• Identified alternate methods to acquire material
— Pull parts from Spare Part Depots
— Use alternate suppliers to manufacture parts
— Product Engineering deviations to use similar products (bearings)
John Deere Spotlight – SCRLC 18 May 201044
Lessons Learned:
• Appropriate team leadership/structure to drive performance
— Prioritize decisions based on enterprise business needs
— Access to appropriate enterprise/3PL leadership
— Appropriate understanding of business processes & operations
— Team approach supported by global Senior Leadership
• Process gaps identified to ensure rapid deployment for future
events
• Expertise and simple tools drove business results
— Cell phones, Share Point web site, email, time-zone calendars
John Deere Online Publication:
John Deere Spotlight – SCRLC 18 May 201045
John Deere Spotlight – SCRLC 18 May 201046
Supply Chain Risk Management
Natural
Disaster
Country Risk
Financial
Risk
Market Segment
Capacity
Risk
John Deere Spotlight – SCRLC 18 May 201047
Risk Management - Criticality Rating (Dimensions)Supply Base
TOTAL
Suppliersidentified“critical“
Supplierswith detected
risk(s)
Supplierscovered by
Risk MitigationPlan
Suppliers“nominated“
PARTS
Criteria(s) : • Number of JD parts• Effort to Resource• Run without• Complexity / Flexibility
Part portfoliorelated
criticality +
Criteria(s) : • Local
(Truck)• Regional
(Train, truck)• Global
(Ship, aircraft)
DISTANCEJD <-> SUPPLIER(Reaction time)
Distance / Reaction timerelated
criticality+
Criteria(s) : • Tooling ownership• Redundant tooling• Tooling leadtime• Tooling cost
TOOLING
Toolingrelated
criticality+
Criteria(s) : • SINGLE- or MULTI-
unit/divisional/regional• PDP Involvement• JD spend & proportion
of supplier’s total business
• Supplier’s dependencyon market segments
• Multiple-tier supplier• # of served platforms &
indicator for high SVA product-line suppliers
BUSINESSWITH JD
Businessrelated
criticality
Total Supplier Criticality Risk Assessment
John Deere Spotlight – SCRLC 18 May 201048
Risk Management – Risk Assessment (Dimensions)
MARKETSEGMENT
Criteria(s) : • Supplier’s dependency
on market segments(focus: critical industries)
Marketrelated
risk +
Criteria(s) : • Quality & delivery• Warranty claims• AE Rating• Downtimes (customer)• Audit compliances• Capacity• Supplier specific events• # of drop-in orders
SUPPLIERPERFORMANCE
Performancerelated
risk+
Criteria(s) : • Event driven risk(s)
- Natural events- (Geo) poltical events- Pandemic- Transportation strikes- Terrorism/attacks, etc.
• Rating results- Political & economic i.e. economic & financial prospects - “Business Climate”
(SUPPLIER) COUNTRYRELATED RISK(S)
Event / Countryrelated
risk
Criteria(s) : • Rating results
- public owned- private owned
• Financial constraint indicators- Change in payment terms
• Request for advances- Creditor/debtor to a bankrupt company- Plant restructuring- Ownership or management change
+
FINANCIAL
“Financial health”related
risk
Total Supplier Risk Risk Mitigation
Supply BaseTOTAL
Suppliersidentified“critical“
Supplierswith detected
risk(s)
Supplierscovered by
Risk MitigationPlan
Suppliers“nominated“
John Deere Spotlight – SCRLC 18 May 201049
FinancialRisk
MarketSegment
Supplier Performance
Event/CountryRisk
Supplier Name Company ABCDEF
Supplier# 123456
Location - Country USA
Location - City Austin
Turnover (JD TOTAL FY 2008) 120,000,000 USD
Relationship Owner(s) A.B. Smith (A&T)C.D. Chen (JDPS)E. F. Kumar (C&F)G. H. Gonzalez (Enterprise)
Add Info 1 Text
Add Info 2 TextCurrent
Risk LevelPrevious
Risk Level
Supplier Risk Scorecard
Public Financial Analysis
Public Financial Analysis
Privately Held Supplier Financial Analysis
Enterprise Supplier Financial Risk Team
Confidentiality – partial financials
Increase in private supplier response – AE wavelength impact
53
An Increasingly Global Process
54
Sample
Repor
t
Maximum Confidentiality Provided
High Financial Risk Supplier
Enterprise Supplier Financial Risk Team
Full financial reviewIn-depth ratio analysisMeet with CFO & Upper MgmtMonthly reviewsSupplier visits
Questions
| John Deere Spotlight – SCRLC May 201056