Brad Weller_Nando Galazzo Packaging Solutions Presentation Berlin 2001

Sonoco Packaging Solutionstm

-End-to-End Supply Chain Solutions –

by Nando Galazzo, Supply Chain Director, Sonoco Chairman, Global Supply Chain and logistics council, Conference Board Europe

Brad Weller, Director Sonoco Packaging Solutionstm

October 1, 2001, Berlin, Germany

Agenda

Credentials Supply Chain thoughts Sonoco Packaging Solutions Implementation Models Get started ! SPStm case studies

CREDENTIALS

Sonoco Global Packaging

285 operations32 countries/5 continents17,000 employeesCustomers - 85 countriesTurnover - US$2.8 billion

CredentialsCredentials

Supply Chainthoughts

SPSSPS

ImplementationModels

Get Started !Get Started !

Case StudiesCase Studies

Sonoco Packaging Portfolio

Pack Center

SPSSPS

“Only Perceptive, Adaptable and Innovative packaging companies can get closer to their customers and markets by developing extended enterprises & supply chain

partnerships”.All others …

will just be passengers during the journey

SPSSPS

Sonoco’s Traditional Value Drivers …

Recycling&

Reclamation

Paper TubeMechanics

&Design

SonocoSonocoValueValue

DriversDrivers

SPSSPS

Product

Service

ServiceProduct Dependent Model• Defends existing position• Protects existing margins• Builds barrier to competition

Limitations• Commodity model• Value extraction is limited• Costs justified on product margin• Short life time for incremental benefits

SPSSPS

Product

Service

ServiceProduct Dependent Model• Defends existing position• Protects existing margins• Builds barrier to competition

Limitations• Commodity model• Value extraction is limited• Costs justified on product margin• Short life time for incremental benefits

Products Sourcing W. Housing Pac Center Logistics Products

Supply Chain Driven Model• Products are pushed or pulled• Fully defined value• Sustainable over time• Non-product Dependent

Possibilities• Higher point of entry (food chain)• Multi-site scalability• Long-term activity• Diversification of income portfolio

Consultancy / Implementation

Pack Center Concepts

Six SigmaInventory

Management Systems

Recycling&

Reclamation

Paper TubeMechanics

&Design

DriversDrivers

Sonoco’s journey to add value …

SonocoProprietary

SPSSPS

Evolution: from products…

Paper Textile Film / Tape Specialty

SPSSPS

Paper PackagingFilm Packaging

Evolution: …to packaging…

SPSSPS

Paper PackagingFilm Packaging

Evolution: …to services…

Pack Design ReclamationSupply Chain

ProcurementLogistics

SPSSPS

Pack Center Concepts

End-to-EndSupply Chain

Management

Six SigmaInventory

Management Systems

Recycling&

Reclamation

Paper TubeMechanics

&Design

DriversDrivers

Sonoco’s extended enterprise …

SonocoProprietary

SPSSPS

Sonoco’s extended enterprise …

SPSSPS

Consultancy Design /Graphics

Sourcing JIT /VMI

PackCenter

PlanningScheduling

W.H.Mgmnt.

Distribution ReturnRecycleRefurbish

Gillette US

Gillette UK

Cryovac

Whirlpool

MFE US

MFE Europe

3M Europe

= assessments

= implementations

DuPont Europe

• Global scale and infrastructure• Supply Chain Management• Packaging Solutions• Customer Relationships• Operational integration / Pack-Centre management

• Resources & Scalability• Consulting Methodology• Venture Capital• IT & B2B Integration• Previous project• Client experience

Offering experience through partnership

SonocoPackagingSolutions

SPSSPS

SUPPLY CHAIN

THOUGHTS

Competitive Pressures in the Supply Chain

Global competition& industry

consolidation

Global competition& industry

consolidation

Shorter productlife cycles

Speed of technologychange

More demanding customers

& shareholders

More demanding customers

& shareholders

Environmentalrisk and issues

SPSSPS

No company, on its own, has the ability to dominate the future … without:

A vision that creates growth & wealth Accelerating the speed of change Executing and sustaining improvement New partnerships that manage complexity

Competing through collaboration

SPSSPS

Managing for change & performance

ACCESSACCESS…

access to economies of scale access to know-how access to technology and innovation access to new collaborative models

SPSSPS

An evolution toward greater collaboration

Partnership & Trust HL

Coordination

Collaboration

Transactions

SPSSPS

Areas of desired collaboration

OptimisationOptimisation

Co-asset andLabour

management

Co-asset andLabour

management

Smartpackaging design

ERP systemsERP systems

SynchronisationSynchronisation

Inventory andWC management

Outsourcing &JIT Kit DeliveryOutsourcing &JIT Kit Delivery

OptimisersOptimisers

End-to-endPackaging solutions

Productionplanning

Multi-use/reuse/returnable

The emergingPackaging webMarket place…

4 InformationTechnology

Supply ChainRe-engineering

& implementation

Pack CentreManagement

Packaging &

GraphicsDesign

SPSSPS

Therefore…

Sonoco has developed and implemented end-to-end supply chain solutionsend-to-end supply chain solutions for its customers around the world … called

SPSSONOCO PACKAGING SOLUTIONS

SPSSPS

innovative

customized

collaborative

scalable

profitable

SPSSONOCO PACKAGING SOLUTIONS

SPSSPS

3pl used to be mainly about sub-contracting warehouse and distribution services …

3rd party 4th party logistics

Tomorrow’s 4pl will sit in the middle of the value chain, drawing products or components from all parts of the network as available …

managing product assembly or packaging …

and then handling the distribution to individual customers by the fastest and most efficient route.

Financial TimesOctober 2000

SPSSPS

4plwith a

difference

SPSSPS

Extended enterprise asset management

sourcing & information management

Pack-centres / packaging operations

Packaging materials planning & inventory management

Packaging materials sourcing, procurement, leverage

Sub-contracting warehousing & distribution

Transportation management - outbound / reverse logistics 3pl

Intensity

SPSSPS

design, development, & engineering support

Packaging material life-cycle management:

Return,, Re-use, Recycle

Logistics sourcing & information management

Transportation management - outbound / reverse logistics

Intensity

SPSSPS

Enterprise asset management

Packaging design, development, & engineering support

Packaging material life-cycle management:

Return, Refurbish, Re-use, Recycle

Logistics sourcing & information management

Transportation management - outbound / reverse logistics

Intensity

SPSSPS

Keeping the Strategic … Outsourcing the Tactical

Customer Supply Chain

MarketingFinished Goods

Planning

Factory Planning

Manufacturing Distribution

Package Planning

Packaging MaterialsProcurement

Systems & PlanningIntegration

3rd Party Logistics

Pack Product

Outsourced Supply Chain Activities to Sonoco

Vision is Critical - for instance

Reverse Logistics

Implementation

The Methodology

SPSSPS

MakeDeliver DeliverSource

Customers

DeliverMakeSource Source

SONOCOSONOCO

DELIVERSOURCE MAKE

• Finished Goods

Warehousing

• Shipping & Outbound

Logistics

• Procurement Pack

• Inbound Logistics

• Inventory Management

• Optimized Core & packaging Design

• RETURN PROGRAMME

COLLABORATIVESYNCHRONIZED

OPTIMIZED

CUSTOMER

Integrated Packaging Design & Life Cycle Management

Vision of an Extended enterprise

Activities -Event Driven Processe Map

Level 4

Business Processes -Event Driven Process Map

Level 3

Process Scenarios -Value Chain Diagram

Level 2

Drilling Down to Levels of Detail

Enterprise Processes

Level 1

Applying a Tool Frameworkto Support Supply Chain Modeling

AS- IS Assessment

TO - BEImplementation

SCOR Methodology Employs a Top-Down Approach

Material Flow View Identify Roles within the logical flow Establish product responsibility Analyze for performance to select

scenarios Analyze Basisof

Competition Business Scenario View

Role-based Scenarios Collaborations/Biz Documents Encapsulation of process detail

ConfigureSupply-Chain

Process Definition View Consistent Modeling Link to public protocol definitions Bounding events

AlignPerformance

Levels, Practices, and Systems

Process Specification ViewImplement

Supply-Chain Processes and

Systems

Objective of this work: Align Scenario Implementation with SCOR Methodology …

Think Big, Start Smart, Scale Fast

2002 2003 2004

Leverage resources

and experience

Start Smart First Plant Implementation

Vision

1Think Big

Scale Fast

SPSSPS

Source: Accenture

Think BIG

Because…nothing short of a step-change will keep you ahead of the competition

Because…packaging touches every aspect of your supply chain

Think Big

SPSSPS

Think packaging

PackagingSupplyChain

Package Procurement

InventoryManagement

ReclamationReuse

Recycling

PackageFilling

PackagingMachinery

Engineering PackagingMaterials

GraphicsManagement

PackageDesign/

Engineering

Think Big

SPSSPS

Silver Bullets

Quick Wins

StrategicStep Changes

Value AchievementLow

Building the Treasure Map

SPSSPS

Assess Performance Attributes

Benchmark Performance

Prove Scenarios

Design Supply Chain Model

Optimize

Start SMARTStart Smart

SPSSPS

Assess Benchmark Prove Design

SPSSPS

Implementation Cycle

Assessment CycleOpportunitiesPre-ScreeningPrioritisation

SPS Education & Presentation

Pre-AssessmentLetter of Intent for

Implementation

FullSupply ChainAssessment

Final Presentation and Contract

Implementation

Project Planning

Solution Design,Developmentand Validation

Start-up Deployment

and Transition

Continuous Operation

Benefits Tracking

and Sharing

Adjustments and Subsequent Phases

Project overview

Implementation Cycle

Assessment CycleOpportunitiesPre-ScreeningPrioritisation

SPS Education & Presentation

Pre-AssessmentLetter of Intent for

Implementation

FullSupply ChainAssessment

Final Presentation and Contract

Implementation

Project Planning

Solution Design,Developmentand Validation

Start-up Deployment

and Transition

Continuous Operation

Benefits Tracking

and Sharing

Adjustments and Subsequent Phases

• Define Offering andSPS Supply Chain Management Program

• Team of 3-4• 2 days per site• High level discovery• Opportunity pockets• Value extraction • Prepare LOI (?)

• Resource aligned• Project Scope & KPI’s• Steering Committee• Resource ID’d• Assess SOP’s

• Team of 4-6 for 1-4 weeks• Process and Financial Analysis• AS-IS Mapping • Stakeholders & Implementation Issues/barriers• TO-BE Mapping (game changing)• Recommendations & Implementation roadmap

• Milestones• Timing • Resources• Plan / Metrics

• Joint team formed• Duration depends on scope & complexity• QA review

• 2-6 months depending on scope complexity site, equipment, & systems• Change management

• Daily management of operations

• Assess delivered value• Quarterly performance review

Project overview

To pick the fruit Leverage resources and experience

Scale FASTScale Fast

SPSSPS

Infrastructure = reusable capabilities

1 2 3 5STARTSMART

SCALEFASTNth

MitsubishiEurope

yourcoPlant 1

It’s not about one site, it IS about leverage and speed It is not about a fad, it IS about improving the business It’s not about going for change, but it IS about going dollars

Insights:

Acceleration

GilletteN.America.

WhirlpoolN.America

MitsubishiN.America

yourcoPlant 20

GilletteEurope

SPS Europe - Global Film Manufacturer

SPS Solutions Reorganised pack matl. planning & purchasing SAP - Inventory control Re-engineered packaging supplier base Return & refurbishing with on-site service

provider Selected 3PL for warehousing, dispatch,

transport Reduction of Carrier Base from 40 to 6

Key Bottlenecks Logistically Independent Production Units - Duplication

of Logistics Activities and Costs Lack of Collaborative Planning between Manufacturing

and Packaging Replenishment Inventory Accuracy and Visibility Network of Past Relationships Size of Carrier Base vs. Synergies Interfaces and Transaction Processes - use of SAP

Cost Reduction Achieved of 11% Logistics

8% Procurement

9% Warehousing

17% Return / Recycling

20% Core Cutting (JIT)

SPSSPS

SPS Europe Implementation Example - Major Film Company

Source Make Deliver

chCustomer Prod 2

Customer Prod 1

Prod LINE 1

Prod LINE 2

Prod LINE 3

Prod LINE 4

Prod LINE 5

Prod LINE 6

CONTAINERS MILKRUN

ses Cus

FIN GOODSWarehouses

Third PartySuppliers

Sonoco Plants

Managed by Sonoco

Managed by Sonoco and Outsourced to 3PL

FIN GOODSWarehouse

SPS Europe – Global Tape Manufacture

SPSSPS

ConvertingOutsourcing

Low High

KaizenLeanPh. 1

Speed of Implementation

KaizenLeanPh. 2

ScrapReduction

PurchasingLeverage

PackagingCycle Ph. 2

PackagingCycle Ph. 3

Experience & success in 4 areas

Conclusion. What makes SPS so different ?

Ability, desire, and culture to implement & partner– Gain sharing (accountability)– Co-asset management– Resource sharing & leveraging

Outsourcing &ContractManagement

Supply chainRe-engineering& Implementation

IT integration& interfaceoptimization

PackagingDesign &Manufacturing

SPSSPS

Changing the way

the world sees

PACKAGING

Sonoco Europe s.a.Boulevard du Souverain, 100 box 3

1170 Brussels – BelgiumTel: +32 2 663 45 40Fax: +32 2 675 02 25

www.sonoco.com

Brad Weller_Nando Galazzo Packaging Solutions Presentation Berlin 2001

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