John Deere SCRLC Member Spotlight Elizabeth Carroll Bob Smola Austin, TX 18 May 2010.

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 Today

– Founded in 1837

– Over 100 Locations

– In 28 Countries

– Over 56,000 Employees


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


The John Deere Strategy

Exceptional operating performance

Disciplined SVA growth (Shareholder Value Added)

Aligned high-performance teamwork


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 Manufacturing Locations

Parts and Logistics

John Deere replacement parts in transit to dealers


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


Agricultural Equipment

World’s premier farm

equipment manufacturer


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


Agricultural Equipment

Emphasis on new products

and emerging markets

• Brazil

• Russia

• India

• China


Construction & Forestry Equipment

$2.6 billion in sales in 2009

Forestry Equipment

World’s premier producer of

timber-harvesting equipment


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


Turf Equipment

Total solution provider offering products and services for:

• Property owners

• Professional landscape contractors

• Golf course superintendents


Financial Services

FarmPlan™ in United StatesAgline™ in Canada


John Deere Water Technologies

Exciting growth


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


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


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


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


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 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


Achieving Excellence


Order Fulfillment Readiness Assessment


29

The Story


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


Daily Security Briefings


- continued on next slide

Daily Security Briefings


Daily Event Communications


JDSN MAP


Event with/without Warning Process


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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


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

Share Point Communication Template:



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)


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:



Supply Chain Risk Management

Natural

Disaster

Country Risk

Financial

Risk

Market Segment

Capacity

Risk


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


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“


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

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

John Deere SCRLC Member Spotlight Elizabeth Carroll Bob Smola Austin, TX 18 May 2010.

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Transcript of John Deere SCRLC Member Spotlight Elizabeth Carroll Bob Smola Austin, TX 18 May 2010.