Supply chain transformation is becoming a critical element for driving business results.

THE GREEN MOVEMENT

In the years since Three Mile Island, not a single nuclear

plant has been ordered and built in the United States.

Nuclear power used to be the environmentalist's ultimate

pariah, but now the green movement has a new pariah -

fossil fuels and their carbon dioxide emissions. As a

result, some of the world's most ardent Greens have come

around to embracing nuclear power. In the last two years,

the US Nuclear Regulatory Commission has received 17

applications for 26 nuclear reactors. Proposals for six

additional reactors are pending.

HISTORY

Nearly 50 percent of the nuclear power plants in operation

worldwide, and nearly 60 percent in the United States, are based

on Westinghouse technology. Worldwide, the nearly 8,500

employees of Westinghouse Electric Company continue to

pioneer value-added engineering and services creating success

for customers in their increasingly demanding markets. The

three core businesses of Westinghouse — Nuclear Fuel, Nuclear

Services and Nuclear Power Plants — support this mission.

CALL TO ACTION

Westinghouse’s supply chain transformation story is about

continuous innovation and growth. The drivers for change at

Westinghouse included the global growth in demand for nuclear

energy, the development of emerging markets, the diverse

customer segments the company serves, and investor

expectations for improving margins. The Westinghouse

executive team challenged us to lower supply chain cost while

implementing the new capabilities needed to support the longer

term nuclear renaissance. The global growth projections for

Westinghouse looked like a minimum 3x growth rate with an

upside of 10x. This is a glide path greater than Starbucks coffee

shops. To prepare for this growth, a major initiative was

launched to retool the company for growth and value creation

immediately. The focus would include common global

processes, infrastructure and controls, new technology and

systems and alignment with a future state business model.

In February of 2008 a one month analysis team was formed to

identify synergy saving opportunities for the three separate

business units. A follow on team provided a more detailed

bottom up view as to where the savings would come. The

executive team quickly commissioned a new team called Global

Growth and Innovation to deliver the synergies and cost savings.

A supply chain core team was sponsored and nine teams across

three BU’s were chartered with leaders and teams to develop and

execute a plan to deliver $1.1 billion in synergy savings.

Our vision at Westinghouse was to create a world class SCM organization that would focus on

exceptional value creation for the entire company and for individual business units. The new

design would equip the organization with value creating, leading edge practices and

technologies to enable the supply chain to outperform the competition by significantly reducing

our total cost of goods while servicing our customers in the most efficient and effective manner.

Effective integration and management of cross business unit dependencies are essential, enabled by end to end, closed loop processes; information technology; and defined policies and management systems. Our discussions evidenced that it is critical to have a comprehensive strategy and clear goals to drive tactical and operational decisions, and that strong leadership with vision and conviction, may be the most important ingredient to success.

Supply Chain Transformation: Focus on Implementation & Initiatives Organization Design

People Competency Development

Change Management

Supply Chain Strategy & Configuration

Governance

SCOR Model Process Design

System Integration

Data Management

Configuration Control

Planning

Sourcing

Manufacturing

Logistics & Delivery

S&OP

TRANSFORMATION PROCESS

Once we gained agreement with the senior executive team

as to the goals, objectives and targets we agreed upon a

Supply Chain re-design process to develop the

infrastructure capable of delivering 10x growth. John

Kotter was hired to lead Westinghouse through the change

process. We began our journey by having each of the core

team members interview key thought leaders in the

organization. From voice of the customer interviews we

further refined our requirements for the new supply chain

organization. A benchmarking / best practices study was

conducted to assess our maturity. It was clear from the

results of the benchmarking study that we would need

additional investments in people, process and systems to

transform the organization. Based on our financial

constraints, we challenged personnel to join the team to

build a better future state, while performing their day jobs.

So, we created cross functional teams with global

representation to ensure that we gained the appropriate

insights into regions and also to build support for the new

team. Weekly team meetings to discuss issues and

opportunities were scheduled to focus on designing new

processes based on researching best practice companies.

IMPLEMENTATION AND RESULTS

By deploying a Core Team and a set of 9 Extended Teams

(representing the main SCM processes) across the

business units, we built a business case and strategic plan

geared to generate value, while improving our

competitive position in the market place. This value

would come through increased leverage, synergies,

reduction of duplication, closing existing gaps, and

improvements of existing processes. Over the next 6

months the teams developed their transformation plans

which were ultimately approved by the Supply Chain

core team and the executive team. April 1, 2010 the three

supply chain organizations became one under the

leadership of Juan Molina. The annual savings targets

have been built into the business plan and the teams are

executing the transformation plans and making great

progress. Benefits include time-to-market, lower risk,

improved agility and a lower cost. I believe two critical

factors were instrumental to the transformation success:

Leadership and communication of the vision. Leadership

philosophy is exemplified through energy and passion,

trust as the base for conducting business, focus and drive,

active communication and flawless execution.

COLLABORATIVE TEAM WITH A COMMON MISSION

Juan Molina, Jack Lanzoni and Jim Dixon, each Vice President’s of their own BU supply

chains sponsored the transformation initiative for the Westinghouse organization. A core team

was later formed to include approximately 8 members in total. Nine teams were formed to

develop a high level plan consisting of key initiatives and a business case. The teams were

Inventory & Warehouse, Transportation, Brokerage, Packaging and Customs, Demand

Planning, Project Management, Operations and Performance Management, Requisition to

Check and Supplier Development and Localization. Benefits were calculated based on a 2007

baseline spend and the $30 billion revenue, ten year, growth model.

1. Baseline Assessment - Profile current performance vs. benchmarks and similar supply chains.2. Improvement Opportunities - Assess performance and maturity improvement opportunities

and the value of the improvements in cost, quality and service.

3. Vision & Targets - Establish fact based future state performance targets, and a business case.4. Supply Chain Future State - Redesign the supply chain and identify initiatives to improve

the current capability. Develop and align a future state supply chain strategy.

5. Roadmap - Develop a realistic, prioritized and achievable transformation roadmap.6. Self Funding Program - Identify quick-win opportunities to “self fund” the transformation.

44%

40%

8%6%1%0%

New Supplier Sourcing SourcingTransportation InventoryOps Effcy Req to Check

The iSCM Transformation Map FY2009 – FY 2012

Technology

People and Organization

Project Mgmt and Demand Plan

Sourcing and Supplier Mgmt

FY 2009 Milestones and

Deliverables

FY 2010 Milestones and

Deliverables

FY 2011 Milestones and

Deliverables

FY 2012 Milestones and

Deliverables

Web Enabled Buying

Dynamic Commerce

Content Management

Direct Material

Indirect M

aterial

Make/Buy/Acquisition

Organ

izatio

n Des

ign

Peopl

e Com

pete

ncy D

evelo

pmen

t

Chan

ge M

anag

emen

t

Qua

lity

Supp

lier C

olla

bora

tion

Inve

ntor

y M

anag

emen

t

Know

ledg

e M

anag

emen

t

“To Be” State

D&B Spend Map

And Data Mart

Evaluate Third Party

Content Options

(e.g., IBM LPS,

Worldcrest, ICG)

Develop Global

Long Term

Content Strategy

Revised FY02/03 FreeMarkets Full Service

Auction Contract

Evaluate and implement

Self Service Auction Model

Evaluate and Implement

Electronic RFQ (eRFX) strategy

Re-evaluate eProcurement Options and

CEP

eP Phase I Implementation (N.A. Indirect)

Begin eP Phase III Implementation (Direct Mat’l)

Integrated IT Strategic Plan– Westinghouse Technology Map agreed

eP Phase II Implementation

(European Indirect)

Develop and Implement

European Spend Map and Data Mart

Develop and Implement Common

Commodity Coding Project

Develop and Implement Capital

Project Management Strategy

Evaluate European eProcurement Options

Evaluate ROW

eProcurement Options

Continuous Integration of all Procurement Technology Solutions

Segment

Group Direct

Spend

Launch Wave 1 and 2

Direct Sourcing Teams

Develop and implement Direct

Material Centers of Excellence

Redesign Product Development Methodology to Focus on Standardization of M

aterials

Develop and Implement

Std Contract L

anguage

Explore Outsourcing

Of Indire

ct Materia

l Procurement

Commodity Standardizatio

n Program

ID Core

Competencies

And Assets by Plant

Worldwide

Develo

p Communicatio

n

Process

es ar

ound

Capita

l Plan

s, Ass

et

Disposa

ls, et

c,

Evaluate and Potentially Outsource Services Not C

onsidered Core

Process in Plac To

Identify

Supplier G

lobal

Capacity And Capabilit

ies

Launch Wave 2 and 3

Indirect Sourcing Teams

Launch Wave 1

Indirect Sourcing Teams

GPC “Dialin

g

For Dollars”

Campaign

GPC “Dialing

For Dollars”

Campaign

Implem

ent P

hase I

& 2

Benefi

ts Tra

cking

Macro

(Cen

ter Le

d / B

U)

Organ

izatio

n Des

ign

And Im

plemen

tation

Micro (

Site Lev

el)

Organ

izatio

n Des

ign A

lignm

ent

People

Yello

w

Pages

In P

lace Dev

elop

Compe

tenc

y Pro

files

and A

sses

s Wes

tingh

ouse

Wid

e Pro

cure

men

t Org

.

Skills

Enhan

cemen

t Pro

gram

Develo

p Cro

ss G

roup

Recru

iting

/Sta

ffing

Pro

gram

Wes

tingh

ouse

Com

mun

icatio

ns P

rogr

am

Core T

eam

Certif

icatio

n Pro

gram

Deve

lop

and

Popu

late

Best

Pra

ctic

es

Data

Bas

e

Wes

tingh

ouse

Proc

urem

ent

Polic

y M

anua

l

1st A

nnua

l

Wes

tingh

ouse

Gro

up

Proc

urem

ent

Mee

ting

2nd

Annua

l

Wes

tingh

ouse

Gro

up

Proc

urem

ent

Meetin

g

Intra

net B

ased

Wes

tingh

ouse

Buy

er

Desk

top

Deve

lop

and

Impl

emen

t

Glo

bal C

omm

odity

Inte

llige

nce

Data

Bas

e

Wes

tingh

ouse

Mob

ilizat

ion

Even

ts P

hase

s I &

II

Enha

nced

W

eb S

ite

Re-eva

luate

Organ

izatio

n Effe

ctive

ness

Dev

elop

Sup

plie

r C

olla

bora

tion

Stra

tegy

Eval

uate

and

Impl

emen

t O

ptio

ns F

or E

nabl

ing

Col

labo

rativ

e R

elat

ions

hips

Defin

e O

vera

ll

Wes

tingh

ouse

Gro

up

Sup

plie

r Met

rics

Deve

lop

and

Roll

Out

Com

mon

Wes

tingh

ouse

Gro

up C

ertif

ied

Supp

lier P

rogr

am

Dev

elop

and

Impl

emen

t Com

mon

Wes

tingh

ouse

Gro

up S

uppl

ier R

atin

g Sy

stem

Dev

elop

Sup

plie

r Por

tal f

or I

nteg

rate

d Su

pply

Cha

in E

ffort

s

Deve

lop

Com

mon

Gro

up A

PQP,

PPA

P,

DFM

EA A

utom

ated

Sys

tem

s D

evel

op a

nd Im

plem

ent W

estin

ghou

se G

roup

Vend

or M

anag

ed In

vent

ory

Prog

ram

Dev

elop

Opt

ions

and

Impl

emen

t Wes

tingh

ouse

Gro

up

Inte

grat

ed S

uppl

y Pr

ogra

m a

s ap

prop

riate

Deve

lop

Ove

rall

Wes

tingh

ouse

Gro

up

Supp

lier M

anua

l

Level 1 2 3 4 5

Supply Chain Transformation: Process Framework

Transformation Benefits Delivery Plan ... $1.1 billion

Jim Dixon!"#$%&'"(#)'$*

+'#,(#-*

./--01*23#4$*5/6/"7*.6#67*

84%4'$*#$,*!#"976%*

:,7$)&1*:(-"';7(7$6*<--'"6/$4)7%*

=#%704$7*>%%7%%(7$6*?*=7$@3(#"A4$9*