Chemical Supply Chain

DOW Business Services…

Accelerating Success

Powering up to serve

Dow Businesses and JVs

Niklas Meintrup

Director

Dow Business Services Pacific

Turning Feedstocks into Essential Products

Salt Gas

Oil

Biomass

Coal

Recycle

Electronics

Agriculture

Wire & Cable

Coatings

Automotive

Building & Construction

Our Industry

� 9,000 global employees in Business Services

� 45,000 customer ship-to locations

� Shipping sites in 200 countries

� 2.5 million shipments each year

� To-thirds of volume by land; one-third by

marine

� 20% of shipments involve international

border crossings with Customs clearance

� 80% not hazardous; 1% highly hazardous

� 99.97% incident-free

� Comprehensive Sustainability Strategy for Supply Chain and Purchasing.

Dow’s Global Supply Chain: Fast Facts

26,000 railcars –second largest fleet in the world

300 warehouses & 122 terminals

Dow’s Evolving Business Model

20%10%

30% 40%

Operating Margins

0%

Market-Driven

Performance

0% 50% 60%

10%

20%

30%

40%

Highly Differentiated

Se

llin

g,

Ad

min

, R

&D

Ex

pe

nse

s %

of

Sa

les

Gross Margin % of Sales

10% 20%

Basics


Te

ch

no

log

y D

iffe

ren

tiatio

n

Customer Intimacy

Coatings & InfrastructureCoatings & Infrastructure

Performance ProductsPerformance Products

Basic ChemicalsBasic Chemicals

PerformancePerformance

BasicsBasics

Hydrocarbons & EnergyHydrocarbons & Energy

Basic PlasticsBasic Plastics

Electronic & Specialty MaterialsElectronic & Specialty Materials

Health & Agricultural SciencesHealth & Agricultural Sciences

Performance SystemsPerformance Systems

Market DrivenMarket Driven

Dow’s Business Model – Three Integrated Parts

Coatings & Infrastructure$6.2

Electronic &Specialty Materials$5.7

Basic Plastics$14.2

Basics

Basic Chemicals

$4.3

Hydrocarbons & Energy

$9.0

Advanced Materials

Note: All figures represent 2008 pro forma sales, in billions of dollars

Performance Products

$13.1

Performance Systems$8.2

Performance Products & Systems

Health & Agricultural Sciences$4.6

Health & Agricultural Sciences

Dow’s New Operating Segments

Business Services …

Gearing Up to Power the New Dow

� Drive Agility

� Drive Customer focus

� Improve Profitability

� Enhance Flexibility

� Enable Innovation

20%10%

30% 40%

Operating Margins

0%

Market-Driven

Performance

0% 50% 60%

10%

20%

30%

40%


Sell

ing

, A

dm

in,

R&

D E

xp

en

ses %

of

Sale

s

Gross Margin % of Sales

10% 20%

Basics

Business Services

� Business Services announced late 2008

� Supports Dow’s operating model

� Capitalizes on strong foundation of functional excellence

� Organized around service capabilities delivered by: � Customer Service, Supply Chain, Environment Health & Safety,

Purchasing, Information Technology, Facilities Management, Six Sigma, Process-focused elements of Finance and HR

Business Services Vision

To achieve this vision, we are:

Organizing around our businesses and JVs

• Adopting a new, more flexible, market-competitive approach

• Listening to better understand and meet client and their customers needs

Emphasizing operational excellence

• Increasing service integration and leveraging best practices

• Changing how Dow performs daily operational activities

• Allowing businesses and JVs to focus on strategy and customers

“Dow Business Services offers a leveraged

model that enables Dow businesses andJVs to run faster, safer, leaner and more

profitably than any competitor in the industry.”

“Dow Business Services offers a leveraged

model that enables Dow businesses and

JVs to run faster, safer, leaner and more

profitably than any competitor in the industry.”

� Dow Businesses align to 3 Operating Models

� Dow Corporate Center provides governance and oversight

� Dow Business Services provides service capabilities to all 3 operating models and JVs

JVs & Basics

PerformanceProducts

Market-Driven

Chemicals, Plastics & Feedstocks

Performance Products

Dow AgroSciences

Advanced Materials

Understanding the Pieces of the Puzzle…

Corporate Center

Dow Businesses & JVs

� Flexibility to bring

capability that meets the

growth demands of Dow’s businesses and JVs and their customer

� Continue to increase

productivity, while

maintaining scale and lowering cost to serve

� Maintaining required integration throughout

supply chain

� Bring competitive

advantage to Business Units

Client Interface / Service Management

BusinessProcessServices Center

Project and

Support Center

Business /Finance Office

Business Services

WorkProcess

Business Services Operating Unit Models

AssetOperations

Consulting &Expertise Services

Focus on the customer

Business Services Organization Model

Service Management

BusinessProcess

Services Center

Project and Support Center


Business Services Work

Process


AssetOperations


Corporate Center

JVs & Non-Affliated

Leveraged Business Units Independent Business Units

Basics Performance Market Driven

� Customer Service

� Supply Chain

� EH&S

� Purchasing

� IT

� Facilities Mgmt

� Six Sigma

� Process-focused elements of Finance and HR


Service Management

BusinessProcess

Services Center




Process


AssetOperations


Corporate Center

JVs & Non-Affliated



Client Interface and Service Management

• Creates a portfolio of services for Dow businesses and JVs and establishes contracts.

• Manages overall Dow business / JV engagement.

• Portfolio management of all services provided or channeled through Business Services.

• Manage service lifecycle

• Introduce new services and retire obsolete/low value services

• Improve existing services where they fall short

• Ensure services are capable and competitive

• Measured by service satisfaction, metrics and benchmarks

• Ensure that services are delivered in alignment with agreements

• Contracts and/or Service Level Agreements (depending on the client)

• Manage “cost-to-serve” of the services


Service Management

BusinessProcess

Services Center




Process


AssetOperations


Corporate Center

JVs & Non-Affliated



BusinessProcess

Services Center




Process


AssetOperations


� Specializes in mature, well understood work, providing consistentwork process execution and lower costs to businesses and JVs.

� Services are provided to businesses, functions, and JVs

� Has processes in place to accomplish significant work that requires judgment and know-how, is expanding scope beyond the transactional.

� Partners with third-party suppliers to provide cost-effective, flexible resourcing with capabilities required to meet demand, at significantcost savings to the Company.

� Employs a global network of strategic locations (Midland and Mumbai) and satellite locations (Sao Paulo, Shanghai and Terneuzen) toprovide uninterrupted, high-quality service.

BusinessProcess

Services Center


Service Management

BusinessProcess

Services Center




Process


AssetOperations


Corporate Center

JVs & Non-Affliated





Process

AssetOperations

Consulting &Expertise ServicesProject and

Support Center



Process

Etc – click for full list

AssetOperations

� These units are the operational arms of the functions

� Services require a physical link to assets.

−Examples include carrier logistics management, site security and emergency response, IT field services, building maintenance and property management.

� Accountable for delivering low cost and high quality service that meets Operational Level Agreements (OLAs)

Supply Chain Operations

IS Operations

EH&S Operations

Communication Services

Lab and Facilities Management

Emergency and Security Services


Service Management

BusinessProcess

Services Center




Process


AssetOperations


Corporate Center

JVs & Non-Affliated






Process


Support Center

� Delivers against the prioritized needsof Dow businesses, JV customers, and the corporation in executing projects that create or improve work processes – typically with IT enablement.

� Provides cross functional capabilities at lower than market competitive pricing.

� Meets variable business demand.• Centers in Michigan

(Midland/Saginaw/Southfield), Philadelphia, Shanghai


Service Management

BusinessProcess

Services Center




Process


AssetOperations


Corporate Center

JVs & Non-Affliated



BusinessProcess

Services Center



AssetOperations


Support Center Consulting &Expertise Services

� Functional expertise that the customer or client will pay for

� Provides knowledge, expertise, advanced technology and solutions consultation to Dow’s corporate center, businesses, major integrated manufacturing sites and JVs.

� Advocates externally for sound public policy consistent with Dow’s business objectives.

Safety Expertise Center

Environmental Technology Center

Health Services and Epidemiology

Toxicology and Environmental Research

and Consulting

Product Stewardship

Supply Chain Consulting and Expertise Services

Purchasing Strategic Sourcing

Advertising

ES&SExpertise

IT Consulting

Remediation

Auditing & Compliance

Sustainability

IT Security

Services for the Corporation

Six Sigma Consultingand Expertise

JVs are a fourth business model we serve from Business Services

Value Proposition

� Mitigates risks (with proven processes and technologies)

� Accelerates operational stability and ability to sell products

� Drives competitive advantage through value delivery

� Accelerates workforce

and world-class operating performance

Provides for quicker start up ofnew businesses, which:

Deliver services for at least 20-30% lower cost than what a business unit can achieve by acquiring independent services or executing these services on its own.

� The new DOW requires a customer focused

service model with profitability emphasis

� Strong foundation of functional excellence

and cost control

� Business Service and its 4 operating units

are providing a market competitive, flexible

model for delivery of services and

capabilities for Dow Businesses and JVs

� New DOW businesses and JVs benefit from

proven Business Service capabilities

through quicker start up with lower risk

and cost

Summary

Chemical Supply Chain

Education

Transcript of Chemical Supply Chain