supply chain update · supply chains optimize global processes accelerate disruptive technology...

1. All Rights Reserved.11 December 2017© 3M

Supply Chain Update

Jon LindekugelSenior Vice PresidentSupply Chain

December 12, 2017


Agenda

• 3M Supply Chain provides a competitive advantage

• 3M Supply Chain strategy

• Operationalize through high-impact, global initiatives


Our Playbook is working

Investing in Innovation

Portfolio Management

Business Transformation


3M Supply Chain is a competitive advantage

Building and leveraging 3M’s Fundamental Strengths

Technology3M technology platforms to innovate new products

ManufacturingProprietary process technology, scale and vertical integration to drive best-in-class cost structure

Global CapabilitiesGlobal capabilities to serve global customers

BrandIconic brand that is synonymous with quality

• 3M gross margins are in the top decile of peer set• Good progress with much more to come

Delivering Cost Reductions

Cost of goods sold as % of sales


We operationalize strategy through high-impact initiatives

Customer First

Regionalizesupply chains

Optimizeglobalprocesses

Accelerate disruptivetechnology deployment

Optimize global processes entitlement driven

• Lean Six Sigma

• Customer engagement

• Integrated business planning

• Sourcing excellence

Regionalize supply chains: agile and closer to customers

• Footprint optimization

• Centers of Expertise

• Global Service Centers

Accelerate disruptive technology deployment

• Proprietary

• Automated

• Connected

• Efficient

• Safe and sustainable


Lean Six Sigma builds on our strong process cultureOptimizing our processes to best serve our customers

Since 2001 inception:

• 77,000+ trained employees

• 110,000+ projects completed

• $17B+ in savings


Optimizing our footprint

Sales value of production by site, 2015$ Millions

Sites Ranked by Sales Value of Production

Opportunity forfootprint optimizationS

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Objectives of footprint optimization

Improve customer service

Accelerate operational efficiencies

Increase cash flow

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Footprint optimization objectives, benefits and results

Expected costs and benefits(2016 – 2020)

• Investing $500-600M

• Service (on-time-in-full) improvement of 3-4 points

• $125 - $175M recurring COGS benefit once optimization is complete

• $100M inventory benefit

• Internal rate of return (IRR) > 20%

Significant progress towards 2020 objectives

Savings tracking to the high end of the target range

>50% complete


Stepping up cap-ex investments

40%Investment increase in capacity

3X Investment in disruptive technologies

Increase in productivity, disruptive technologies and capacity

$1.4B

$1.5B to$1.7B

2017e 2018e

2XInvestment in productivity


Disruptive technology deployment programCreating the next generation 3M Supply Chain

Customer First

Proprietary technologySuperior solutions with six sigma quality and cycle time

AutomatedConsistent, no-touch processes

ConnectedData driven, real-time process and product control

EfficientLean, continuous process flow

Safe and sustainableLasting positive impact on our people, communities and customers

Highest quality and shortest lead times to our customers

Accelerated investment deploying 3M advanced technologies


Leveraging our proprietary technology platformsThe next generation of 3M Supply Chain

3M technology platforms 3M disruptive technology examples:

• Automated web inspection

• Low surface energy coatings

• Precision die coating

• Robotics and automation

• Micro tribology web transport systems

• Artificial intelligence and machine learning


3M Proprietary automated web inspection system

100Systems

70Process lines

Technology delivering quality improvement and cost reductions

3X Increase in inspection speed

80%Decrease in defective parts/million

$30 MillionAnnual cost savings


Our Vision

3M Technology Advancing Every Company

3M Products Enhancing Every Home

3M Innovation Improving Every Life

supply chain update · supply chains optimize global processes accelerate disruptive technology...

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