Strong Today. Stronger Tomorrow.

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Strong Today.Stronger Tomorrow.
The Management of the Global Supply Chain at Dow
Don Weintritt Global Supply Chain Technology
Director, Dow Chemical Supply-Chain Executive
Retreat, Boca Raton, FL January 23, 2007
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Topics Today

• Dows Strategy
• Shared Services Supply Chain
• Execution and Sustainability
• Lessons Learned

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Strong Diversified
2005 Record Results
Dow -- One-of-a-Kind
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Dows 60-Year Strategic Evolution
?
Era Business Model Strategic Thrusts 1940s/1950s M
ove to petrochemicals/plastics ? Integrated U.S.
manufacturer from just organic/inorganic
chemicals 1960s Geographic expansion ? Integrat
ed manufacturer (export U.S. model) ? Product
innovator ? Joint ventures 1970s/1980s Business
diversification ? Integrated global
manufacturer (pharma and consumer) ? RD
investor 1990s Re-defined core
chem/plastics/ag ? Product and site
integration Focus on Performance
businesses ? Global business ? Productivity ?
MA
?
?
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Vision, Mission, Values and Strategy
Vision To be the largest, most profitable and
most respected chemical company in the
world Mission To constantly improve what is
essential to human progress by mastering science
and technology Values Integrity Respect for
People Strategy Strengthen our franchise basics
businesses and preferentially invest in our
performance businesses
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Turning Global Trends to Dows Advantage

• The chemical industry remains broad, diverse and
  growing
• Basic chemical industry remains cyclical
• Increased global competitiveness through the
  value chain
• Emergence of strong regional players
• Faster growth in emerging geographies
• Middle East ethylene cost advantage widens

Strategy to create global growth opportunities
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Integrated Business Model
JOINT VENTURES
PRODUCTS
PERFORMANCE
BASIC
MARKET FACING
SOLUTIONS
SYSTEMS
JOINT VENTURES
Technology RD
Marketing Sales
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Integrated Business Model

• Global organizations how to build the Dow
  shared services model.
• Global supply advantaged sources.
• 3. Global markets how the linkage between the
  manufacturing and shared services strategy
  promotes market penetration.

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1 - Global Organizations
Shared Services Opportunity
Shared Services A Portfolio of Functions
PURPOSE Helping Dow achieve its vision being
the largest, most profitable and most respected
chemical company in the world by enabling
Dows businesses, customers and the industry to
run better, faster and safer.
OPPORTUNITY The Shared Services model is
providing Dow unique opportunities for
integration, leverage and process improvement
across functions to increase the productivity and
effectiveness of its supply chain operations.
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Alignment to the Corporate Strategy
Vision To be the largest, most profitable and
most respected chemical company in the world.
Value Proposition Enabling Dow businesses and
customers to run better and faster than anyone.

• Responsible Care leadership from supplier to
  customer

• Compliance with Dow policies and laws

• Best in class world operations in each function

• Six Sigma mindset integrated into all we do

• Meet or exceed corporate performance goals

Drive financial discipline and low cost to serve
Invest forstrategic growth
Set the standardfor sustainability
Build a people-centricperformance culture
Inventory Productivity Supply Chain Cost to
Serve Raw Material Cost Improvement On-time
Delivery Delivered Complete
Reduce LOPCs by 75 Improve Operational Safety
Performance by 75
Seamless Material Flow Flexible and Adaptable
Supply Chains Emerging Geographies/ISC
Design Next Enterprise Architecture Joint
Ventures
Performance Management Leadership
Development Diversity Inclusion
2010Shared Services Objectives
Low Cost Feedstocks Cost Structure
Productivity Effective Work Processes / IT
Systems
Performance Management Leadership
Development Diversity Inclusion
Local Citizenship Product Stewardship
Innovation Global Footprint Ethics, Compliance
Governance Corporate Reputation
Portfolio Management Strategic Customers
Markets Emerging Geographies
Corporate Objectives
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2 - Global Supply

• Advantaged energy and feedstocks
• Safe and secure supply chains are part of our
  brand
• - Its who we are
• - Its part of what our customers
• buy
• Supply Chain Design

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Safe and Secure Supply Chains - Results
HAZMAT Performance
0.0246.07 ?
Six Sigma Performance on Transportation
Incidents
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2015 Sustainability Attainability

• Global Footprint
• Energy efficiency and conservation
• Addressing climate change
• Product Stewardship and Innovation The 3 goals
  are
• How we manage our existing products
• How we develop more sustainable products
• How we help to meet world challenges.
• Local Citizenship creating stronger, safer
  communities
• Local protection of human health and the
  environment
• Contributing to community success

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Key Sustainability Goals
Local Protection of Human Health
Environment 75 improvement of key indicators for
EHS Contributing to Community Success 100
of major Dow sites achieve community acceptance
ratings. Energy Efficiency Conservation
Reduce energy intensity 25 from 2005 to 2015.
Addressing Climate Change Reduce GHG emission
intensity 2.5 per year through 2015.
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Supply Chain Design A Complexity Reducer
Suppliers Supplier
Customers Their Customers
Supplier
Enterprise
Distribution

• Complexity Driver
• Number of customers
• Number of distribution points
• Number of orders
• Size of shipments
• Number of transportation modes
• Number of products
• Hazardous materials classification
• Manufacturing process
• Degree of Envelope Integration

JV Partners
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Lessons Learned

• Building Supply Chain expertise across the
  enterprise not just in the expertise centers
• Collaborative planning and strategy development
• Getting a seat at the table
• Organization capable of multi-generational
  integration

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Lessons Still Being Learned

• Maximizing the value chain
• For ourselves and our customers
• cost and margins
• capability
• networks
• sustainability
• supply chain flexibility
• supply chain adaptability
• service models
• market penetration
• supply chain design

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Some of the variables

• Chemical transportation security
• International trade
• Transportation infrastructure
• Rail competition
• Payload optimization
• Ocean vessel flexibility
• Chemical transportation safety regulations risk
  management
• Sustainable supply chains
• Massive shift in supply chain complexity and
  volume on the horizon various business models

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Questions
Thank You. Questions?
Don Weintritt Global Supply Chain Technology
Director The Dow Chemical Company