Martin McKie, Director EMEA Supply Chain at Arris spoke at the SCL Event July 2013

1. Collaboration: The Key to
Success
Martin McKie
Director, EMEA Supply Chain
ARRIS

2. The new ARRIS transforms how service providers deliver
entertainment and communications without boundaries
2

3. New ARRIS (Motorola & ARRIS)
Direct presence in over
25 countries
Channel presence
in over 85 countries
~7,000 employees
Customers Worldwide
85+
3
25+

4. Combining for New ARRIS Segments
Home Devices
Modems, EMTAs, Gateways,
Set-top Boxes
BCS
Modems, EMTAs, Gateways
ATS
HE Optics, Fiber Nodes
RF Amplifiers
MCS
Assurance, Analytics
Workforce Management
Video on Demand
Ad Insertion & Management
Network Infrastructure
CMTS, Edge QAMs, HE Optics
Fiber Nodes, RF Amplifiers
Encoders/Decoders/Transcoders
Convergence Experiences
Assurance, Asset
Management, Content Security
, Ad Insertion, Video on
Demand, User
Experience
BCS
CMTS, CCAP, Edge QAMs
Encoder/Decoder/Transcoder
NOWBefore
Roadmap is subject to change. June 2013
4

5. An Industry Leader with Commitment to
Innovations and Transformative Solutions
▪ World Leader in IP Gateways, Modems and Video Devices
▪ First whole-home headless gateway
▪ First all-digital HDTV standard
▪ First cable telephony system
▪ First wireless cable modem gateway
▪ First DOCSIS® 3.0 certified E-MTA on Wideband
▪ DOCSIS 3.0 broadband speed record with
Kabel Deutschland-4.7Gig/s
▪ Designed market-leading ad insertion solutions
▪ 14 Technical Emmy® Awards
~ 2,000 Patents Approved
or Pending
plus a license to a wide array of
Motorola Mobility patents
Roadmap is subject to change. June 2013
5

6. 6
▪ Defining our strategy
▪ Supply Chain Business Operations
▪ Business unit alignment
Supply Chain Strategy & Organization

7. ARRIS – Supply Chain Model Strategy
Simplify
Continuous improvement
Customer focused
Execution excellence
Obsess over product
superiority
Supply Chain Simplification
Supply Chain Velocity
Deep Supplier Relationships
Operational Excellence
Customer Quality Renewal
Customer:
On Time Delivery
On Quality
Cash:
Inventory Turns
Cost:
Total Supply Chain Cost
Cycle Time:
New Product Introduction
Supply Chain
Responsiveness
PLAN SOURCE BUILD DELIVER
Focused to win Our strategy Our key measures
7
NPI

8. Supply Chain Business Operations
Supply Chain
Business Ops
Supply Chain
Product
Marketing
Sales&
Marketing
Customer
Finance / Pricing
Demand
Management
Supply
Management
Demand &
Supply
Balancing
Consensus
Planning
Our functions:
Customer operations | Sales & Operations planning
Inventory Management | Excess & Obsolescence
Our focus:
Customers | Cost
Cash | Cycle time & Service level
Demand Supply
8

9. Motorola Mobility
Supply Chain Business Cycles & Challenges
9
▪ Typical activities and business cycle: Medium term
▪ Bullwhip affect: Short term
▪ Product mix matrix
▪ Value chain

10. Shrink
Sell facilities
Reduce resources
Decrease prices
Hold onto share
Grow?
Buy facilities
Make new deals
Chase parts
Business Cycle &Typical Activities: Medium Term
10

11. Bullwhip Affect (the textbook way): short term
Cancel orders
Stop shipments
Negotiate SOI
Reduce prices
Expedite orders
Expedite shipments
Open the floodgates
Increase prices?
11

12. Competitive Environment
2008
2013
Development Time to market
pressure pressure
12
A challenge for Consumer facing Enterprises and any Businesses
supporting them.

13. Motorola Mobility 13
▪ Defining it for supply chain
▪ Multi-enterprise collaboration
▪ Collaborative Planning, Forecasting and Replenishment (CPFR)
- S&OP overview
- Demand change
- S&OP summary
- Supplier S&OP range forecasting
- How collaboration impacts results
Collaboration
13

14. Motorola Mobility Internal XX-Month-2012© 2012 Motorola Mobility, Inc. 14
Verb 1. To work jointly with others
2. To cooperate with or willingly assist another
Tactical / short term
 Replenishment
 Forecasting
 Business process mapping
 Logistics sharing
 Merge in transit
Strategic
 Business planning
 Joint product design
 Joint supply chain design
 Vendor managed inventory
 Joint warehouse space
14
Collaborate ke-’la-be-rāt

15. Collaborative planning, forecasting and
replenishment (CPFR)
CPFR is a structured, inter-enterprise, business planning
methodology with three key elements:
2 3Plan Forecast Replenish
15

16. Motorola Mobility
CPFR
Collaborative Plan
▪ Business plan between
purchasing of the the customer
and the supplier
▪ Contract terms
▪ New product transitions
▪ Align planning windows
▪ Mutual goals
16

17. Motorola Mobility
CPFR
Collaborative Forecast
▪ Developed monthly
▪ Cross-functional inputs
▪ Cross-enterprise inputs
▪ Inputs from collaborative
planning team
- Inventory
- Sell-through
- Forecast
- Refurbs
2
17

18. Motorola Mobility
CPFR
Replenishment Plans
▪ Support forecast and inventory plans
▪ Reserve fulfillment capacity
▪ Freight space for customer
▪ Inventory for customer
▪ Observe the constraints of Collaborative
Plan
▪ Measure & Refine performance
- On Time Delivery
- Stock-out
- Inventory
- Sell-out / Through
18
3

19. Customer
Market
Planning
ARRIS
Product
Roadmap
Customer
Sales
Forecast
Joint
Collaborative
Order
Forecast
ARRIS
Replenish
Customer
Customer
Sell-through
Measure
Performance
Joint
Business Plan
CPFR: The Customer Collaborative overview
19
Simple system supported by
real time data to determine
performance

20. Motorola Mobility Internal XX-Month-2012© 2012 Motorola Mobility, Inc. 20
At ARRIS:
A key enabler for successful downturns and upturns
Deeper integration = higher performance (Pagell, 2004)
Integration inside an organization is difficult
Integration across enterprises is even more difficult
Commercial terms often constrain more strategic collaboration
Collaborate ke-’la-be-rāt
20

21. Multi-enterprise Collaboration
INTERNAL
CUSTOMER
SUPPLIER
Integrating these ends and adding significant customer value
are the essence of our deliverable
21

22. Time | Demand Change to Suppliers?
How long does it take for a change in demand to reach the
farthest point in your supply chain?
Tier
1
Tier
2
Tier
3
Demand
Change
22

23. S&OP summary
Customer > Internal > Supplier
? ?
Now
2009
23

24. Face-to-face
Connected by procurement team
Decision makers on both sides
Weekly to monthly
Range forecasting
Material / capacity
Inventory
Systems
Excess
parts
Alignment
Long lead-time
suppliers
Constrained
industry
Single sourced
components
Supplier S&OP
24

25. 4 months
3 months
2 months
I month
Actual
25
Flexible Range Forecasting

26. __ weeks before
supplier ships
Supplier ship date“Inflection
point”
Long Lead Time
60% of BOM
Short Lead Time
40% of BOM
NPI PLAN SOURCE BUILD DELIVER
Raw materials are inexpensive and common across many manufacturers and products
Processed WIP is expensive and is often unique to a specific manufacturer or product
PLANNING | SUPPLIER S&OP
26

27. Range Based Forecasting
0k
100k
200k
300k
400k
500k
600k
700k
800k
prior Q1prior Q2prior Q3prior Q4 Q1 Q2 Q3 Q4
Actual Fcst Lock Buffer Avg
Drive Range Based Forecast material to:
•YQA - 100% of the average of the prior Y quarters for
the next 3 quarters, or the consensus forecast, if
greater.
•RGP (Rolling) - % of the average of the prior Y quarters
for the current quarter, or % of the next quarter’s
forecast, if less.
Right Goal
Post
X%
Forecast
Floating
RGP
Rolling
Range Based Forecast
YQA
Y Qtr Avg.
Component Lead
Time
• PO for Lock + Buffer
• PO aligns to supply plan
• RGP scheduled to sea
freight cut-off
Weekly - Tracking
• PO support for entire
RBF
• Track supply cover of
RBF
RBF Response
time
• Final build schedule
• Cover final build
quantity with supply
commit
Excess RBF Supply
• Deliver supply to
inventory /SOI /Buffer
• Push PO delivery into
next quarter
• Cancel PO
27

28. Motorola Mobility
CPFR and Supplier S&OP
GET STARTED
Supplier
S&OP
GET
STARTED
▪ Start at the top
▪ Confidentiality
▪ The good, the bad, the ugly
▪ Find decision makers
▪ Commit without fear
▪ Immediately communicate breaking news
28

29. Motorola Mobility
Supplier
S&OP
CHALLENGE
S
CPFR and Supplier S&OP
CHALLENGES
▪ Measurable?
▪ News isn’t always positive
▪ Communicate up and out
▪ Building relationships takes time
▪ Avoid short-term issues
29

30. Motorola Mobility
▪ Time commitment
▪ Critical expertise
▪ Level in the organizations
▪ Relationship builder
CPFR & Supplier S&OP
RESOURCE
30

31. June 2012© 2012 Motorola Mobility, Inc. 31
Customer
 Improved supplier
flexibility
 Improved lead-times
and better on-time
delivery
 Supply chain ability to
deal with demand shifts
 Increased Sales
Inventory optimisation
– confidence to “lower
the water levels without
exposing the rocks”
Supplier
 Better demand visibility
 Improved
responsiveness
 Optimisation of
inventory, cash (capacity
planning)
 Improved customer
satisfaction
 Improved sales
Sub-tier suppliers
 Better demand
visibility
 Great potential to
support upsides
Range-based planning
 Potential to increase
sales
31
Results of Cross Enterprise Collaboration

32. Thank you for listening
Any questions?