Haas TCM
Chemical Management
Services
November 09, 2005
www.haastcm.com
Overview of Haas TCM
Employees: 300
Gross Revenues: ~$170 million/yr
Facilities Served: 250
Countries: - US, Canada, Mexico, Argentina, China,
Korea, Brazil, Israel
IN PROGRESS – Europe, SE Asia
Corporate Operations:
- West Chester, PA (HQ)
- Austin, TX- Purchasing & Data Center
Ownership: Privately Held
Haas TCM: the largest “independent” Chemical
Management Services company
Chemical Management Services
Chemical Lifecycle Management Activities
Tre
Pr
oc
atm
en
t
Output
ure
me
nt
De
liv
ery
-e
xt.
Inv
en
tor
y
Us
e(
ha
nd
lin
g)
Us
eR
ed
uc
tio
n
Mo
nit
ori
ng
Re
po
rtin
g
Co
lle
cti
on
Dis
po
sa
l
Input
Each step of the lifecycle is an opportunity to reduce cost,
use and environmental risk. Haas TCM has direct
involvement with the entire chemical lifecycle.
Chemical Management Services
Haas TCM Creates Realigned Incentives
Traditional Relationship
Haas TCM Model
Conflicting Incentives
Aligned Incentives
SUPPLIER
CUSTOMER
CMS SERVICE
PROVIDER
CUSTOMER
Lifecycle costs
(materials PLUS
management, including
waste management)
Material
(cost, volume)
wants to
increase
wants to
decrease
wants to
decrease
wants to
decrease
•Haas TCM compensation is aligned with customer objectives
•Our program is not volume/activity based. We generate no
income from chemical volume.
•We have client lines not product lines.
Chemical Management Services
Haas TCM - Focus on the Five “Value Pools” of the Chemical Lifecycle
1. CHEMICALS PURCHASED
2. STORAGE
&
Distribution
3. CHEMICAL USE
4. Waste
• Air
• Water
• Haz Waste
VALUE
CREATION:
Chemical
Costs
METRICS:
1. UNIT
PRICE
2. SPOILAGE,
SCRAP
$/ LB (or Gal, etc)
% of “Spend”
3. CHEMICAL
EFFICIENCY
Lbs Chemical
per Unit of Production
4. WASTE
RATE
Lbs Waste
per Unit of Production
5. Management Costs, incl Env Health & Safety
VALUE CREATION
Structural and Carrying Costs + Contingent (Risk) Costs
Customers
Haas TCM’s Customer Base by Industry Sector:
Aerospace
& Defense
Boeing
Lockheed
Martin
Automotive
General
Motors*
Raytheon*
United
Technologies
(UTC)*
Southwest
Airlines*
Continental
Airlines
Electronics
Seagate
Technologies*
Ford
DRS Corp
Daimler
Chrysler
Delphi
Corp
Research &
Industrial
Manufacturing Laboratory
Stanford
Sauer
Linear
Danfoss*
Accelerator
Arvin
Meritor
Power
Generation
Univ Cal
Merced
(pending)
Dana
Corp*
GEMA
General
Dynamics
BAE Systems
Israeli Aircraft
Industries (IAI)
* - Denotes an “enterprise customer”, or one for whom Haas TCM
provides service to all or most of customers’ facilities
First
Energy
Pacific
Gas &
Elec
(PG&E)
Food &
Beverage
Miller
Brewing*
US Aerospace Facilities Served By Haas TCM
Legend
Raytheon
UTC
Boeing
SWA, CAL
LMC, GD, BAE, DRS, L3
Puerto
Rico
All North American Facilities Served By Haas TCM
Legend
Raytheon
UTC
Boeing
SWA, CAL
LMC, GD, BAE, DRS, L3
Non-Aerospace Customer
Puerto
Rico
Haas TCM’s International Operations
Latin America
Hermosillo
Saltillo
Chihuahua
Ramos
Europe
Cuautitlan
á
Toluca
Haifa
China
Shenyang
Shenyang
Shanghai
Shanghai
Chongqing
Chongqing
Liuzhou
Liuzhou
Sao Paulo
Rosario
Haas TCM - What We Do
Bundle Chemical Lifecycle Work Processes Into a Single Solution
• Sourcing & Procurement => all chemicals
- Direct and Indirect
- Catalog and non-catalog items
• Inventory management - Offsite and Onsite
• Just-In-Time (JIT) delivery
• On-site services - Fluid Management, Process
Control and Improvement
• Automated EH&S compliance and reporting
• Hazardous waste management
Via Three Service Models
What We Do (1) e-Commerce and Logistics Automation
Customer Site 1
JIT Delivery
Industrial
Chemicals
Industrial
(mineral
acids,
Chemicals
Industrial
solvents,
etc)
(mineral
acids,
Chemicals
Receiving
and
Storage
Sites 2,3..
Customer
Competitive
Price
Delivery
Order
Placement
solvents,
etc)
(mineral
acids,
solvents, etc)
Waste
Services
Suppliers
JIT Delivery
Oils and
Oils,
Lubes
Lubes
and Fluids
Haas tcmIS
Boiler,
Water
Boiler,
Tmt
Chemicals
Water Trmt
Chemicals
JIT Delivery
Cleaners
Cleaners
Cleaners
JIT Delivery
Plating
Chemicals
Plating
Chemicals
3PL Provider
Industrial
Gases
= Electronic Connection & Automated
Performance Monitoring
Local Storage for “other”
Customer Chemicals
Coatings &
Adhesives
Coatings &
Adhesives
What We Do (2) Offsite Inventory/JIT Delivery
Hub Services:
Haas
Haas
• Receiving, Inspection, Quarantine
• QA/QC – Testing, Cert review
• Custom Labeling
• Stocking (min/max)
• Shelf Life Management
- FIFO
- Lot/Receipt Monitoring
- Recertification
• Inventory Management
- Demand Pattern Analysis
- Lead Time Monitoring
- Exception Processes
• JIT Delivery
• Container Management
• Waste Consolidation
Number Aerospace Chemicals
Stocked @ Haas TCM Hubs ~8,000
Number of Order on Request
(OOR) processed - 46,000/yr
Plant A
Milk Run
Plant E
JIT Delivery and Waste
Pickup/
Transport
Plant B
Haas tcmIS
Plant D
Plant C
N.A. Facilities Served By Haas TCM & Hub Locations
Legend
Raytheon
UTC
Boeing
SWA, CAL
LMC, GD, BAE, DRS, L3
Non-Aerospace Customer
Existing Haas TCM JIT Hub
“Planned” Haas TCM JIT hub
Puerto
Rico
International Logistics By Haas TCM
Philadelphia Hub

Consolidation

Shipping to Israel, China

Compliance
To Israel
To China
To China
What We Do (3) – Onsite, Turnkey Management
Haas Client Facility
Bulk
Storage
O&M WWTP
Chem Inv
Mgmt
Receiving
Chem Mfgr,
Supplier,
Waste
Waste Transport
TCM Hub
Storage
POU Delivery
Data capture and
transaction automation
Waste Pickup
tcmIS
Fluid
Management
& Process
Improvement
...Automated/Enabled through tcmIS, our
advanced information & transaction platform.
What We Do (3a)-“Floor Stock” Management
Barcoded
Cabinet
Barcode Container Mgmt
Return to Cabinet
• All containers bar coded
• Cabinet & Bins bar-coded
• Min/Max set for each bin
• Cabinets scanned
Stocked Items
Non-Stocked
Items
• Automated Replenishment
• Shelf Life Management
• Usage tracking at Point-of-Use
Onsite Chemical Crib or Direct to POU
From Chemical Manufacturers or
Haas TCM Hub
Cabinet Management Streamlines “Multi-Product”
Factory Operations
Sikorsky Warehouse & Crib
BEFORE
Sikorsky Warehouse & Cabinet
AFTER
Haas TCM Services to Enterprise Customers
Haas TCM
Enterprise
Customer
Total
Sites
Sites Served by Service Level
E-Commerce
JIT
Turnkey, On-Site
GENERAL
MOTORS
27
RAYTHEON
45
10
27
8
SEAGATE
10
2
2
6
DANA CORP
52
14
SOUTHWEST
AIRLINES
27
27
MILLER BREWING
5
UNITED TECHNOLOGIES CORP
22
27
38
5
10
12
What We Do Process Improvements
• Process efficiency improvements and
chemical use reduction
– Core staff of subject matter experts:
•
•
•
•
•
•
•
•
Metalworking
Coolant and Fluids Management
Lubrication Systems Management
Solvent applications
Plating & Coating
Adhesive and bonding
Gas and cylinder management
Water and Waste treatment
Supplier Expertise Augments Haas TCM’s SME’s
Haas TCM Suppliers
EXPERTISE
KNOWLEDGE
INFORMATION
DATA
Haas TCM Subject Matter
Experts
tcmIS (and
HaasTech)
efficiently capture
and analyze data
What We Do – Transaction Automation and Info Management
TCM
Hub
Internet
Corporate
Oversight
Internet
tcmIS integrates with
customers’, enterprise
resource planning (ERP)
and accounting systems.
tcmIS Data
Center
Internet
Supplier
Internet
(chems, gas,
waste, etc)
d-Buy - tcmIS electronically
integrates with suppliers’
order processing and
fulfillment systems.
Facilities
Our tcmIS Platform Decreases Cycle Time and Improves
Information Exchange
tcmIS – Features & Functions
 Automated operational support (Sourcing, purchasing, expediting, tracking,
shipping, inventory mgt, & waste mgt)
 Automated Material Management System
 Customer Inventory Management Tools
 Online electronic catalogs with built in AULs by Person, Facility, and Work
Area - plus quantity and frequency and cost
 Online catalog addition with built-in approval routing
 Bar-coded cabinet management, Dispensing & Repackaging
 Material Tracking to Point-of-Use & Waste Tracking from Point-ofGeneration to Disposition
 Online MSDS & Waste Profiles - plus data extraction including composition
for material and waste
 Speciated usage and generation information in real time
tcmIS – Features & Functions (con’t)
 Compliance automation support (Waste clocks, lists, auto notification of
exceeded usage levels, risk & usage reports, etc.)
 Electronic billing & online cost management reports
 Systems are Internet-based - integrated information available world-wide
tcmIS – Creating MR’s
Five Options:
• tcmIS onsite Inventory Counting
• Cabinet scanning & upload
• tcmIS Catalog drag & drop
• Client system extraction & FTP
• Ariba, Oracle I-Commerce, SAP EBP, XML,
EDI, MRP, etc
Screen Captures of tcmIS
intentionally removed
from this presentation.
Case Study #1 – Raytheon Corporation
Case Study: Raytheon Corp
Drivers to Initiate Raytheon’s Chemical and
Gas Management Program (CGMP):
• Become one company despite multiple cultures,
procedures, and systems
• Reduce chemical lifecycle costs
• Desire to focus on core competencies
• Better data management of hazardous materials
• Diverse and large supply base
• Lack of material & process standardization
Raytheon Program At-a-Glance
• Goals:
• Ensure that quality chemicals and gases are supplied
dependably to Raytheon’s operations – On Time
• Continuously reduce Raytheon’s use and costs of
chemicals
Program Overview:
• Multiyear agreement awarded in February 1999
• Deployment initiated May 1999
• Three regional hubs implemented: Salem, Dallas, & Tucson
• Over 45 sites participating, representing 98% of the dollars
spent in North America
CGMP scope of services
Procurement
• Chemical Gatekeeping
• Sourcing
• Supplier Consolidation
& Rationalization
• Volume Leveraging
Hazardous Waste Management
· Waste Pick-up and Disposal Mgmt
· Long Term Liability Reduction
· Volume Leveraging
· Emergency Response
Inventory Management
• Incoming Inspection/Testing
• Labeling and Shelf-life Control
• Catalog Maintenance/Part Number
• Consolidation
• Controlled storage
Database Management
· Chemical Usage/Haz waste Tracking
· MSDS File
· Electronic Catalog
· EH&S Reports
Distribution
• Point of Use Ordering/Delivery
• Just-in-Time Delivery
• Emergency Service
Technical Support
· Process Improvements
· Hazardous Waste Reduction
· Toxic/Hazardous Chemical Reduction
Result 1. Streamlined & Automated Operations
• Automated ordering and tracking through
tcmIS (Online: ~20,000 chemicals & gases,
~700 waste profiles)
• Chemical gate keeping - managed work flow
approval
• Online MSDS & EHS data for reporting
• Chemical usage/waste generation tracking
• Centralized electronic invoicing
• Leveraged sourcing, procurement & inventory
management
Result 2. Improved Service & Quality
On-Time Delivery Min/Max Material (24 HR)
Year 1 Baseline:
Year 4 Goal:
Year 4 Average:
82%
95%
96%
Scrap Rate
Year 1 Baseline:
Year 4 Goal:
Year 4 Average:
3%
.47%
.45%
Result 3. Reduced Costs - Breakdown
At 12 Raytheon Facilities, Year 3 Snapshot – 15MM$ Chemical Spend
30
NET SAVINGS
Annual Costs ($Million/year)
27
= $ ~3 Million, FY 2001
LIFECYCLE COMPONENT
PreTCM
PostTCM
EHS Labor
24
Purchasing
21
Use & Distribution
Logistics
18
Waste Disposal
Haas
Service Fee
15
12
9
6
3
0
Chemical
Costs
Chemical plus
other lifecycle
costs
BASELINE COSTS - Pre-TCM
Chemical plus other
lifecycle costs plus
Svc Fee
Post - TCM COSTS
Chemical Purchases
Result 4. Reduced Scrap & Waste
Consolidated Regional Inventories
Greater Supply Flexibility & Turn Rate
Lower Scrap Rate
+
Process Improvements
Reduced Usages & Wastes
(Presented by Raytheon at 9th Annual CMS Forum, San Francisco, CA)
Gainshare for Process Improvements
Challenges
•
•
•
•
Collecting baseline data
How to share savings and for how long
Management/process owner approval
Validating savings are sustained
Examples
• Business Process Improvement – automation of labor-based, material
management processes (“gate keeping”, handling, etc);
• Manufacturing Process Improvements:
BENEFITS
EXAMPLES
Reduced Cost
Reduced Usage Reduced Waste
1) Precious metals recovery
X
X
2) Technology transfer for
chemical stripper process
modification
X
X
3) Changed mode of chemical
delivery (pipeline to on-site
storage)
X
X
X
Raytheon Program Goals Performance
Historical Material Cost Reductions
50%
Reduce Material Costs
40%
Cost Reduction,
Adjusted for
Producers Price
Index-Chemicals
30%
20%
Cost Reduction, Not
Adjusted for
Producers Price
Index-Chemicals
10%
0%
Historical On Time Delivery
100%
80%
60%
MM
40%
OOR
Reduce Cycle Time
20%
May 04
Dec 03
Jul 03
Feb 03
Sep 02
Apr 02
Nov 01
Jun 01
Jan 01
Gross Program Savings
(Excluding Haas TCM Service Fees)
Continuous Improvement
Across Chemical Lifecycle
Percent of Chemical
Spend
Aug 00
Mar 00
Oct 99
May 99
0%
80%
Avoided
Material Costs
60%
Structural
Savings
PEI
40%
20%
0%
Y-1
Y-2
Y-3
Y-4
Program Year
Y-5
Y-6
Material Cost
Reductions
Summary of Other Benefits to Raytheon
• Supply base consolidation to a single first-tier provider
• Improved delivery to point of use
• Reduced overhead costs, such as accounting, accounts
payable, suspense and incorrect charges
• Reduced labor (75 FTE), inventory elimination ($12
million), floor space recovery (~60,000 ft2)
• Material leveraging & process efficiency improvements
• Reduced chemical purchases and non-production waste
• Improved EHS Stewardship, including reduced chemical
usage, reduced liability & 100% MSDS access
• Improved data management & reporting
• “Best In Class” information management system
Case Study #2 – Sikorsky Aircraft Corp, Stratford, CT
Chemical Management
Sikorsky Aircraft
Sustained focus on
Savings and Process
Improvements
9th Annual CMS Forum
San Francisco, CA
Bob Melnick, Scott Little
October 20, 2005
Why Chemical Management at
Sikorsky?
• Focus on core business processes
• Lean manufacturing principles
• Process improvement
• UTC Initiatives (UT500 & EHS 10X)
Chemical management business case – Sikorsky
Function
Before
After
Procurement
2 P.T. Buyers, 1
F.T Buyer
P.T. Planner
oversight ~10% PPV
Internal Delivery
2 F.T M.Handlers,
1 P.T. Handler
Haas Point-of-Use
delivery
Inspection Quality
2 P.T Material
Inspectors
Haas DQR Certified
MSDS Mgmt
$75K/yr
0$ (tcmIS)
Scrap Chemicals
18%
6%
Inventory
$1M
Consigned
Environmental
Tracking
Consultant + 1 P.T. Consultant + tcmIS
EHS manager
Displace Internal Costs to Supplier
Performance Gets Recognition
Case Study #3 – Seagate Technologies
Scope of Seagate CMS Program
Seagate, MN Ops
Seagate, Other NA
Seagate Int’l
- Ireland
- Asia
Haas TCM
SUPPLY CHAIN MGMT
tcmIS
Material Suppliers
Integrating Platform
On Site Services
• e-Commerce
• Lifecycle Tracking
• Record Keeping & Reporting
• EHS Stewardship
• Product Information
Haas
TCM
• POU Delivery
• Waste pickup
• Other Onsite Svcs
Air Products
and Chemicals
• Gas Services
• Cylinder Mgmt
• Emergency Response
Haas
TCM
• UPW
• Waste Water
• Optimization
“D-Buy”
• Chemicals
• Gases
• Waste Services
Rinchem Inc.
• Offsite Inventory
Mgmt
• JIT Delivery/Stocking
• Container Mgmt
• Emergency Response
Seagate View - Productivity Progress
•
•
•
•
•
•
•
Before CMS
22 Chemical Related Seagate
Employees
149 Direct Tier 1 Suppliers
868 Chemical POs
7 Direct Supplier Contracts and
Risk
No Electronic Chemical
Catalogs
Manual Chemical
Approval/MSDS Process
~$800K Chemical Inventory On
Site
•
•
•
•
•
•
•
After CMS
18 Chemical Related CMS
Employees
Single Integrated Supplier
Single E-procurement Vendor
Contracts Novated Under CMS
Supplier/Less Risk
Single Consolidated Web-Based
Electronic Catalog
Web-based Approval CRA/MSDS
Process
No Working Capital – Seagate
Pays Only at Point of Use.
Lower “scrap”= Reduced Chemical Use
$700,000
Chemical Spend
9%
$600,000
% of Spend
Shrinkage/Obsolete
8%
7%
$500,000
6%
$400,000
5%
$300,000
4%
3%
$200,000
2%
$100,000
1%
Sep-03
Aug-03
Jul-03
Jun-02
May-02
Apr-02
Mar-02
Feb-02
Jan-02
Dec-01
Nov-01
Oct-01
Sep-01
Aug-01
Jul-01
Jun-01
May-01
0%
Apr-01
$0
CMS is platform of continuous cost improvement
"Total" Chemical Costs - Seagate Normandale and Shakopee
16,000,000
14,000,000
$ per Year
12,000,000
10,000,000
Management Fee
8,000,000
Management Costs
Chemical Costs
6,000,000
4,000,000
2,000,000
0
Baseline
FY 2002Actual
FY 2003Actual
Year
FY 2004Actual
Our Compensation Model Produces Alignment
Three Part Compensation:
1.Service Fee – Based on Costs to Serve;
Service Level Based on Customer BCA
2. Chemicals Costs – At Haas TCM’s cost
3. Savings Gainshare:
- Chemical Costs; and
- Process Efficiency Improvements