3M Canada 2010-2011
Brian Young
Today’s Agenda
MORNING
 8:00 a.m. – Brian Young
Welcome │ Introductions │Business Execution Process
 8:30 a.m. – Don Ashton
Financials
 9:15 a.m. – Brian Young
Operational Imperatives │Targets to Improve
 10:15 a.m. – Morning Break
 10:45 a.m. – Brian Young
3M Canada Big B Overview
 11:45 a.m. - Wrap-up
 12:00 p.m.
2
Lunch │ Employee Presentation
AFTERNOON
 1:00 p.m. - 3M Canada R&D
Presentations │ Poster Sessions
© 3M 2011. All Rights Reserved.
2010 Highlights for 3M Canada
 OI Vs OP – 4 for 4 in 2010 – 8 for 8 in last 2 years
 Tax partnership creates tax rate benefit (25% in 3 years from 35%)
 Generation of Cash, repatriated $200 Million
 “One Company” Plan
 Achieved SKU reduction targets
 2010 Vancouver Olympics sponsorship
 Successful Integration for local/global acquisitions
 Portfolio Management & Resource Allocation
3
 Progress on Market Prioritization
 Excellent Opinion Survey Results: Engaged Employees
 World Class EHS performance
© 3M 2011. All Rights Reserved.
The “One Company” Plan
FROM
TO
3M Markets
EVPs
Local
Individual Business
Function Leaders
Portfolioand
Prioritization
Focused
on ownAllocation
operations
Resource
Working
individual
Silos
Market in
Focused
Execution
4
Shared Resources
• Speed/adapting to change as a Total Co
• Focus on own operation
• Standardized Processes
• Working in individuals silos
• Shared Services
© 3M 2011. All Rights Reserved.
Future
Direction
for 3M
Canada
Local Alignment to Global Strategies
5
© 3M 2011. All Rights Reserved.
NOTE: BEP Documents integrated to
show Execution rigor
3M Canada’s Markets
Aerospace
Mining
Gvnt’
Based on Top Growth Programs,
Channel Strength, Competitive Advantage
3M Ability to Win
Const.
Vehicle AM
Food
& Bvg
Sporting Goods
Infrastructure
O&G
Retail
Bldg. Mtce
Health
Care
Office
Supplies
Dental
Manufacturing
Vehcl. Mfng
Banking
Apparel, Footwear
Water Infr.
Drug delivery
Telecom
Electricity Distribution
6
1
2
3
4
5
6
7
8
9
Market Attractiveness
Based on Estimated CAGR (’10-’15), Market Size, Stay-at-Home Market
Based on Estimated CAGR (’10-’15), Market Size, Stay-at-Home Market
© 3M 2011. All Rights Reserved.
10
Priority Markets
Health Care
7
Infrastructure/Construction
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Government
Oil and Gas
Transportation
Mining
Retail
3M Canada Business Execution Process
Engaged Employees
Hoshin Kanri
Lean Six Sigma
8
Strategic Plan – Op Plan
Business Imperatives
Prioritized Markets
© 3M 2011. All Rights Reserved.
Why Business Execution Process
Ties operating imperatives to strategic objectives
Drives Alignment
Prioritization: Define the Vital Few Goals
Ensures Accountability
Establishes a rhythm for regular reviews based on forward
look and leading indicators
 Shifts discussions to what will we make happen from what
already did
 Reduces PowerPoint dependency
 Provides simple tracking for all elements of the plan





9
It’s not the Tool that matters, It’s the Mindset
© 3M 2011. All Rights Reserved.
The Business Execution Process
1
2
A3s
Top level X-Matrix
1
Create X-Matrix
2
Build A3 Plans
3
Track Performance
4
Countermeasure
“Countermeasures” would be
what we build into
“Management Action Plans”
4
3
Top Level Bowler
Strategic Performance Dashboard - Canada
Each target you have previously entered will appear below automatically. For each target, enter your starting point and plot the progression needed to meet the target on time. Fill in the actually progression over time. Current cell formatting will
show any actual result that is LESS than the planned result to highlight the cell in RED.
Priority
10
© 3M 2011. All Rights Reserved.
Deliverables and Measures
1
Income:Meet Gross margin target improvement
2
Income: Exceed monthly OI forecast
3
Sales: Exceed monthly sales forecast
4
Inventory: Meet $6MM Inventory Reduction Target
5
NWC: Increase turns by 1.0
6
Inventory: Decrease defective SKU's by 50%
7
Inventory: Reduce Non-working Inventory by 50%
8
Service: Order OTIF 85%, Line OTIF 95%
9
Cost: Exceed LSS Cost Reduction target
10
Productivity : Improve Headcount Productivity by 8%
11
Productivity : Improve Indirect Productivity by 5%
12
Productivity: Improve Manufacturing Productivity by 5%
Starting
Point
This Year:
Plan
Actual
Plan
Actual
Plan
USD
Actual
Plan
Actual
Plan
7.0
Actual
Plan
829
Actual
Plan
6.0%
Actual
Plan
95%
Actual
Plan
14,895
Actual
Plan
Actual
Plan
Actual
Plan
Actual
51.0%
YTD
53.6%
53.8%
$167.0
$184.7
$631.2
$686.2
$67.7
$66.7
8.1
7.5
622
793
3.0%
3.7%
95%
88.9%
100%
102%
8%
5.10%
5%
6.3%
5.0%
-2.6%
JAN
54.1%
48.6%
$11.7
$9.2
$48.2
$44.8
$68.4
$71.5
7.3
6.9
726
828
6.0%
6.7%
95%
94.7%
8%
9%
8%
FEB
53.2%
49.5%
$10.1
$9.7
$45.6
$46.3
$68.4
$69.7
7.3
6.4
726
796
5.5%
6.5%
95%
95.3%
17%
17%
8%
-8.50%
5%
5%
1.5% 5.7%
5.0% 5.0%
MAR
53.4%
54.5%
$14.9
$17.4
$54.6
$56.2
$68.4
$61.5
7.3
6.4
726
862
5.5%
7.5%
95%
95.0%
25%
24%
8%
-3.40%
5%
9.6%
5.0%
-9.60%
APR
53.8%
53.9%
$13.0
$13.2
$50.9
$51.1
$68.5
$67.4
8.2
6.2
622
741
5.0%
7.0%
95%
91.7%
33%
32%
8%
-4.80%
5%
9.5%
5.0%
MAY
54.9%
52.4%
$15.2
$15.3
$53.5
$57.6
$68.5
$71.0
8.2
6.3
622
778
5.0%
7.0%
95%
88.7%
40%
40%
8%
6.50%
5%
9.7%
5.0%
JUN
55.3%
58.0%
$17.2
$19.3
$57.0
$60.1
$68.5
$68.1
8.2
6.6
622
793
5.0%
6.6%
95%
89.5%
50%
50%
8%
7.40%
5%
9.9%
5.0%
0.90%
JUL
52.9%
54.5%
$11.6
$16.9
$48.2
$59.1
$73.5
$72.6
7.1
6.9
520
522
4.0%
6.3%
95%
86.4%
58%
58%
8%
6.80%
5%
9.5%
5.0%
AUG
53.4%
56.1%
$13.1
$14.7
$50.5
$51.8
$73.5
$75.9
7.1
6.8
520
427
4.0%
5.7%
95%
86.9%
67%
66%
8%
5.90%
5%
8.0%
5.0%
SEP
54.8%
58.1%
$18.8
$22.9
$60.1
$68.1
$73.5
$73.7
7.1
6.4
520
403
4.0%
5.7%
95%
84.4%
75%
78%
8%
5.90%
5%
5.0%
5.0%
0.70%
OCT
52.8%
51.8%
$15.2
$14.8
$56.5
$61.6
$67.7
$73.5
8.1
6.8
413
NOV
52.6%
57.1%
$14.6
$19.8
$54.7
$64.3
$67.7
$66.9
8.1
7.7
413
DEC
49.6%
51.5%
$11.5
$11.4
$51.5
$65.1
$67.7
$66.7
8.1
7.5
413
3.0% 3.0% 3.0%
5.0% 5.6% 3.7%
95% 95% 95%
82.7% 84.0% 85.0%
83% 92% 100%
92% 92% 102%
8%
8%
8%
5.50% 4.10% 5.10%
5%
5%
5%
5.2% 6.9% 6.3%
5.0% 5.0% 5.0%
An A3 Walkthrough in Actual Practice
3. Current Performance
Where Are We, Where Were We
Where Are We Going?
2. What Worked and What Didn’t
Green, Red
11
1. Why is this Vital
Rationale for focus
4. Action Plan
Who, When, How Much
5. Countermeasures
What Needs to be Done
to get Back on Track
6. Unresolved Issues
What Needs to be Done
to get Back on Track
Forward Looking Dashboard focused on Counterrmeasures
© 3M 2011. All Rights Reserved.
3M Canada X-Matrix
NOTE: BEP Documents integrated to
show Execution rigor
In what follows, the team does a nice
job of breaking the X-Matrix into
pieces to highlight the components --Slides should include your VITAL FEW,
and some sequence to address the
FOUR sides of the X-Matrix -- -this will
describe how you will
“Operationalize” your Strategic Plan
and execute in a disciplined way.
Alignment &
Prioritization
12
© 3M 2011. All Rights Reserved.
12
Alignment and Prioritization
Long Term “Breakthrough” Strategic Objectives
A Leader in Prioritized Markets
$400 MM Sales from Localization
Benchmark for Marketing Excellence
Healthy Organization for the Future
13
World Class Operational Excellence
© 3M 2011. All Rights Reserved.
Alignment and Prioritization
Annual Strategic Objectives
Cost and Cash Management (Asset Optimization)
Proactively Manage Our Portfolio
Continuous Improvement in Employee Development and Engagement
Execute a Marketing Excellence Program
NPVI of 30% (30% Locally Developed)
14
Grow at 2.5X IPI
© 3M 2011. All Rights Reserved.
Alignment and Prioritization
Top Level Improvement Priorities
Strengthen and Grow Manufacturing in Canada
Execute a Customer Focused Quality Improvement Plan
Portfolio Prioritization and Resource Allocation
Employee Engagement & Performance Culture
Human Capital Planning for the Future
Core and Interactive Marketing Execution Plan
Marketing Competency and Planning Development
Successful New Product Development and Commercialization
Protect the Core, Gain Share and Execute Key Opportunities for Growth
15
Customer Focus Approach
© 3M 2011. All Rights Reserved.
Alignment and Prioritization
Targets to Improve
Growth
from
Strategic
Accounts
at Financial
and Operational
Milestones Milestones
Growth
from
Strategic
Accounts
at Financial
and Operational
Young
Execute a Quality Improvement Plan that Strengthens Customer Loyalty from 53% to 65%
Brown
Achieve Pricing Yield of 2% Execute Sales Excellence Plan
Ashton
Growth Plans for Priority Markets: Health Care, Retail, Oil and Gas
Allan
Achieve New Product Development Milestones and Commercialization Success
Build and Manage A&A Hopper Process to Bluebook
Ashton
Execute Sales Excellence Plan
Execute Brand Reputation Plan
Allan
Achieve New Product Development Milestones and Commercialization Success
Irwin
Execute Brand Reputation Plan
Allan
Marketing
Intelligence
and Competency
Development Plan
Develop and
Execute Interactive
Marketing
Plan
Allan
Marketing Intelligence Competitor
and Competency
Development
Plan
Intelligence
and
Analytics
Allan
Competitor Intelligence and Analytics
Higgins
Strategic Business Development Plan
Allan
Develop
Execute
Capital
Plan
& AligntoResources
Develop
andand
Execute
HumanHuman
Capital Plan
& Align
resources
Priorities to Priorities
Young
Execute Employee Engagement and Performance Culture Plan
Pawson
ERP Business Transformation Implementation
Brock
Meet Our Customer Service and Inventory Targets
Brock
Deliver LSS and Value Stream Project Targets
Brock
Make Variance and Factory Cost Plan (Domestic and Intercompany)
Brock
Manage RM price headwinds and availability
Brock
Develop and Execute Interactive Marketing Plan
Strategic Business Development Plan
Employee Engagement and Performance Culture Plan
16
Owner
ERP Business Transformation Implementation
Deliver LSS and Value Stream Project Targets
Business
Conduct,Conduct,
RegulatoryRegulatory
Compliance Compliance
and World Class
Safety
Business
and
World Class Safety
16
© 3M 2011. All Rights Reserved.
MacDougall
Alignment and Prioritization
3M Canada X Matrix 2011
SS&PS X Matrix 2011
A Leader in Prioritized Markets
A Leader in Prioritized SafetyBCSD
and Security
Categories
X Matrix
2011
17
Become the Leader in Facility Protection and Maintenance
Clear Alignment Throughout the Organization
© 3M 2011. All Rights Reserved.
Financial Update
• 2010 Performance
• Canadian Economic Landscape
• Looking Forward to 2011
18
© 3M 2011. All Rights Reserved.
Business Profile
2011 Domestic Sales – $820
LCG = 4.4%
2011 Income – $210
% Change = 4.9%
(12% ex pension)
19
Good Balance of GDP vs IPI Based Businesses
© 3M 2011. All Rights Reserved.
Summary Scorecard – 2010
+$43.6m
LCG
+1.3%
GM%
+0.6%
Vs OpPlan
Sales
Indirect Prod’y
4.5%
LSS Cost
133%
Income
+$17.6m
Compliance
Inventory
11.1 turn
Service
91.1%
Line Fill
20
A/R
Sku Red’n
From Baseline
© 3M 2011. All Rights Reserved.
10.1 turn
-61%
A/R % Current
94.5%
D/E Inv’y
3.5%
Local Currency vs the Economy
21
3M Canada Continues to Outpace the Economy
© 3M 2011. All Rights Reserved.
Economics from Global Insight – Dec 10 update
The External Environment – Looking Forward
• Continued downgrading of estimates
•Consumer sentiment remains low, but upside
from last quarter estimates
•S-T Interest rates starting to inch up
•FX remains fairly stable, roughly par to USD
22
Flatter Recovery than Expected…but Stable
© 3M 2011. All Rights Reserved.
Source: TD Economics
Summary
13
20:00
1
3M Canada
 Continued trend of delivering commitments – the right way
 Growth curve positive vs Canadian economy
 Raw material costs and availability remain a key challenge
 Flexible plans and portfolio help deliver income in the face
of growth challenges
23
 The RIGHT inventory and pricing will be critical to
delivering 2011 commitments
© 3M 2011. All Rights Reserved.
3M Canada 2011 Operational Imperatives TTIs
Targets to Improve
Owner
Growth from Strategic Accounts at Financial and Operational Milestones
Young
Execute a Quality Improvement Plan that Strengthens Customer Loyalty from 53% to 65%
Brown
Achieve Pricing Yield of 2%
Ashton
Growth Plans for Priority Markets: Health Care, Retail, Oil and Gas
Allan
Build and Manage A&A Hopper Process to Bluebook
Ashton
Execute Sales Excellence Plan
Allan
NOTE: Showing PARTS of the X-Matrix on a Slide to indicate Top Priorities for Subsidiary
Achieve New Product Development Milestones and CommercializationIrwin
Success
Achieve New Product Development Milestones and Commercialization Success
24
Execute Brand Reputation Plan
Allan
Develop and Execute Interactive Marketing Plan
Allan
Marketing Intelligence and Competency Development Plan
Allan
Competitor Intelligence and Analytics
Higgins
Strategic Business Development Plan
Allan
Develop and Execute Human Capital Plan & Align resources to Priorities
Young
Execute Employee Engagement and Performance Culture Plan
Pawson
ERP Business Transformation Implementation
Brock
Meet Our Customer Service and Inventory Targets
Brock
Deliver LSS and Value Stream Project Targets
Brock
Make Variance and Factory Cost Plan (Domestic and Intercompany)
Brock
Manage RM price headwinds and availability
Brock
Business Conduct, Regulatory Compliance and World Class Safety
© 3M 2011. All Rights Reserved.
MacDougall
3M Canada NPI
2011 - A3 Action Plan Highlights
25
NOTE: BEP Documents integrated to
show Execution Focus
This slide and several others that
follow show the A3 first – but just as
a background – NOT to be spoken to
in detail – the KEY is to highlight the
Key ACTION PLAN components on
this slide. This quickly shows HOW
you plan to achieve the
Improvement Priority/Target.
NPI Utilization
Hopper
NPI Milestones
Total NPI Post Launch Sales
Top Locally Developed New Product Sales
Top Imported New Product Sales
NPVI%
Going through the entire A3 would
represent too much detail for an
ADVI%
executive review
© 3M 2011. All Rights Reserved.
Alignment and Prioritization
26
Business Conduct, Regulatory Compliance and World Class Safety
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Biz Conduct, Regulatory Compliance and World Class Safety
2011 - A3 Action Plan Highlights
 Business Conduct
— Effective Business Conduct Investigation Process and Decision-Making
— Training Program (Anti-Bribery/FCPA)
— Regulatory Compliance
 EHS Management Systems
 Financial
 Acquisitions/Integrations
— Improve Communication Tree re: Acquisitions
— Improve Regulatory Due Diligence
— Create EHS audit process
27
© 3M 2011. All Rights Reserved.
27
Alignment and Prioritization
Growth from Strategic Accounts at Financial and Operational Milestones
28
© 3M 2011. All Rights Reserved.
28
Strategic Accounts
Staples
Canadian Tire
WalMart
RIM
Bombardier
Tim Hortons
Cardinal Health
Revera
Syncrude
AGI
Trans Canada
29
© 3M 2011. All Rights Reserved.
Federal Government
A Total Company Approach to A Key Account
30
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Canadian Tire - The Evolution of an A3
June 2010
November 2010
31
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January 2011
Strategic Account – Canadian Tire
January 2011
2011 - A3 Action Plan Highlights
32
Financial Metrics
Customer P&L
Product Portfolio
Pricing Strategy
NPI
3M Hockey Program
Marketing Excellence
Brand – Program Execution (Bondo®, Meguiars®, Command ™)
E-Marketing
Pyramid Strategy
Sales Excellence
Sales Agent Implementation
Driving Customer Engagement
Participation in CTC Corporate Initiatives
Operational Excellence
Supply Chain Optimization
Service Improvement
© 3M 2011. All Rights Reserved.
Canadian Tire and Meguiar’s – A Grassroots Partnership
 Acquisition Dec. 2009 - grew sales 8% in
first year
 Grassroots Strategy to strengthen brand
integrity – 100+ car shows in 2011
 Maintaining clear divide between
Meguiars and 3M Brand positive for CTC
2010 Sales - $5.5 M
2011 Plan - $6.2 M
33
© 3M 2011. All Rights Reserved.
Alignment and Prioritization
Develop and Execute Human Capital Plan & Align Resources and Priorities
Employee Engagement and Performance Culture Plan
34
© 3M 2011. All Rights Reserved.
34
Human Capital Plan
2011 - A3 Action Plan Highlights
 Performance Management/Skill Alignment
 Complete HCP for all Big Bs and Staff Groups
— Identify gaps and prioritize based on criticality
— Identify actions & investment for gaps
— Create succession plans for all strategic roles
 Accelerated Development of HiPos
35
Company wide Human Resource Allocation based on Priorities
© 3M 2011. All Rights Reserved.
Human Capital Planning in Action
36
© 3M 2011. All Rights Reserved.
 Detailed development plans with
accountability for all HiPo employees,
reviewed bi-annually.
 Complete review of all Business/Staff
Groups bi-annually to review
performance issues and strategic fit.
 Process to move HiPo to Strategic roles
for development
 Process to move employees to align skills
to non strategic roles.
 Strategic external hires to fill Corporate
HCP Gaps..
Employee Engagement A3
2011 - A3 Action Plan Highlights







Develop EE Strategy
Communication
Career Progression
Reward and Recognition
Alignment
Leadership
Resources
37
© 3M 2011. All Rights Reserved.
Employee Engagement
Career Progression - Leadership Attributes Communication
Makes Courageous Decisions
Lives 3M Values
Thinks from the Outside
Leads with Energy, Passion & Urgency
Drives Innovation and Growth
Develops, Teaches and Engages
Rewards and Recognition – We Are 3M
38
© 3M 2011. All Rights Reserved.
3M Canada 2010 LSS Results
35000
30000
25000
20000
15000
10000
5000
0
Cash
Cost
2010 YTD Actual
Growth
O.I.
2010 Target
2011 LSS Targets
39
© 3M 2011. All Rights Reserved.
Cash
Cost
Growth
OI
3804
13856
12407
26263
3M Canada




Market Focus
Customer Focus
Prioritization
Alignment and
Resource Allocation
 A competitive organization
40
Deliver Operationally/Manage Strategically
© 3M 2011. All Rights Reserved.