FINANCE DEPARTMENT PROJECT BACKROOM Sony Six Sigma Champion

FINANCE DEPARTMENT PROJECT: BACKROOM Sony Six Sigma Champion: Marcelo Freitas Black Belt: Joao Franco Green Belt: Andre Belleza and Mauro Perin 1

DEFINE PHASE Sony Six Sigma Ver. 2. 4

Customer Diagram Date: 02/SEP/03 Company/Plant COLUMBIA TRISTAR COSTS OPTIMIZATION AND CONTROL Department/Title FINANCE & ADMINISTRATIVE MANAGEMENT REPORTS DIRECTOR HOME OFFICE CASH FLOW MANAGEMENT Name MARCELO FREITAS 3

Define Diagram 2. Commitment to The Process Department FINANCE DIRECTOR Name MARCELO FREITAS Date　02/SEP/ 03 Commitment (in plain language understandable to the customer) REDUCTION IN 30% OF THE FREIGHT AND BACKROOM COSTS BY THE END OF THE FY 04 (FEBRUARY/04) 1. Customer and VOC Customer HOME OFFICE Customer Requirements with Voice FREIGHT COSTS REDUCTION BACKROOM COSTS REDUCTION Basic Requirements without Voice CASH FLOW IMPROVEMENTS COMPLIANCE WITH LEGAL REQUIREMENTS Subconscious Expectation AUDIT SECURITY ISSUES COMPLIANCE. VOC IMPROVE CASH FLOW AND INTERNAL CONTROLS OF THE BACKROOM 4

Business CE Diagram Department: Finance Director, Columbia Tristar Name: Marcelo Freitas Date: 02/SEP/03 Promote economy of scale Create Prints Destruction Policy Freight & Backroom cost from January to September/03 was R$ 1, 8 million Home Office VOC Prevent Pollution of the Environment Achieve Freight single supplier. Present Customer Destroy used Prints Change Storage defrayal structure. IMPROVE CASH FLOW AND INTERNAL CONTROLS OF THE BACKROOM Commitment Protect Copyright Promote award Evaluate personnel REDUCTION IN 30% OF THE FREIGHT AND BACKROOM COST. Improve Skills Train Personnel 5

CTQ Diagram - A Department: Name: CTQ FINANCE DIRECTOR, COLUMBIA TRISTAR M. FREITAS Date: 02/SEP/03 What To What Extent When to achieve Person In Charge Change Storage Defrayal Structure Reduce Costs in 30% End of FY 04 Joao Franco 6

BACKROOM EXPENSE (R$ k) *Data collected until September 7

BACKROOM LOCATION 8

PRINT MOVEMENT (2002) 9

TREE DIAGRAM Improvement Target: Change Storage Defrayal Structure Storage cost in SP Reduce Costs in 30% OTHER STATES 10

MEASURE PHASE Sony Six Sigma Ver. 2. 4

PROCESS FLOW DIAGRAM Start Labs duplicate Prints Murundu Storage Prints SDF Storage Prints Backroom sends Print to Transport. Backroom sends Prints to Transport Co. A Transport Co. B Transport Co. C Transport Co. D Transport Co. E Transport Co. F THEATRES 12

STORAGE BREAKDOWN I Department: Finance Director, Columbia Tristar Name: Joao Franco Date: 14 /OCT /03 Film Storage 13

STORAGE BREAKDOWN II *Data collected until September 14

Tree Diagram Improvement Target Change Storage Defrayal Structure Storage cost in SP Storage cost of Films. Reduce Costs Reduce Storage participation on Backroom cost in 30% OTHER STATES Other Costs on the invoice 15

Project Purchase Order (PPO) Dept. : FINANCE CH Name: MARCELO FREITAS Date: 14 /OCT/03 BB Name: FRANCO STEP-2/14 STEP-3/14 CTQ Project Name Improvement Metrics Storage participation on Backroom cost What to achieve Optimize Backroom Costs To what extent BACKROOM When to achieve STEP-5/14 CH Approval Date 02 CH Signature STEP-5/14 PGS Schedule 02/09/03 Measure 14/10/03 Analyze 14/11/03 -) Improve 14/12/03 PGS Control 29/02/04 Investment: Target Values Reduce from 24% to 17% the Storage Cost STEP-5/14 Define R$ 300 K annual /SEP/03 Marcelo Freitas STEP-5/14 Gains+Savings: Current Values 24% of Total Invoice relates to Storage Cost. 30% End of FY 04 (February/04) STEP-5/14 Project Members GB Andre Belleza (Leader) Mauro Perin 16

Analyze Phase Sony Six Sigma 17

A-Phase CE Diagram Films Prints High number Print destruction policy of releases Aggressive policy Control number of of prints on stock Reduction in number of days of storage for MKT Materials Aggressive policy in production of Ad. Pub. Materials. MKT Storage participation on Backroom costs Improvement on the defrayal method Services and gain of scale Cost Base 18

A-Phase CE Diagram Films Print destruction policy High number of releases N Control number of Aggressive policy of prints N prints on stock Reduction in number of days N of storage for MKT Materials Aggressive policy in production N of Ad. Pub. Materials. MKT N C Reduce Storage participation on Backroom costs Improvement on the N defrayal method Services and gain of scale N Cost Base C The IFDS system controls how many and where all our prints 19

A-Phase CE Diagram Films Prints High number Print destruction policy N of releases Aggressive policy of prints N Control number of N prints on stock C N Reduction in number of days of storage for MKT Materials Aggressive policy in production N of Ad. Pub. Materials. C C C Reduce Storage participation on Backroom costs Improvement on the defrayal method N Services and gain of scale N MKT C C Cost Base 20

A-Phase 21

A-Phase CE Diagram Films Prints High number Print destruction policy N of releases Aggressive policy of prints Control number of N prints on stock C Reduction in number of days of storage for MKT Materials C Aggressive policy in production of Ad. Pub. Materials. MKT X X C C Reduce Storage participation on Backroom costs Improvement on the defrayal method X Services and gain of scale C X Cost Base 22

FMEA Vital fews ! 23

Improve Phase Sony Six Sigma 24

IPO DIAGRAM Improvement on the defrayal cost Change of the cost base from variable costs to fixed costs Services and Gain of scale Print destruction policy Concentrate majority of copies in one supplier Reduce Storage participation on Backroom costs 25

Improovement on Vital Fews !!! 26

Old Method The majority of prints were in dificult locations to transport Our old suppliers work for other film distributors Storage in non proper rooms with other kind of materials Ad Pub materials in bad condition of storage and poor control Manual inventory controls Variable costs increasing the storage cost 27

MCR Fantin Project Centralization of all São Paulo prints in one single backroom Better storage of prints in a refrigerated room Storage capacity of 5. 000 copies Proximity of prints supplier in Alphaville - Cinecolor - Better location. More accessibility to other cities Exclusiveness of services -Only our materials- Barr codes in all Prints Control of Ad Pub materials shipping to the exhibitors Fixed cost 20 K Lc a month 28

MCR Fantin Project Estimated savings on CY 04 30% Less 29

New print destruction policy • Destruction of 2. 000 copies each 6 months • Prints for films older than 6 months will be destroyed • Keep minimunn number of copies for films released more than 2 months • Maintenance of 4. 000 copies in storage (20% under backroom full capacity) 30

MCR Fantin Project 31

Control Phase Sony Six Sigma 32

Controle de estoque e disponibilidade de todas as fitas on-line atravéz do site da MCR. 33

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Separated cost centers for each supplier 35

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FINANCE DEPARTMENT PROJECT: BACKROOM Sony Six Sigma Champion: Marcelo Freitas Black Belt: Joao Franco Green Belt: Mauro Perin and Andre Belleza Thank You 37