ISM 2006 Northeast Supply Chain Conference Educational Exhibition

ISM® 2006 Northeast Supply Chain Conference & Educational Exhibition October 2006 “Supply Chain” Your Company’s Secret Weapon Shelley Stewart, Jr. Senior Vice President, Operational Excellence & Chief Procurement Officer Tyco International (US), Inc.

The Evolution of Supply Chain 2 11/25/2020 • From Tactical to Strategic • Creation of the CPO Level • Globalization of Supply Chains • Engagement in Non-Traditional Spend – HR – Legal – IT • “Bravely” Using Technology • Talent Skill Shift

Total Cost Driven Purchase Price Administration Inventory Set up Quality Maintenance Capacity Payment-terms Scrap Expediting e. Nablers Revenue Recognition Mfg Efficiencies Lead-time Planning Warehousing Specifications Attacking all of the Opportunity 3 11/25/2020

Signing the Contract is only the Start! Supplier Value Scenarios Different Types of Supplier Value Management 3 Supplier Collaboration Value Creation • Six Sigma • Value Engineering • ESI Contract Signed 2 Supplier Performance Management Up to 75 percent of Sourcing Savings can disappear within 18 months 1 Non-Compliance Strategic Sourcing Time 4 11/25/2020 Source: Geller & Company; PSC

Taking it Straight to the Bottom Line™ – Some of the Key Elements Best Practices Procurement Role Core Part of Corporate Strategy • Strategic Sourcing • Negotiations Management • All Spend Categories in Scope • Risk Management • Partnerships with Suppliers • Supplier Recognition • Contract Management & Supplier $ Centric Strategies • Cost Reduction Planning/Tracking • Budget Adjustments to Preserve Cost Reductions • Low-Cost Country Sourcing • Consortium Buying • Asset Recovery Innovation & Technology • Selective Outsourcing • Spend Analysis & Category Management • Demand Aggregation • Electronic RFIs, RFPs • Reverse Auctions • Optimization & Decision Support • Contract Mgmt & Compliance • Results Tracking & Reporting • Supplier Performance Evaluation 5 11/25/2020 • Project Mgmt & Executive Dashboard Objectives • Aggressive Stretch Objectives • Total Cost of Ownership perspective • ROIC goals • Objectives Shared Across Entire Organization • Incentives/Consequences • Supplier Performance Metrics Good Leadership • The Right Leader • Leadership Culture at all Levels • Bias to Action and Results Optimized Organization • Structure that works in your culture • Cross-functional involvement • Speaking with One Voice • Commitment to Continuous Learning • Professional Career Track Excerpted from the book “Straight to the Bottom Line”

A Global Business § § Broad geographic sales mix - $40. 0 Billion Facilities in over 60 countries Asia-Pacific 14% $5. 8 Europe 27% $21. 2 $11 More than 40% of sales are outside the US More than 50% of employees are outside the US $2. 2 Other Americas 5% Significant Worldwide Presence 6 US 54% 11/25/2020 (based on FY 2004 data)

Diverse Portfolio of Leading Brands Electronics Healthcare Fire & Security Engineered Products Our Brands Are Well Known and Respected 7 11/25/2020

Key Areas of Focus • Strategic Roadmap • Global Commodity Strategy/Teams • Leadership Engagement • Emerging Market Sourcing • e. Sourcing Strategies • Talent Development People 8 11/25/2020 - Processes - Technology

Strategic Roadmap Segment Geography Strategies Scope Training 9 11/25/2020 2003 2004 “Build the Foundation” “Expand the Core” Segment C Segment D Segment E Segment F Segment A Segment B North America EMEA China India Latin America Volume Leverage e. Sourcing Traditional “Purchasing” Low Cost Country Sourcing “Segment Specific” - 10 Teams - Limited Spend 22 Teams/110+ Sub-Teams Begin Global Expansion 7 Step Sourcing Process e. Sourcing Leadership Training 2005 “Accelerate the Impact” 2006+ “Sustain the Gains” Eastern Europe Indirect Compliance Working Capital (DPO) Supplier Development Emerging Market Expansion “Global Sourcing” Continue Global Expansion 55% Spend Addressed Trade Compliance IT Contract Six Sigma Sourcing Expanding Toolkit and Scope Competency Training New Product Development

Strategic Sourcing Teams EMEA North America • Capital Equipment • Chemicals • Commercial Print • Corp Commodities • Electronics • Energy • Facilities • Fleet • IT • Metal Forming • Molded Plastics • MRO • Office Equipment • Office Supplies • Packaging • Resins • Telecom • Temporary Labor • Tooling • Transportation • Travel 10 11/25/2020 Latin America • Energy • Fleet • MRO • Packaging • Telecom • Temporary Labor • Transportation • Travel • Capital Equipment • Castings (New) • Electronics • Energy • Fleet • Inj. Molding (New) • IT • Metal Forming • MRO • Office Consumables • Office Supplies • Packaging • Steel Tubes (New) • Telecom • Temporary Labor • Transportation • Travel 30 Category Teams, 229 Initiatives Asia • Electronics • Fleet • Packaging • Telecom • Temporary Labor • Tooling • Transportation • Travel

Electronics Category Team Electronics Steering Committee Analyst Team Leader TE TFS THC TEPS Electronics Category Team Category Initiatives PCBs Resource #1 Resource #2 Segment Council Business Stakeholders IPO (Reps) Caps PCBAs Cables Conn. Resource #3 Electronics Category Team Initiative Leaders Segment Council Business Stakeholders Etc. . TE 11 11/25/2020 TFS THC TEPS IPO Offices

IT Sourcing Team Structure CIO Council Hardware Telecom Software Resellers Infrastructure Council Apps/ Enabling Council Security Council Sourcing Sub-Teams IT Sourcing Steering Committee 12 11/25/2020 Tyco Sourcing Leadership Team (TSLT)

Leadership Engagement Category Executive Sponsor CAPEX SVP, Operational Excellence Chemicals Segment President Commercial Print SVP Communications Electronics Segment President Fleet Segment President IT SVP, Chief Information Officer Legal EVP, Chief Counsel MRO SVP, Investor Relations Packaging Resins Segment President Telecom Chairman & Chief Executive Officer Temp Labor Travel 11/25/2020 SVP, Operational Excellence EVP, Chief Financial Officer Transportation 13 Segment President SVP, Corporate Governance Senior Leaders Actively Involved

Global Sourcing Regions & Commodities Asia Eastern Europe • • Mexico / Latin America • Metal parts • Cable Harnesses • Assemblies Raw material Metal parts fabrication Castings Tooling • Electronic components • Cables / Harnesses • Auto parts / stamping • Molded parts / Tooling • PCB / PCBA • Textile • Contract mfg. - Hi Volume • Castings China India • Molds & Dies, Molded Parts • Metal parts / Machining • Chemicals / Resins • Pharma & Bio-tech • IT & ITES • Textiles • Castings & Forgings Selecting Regions Based on Total Cost, Quality & Delivery 14 11/25/2020

Strategic Sourcing – Global Sourcing Ø Global Sourcing Spend 2003 2004 -2005 Focus on Asia … IPOs established in China and India: – – 2005 2006 Tooling Electronics Metal forming Chemicals Ø Expanding to Eastern Europe, Latin America & Southeast Asia in ’ 05 through ‘ 07 Ø Developing local talent via ongoing training … Sourcing, Integrity, Trade Compliance Ø Raising awareness & overcoming internal resistance in high cost countries Big Opportunity Ahead 15 11/25/2020

Spend Management Roadmap 2006 -2007 2005 -2006 Supplier Portal COMPLETE Contract Mgmt COMPLETE 2004 -2005 e. Procurement 2003 -2004 Datawarehouse e. Sourcing Sourcing Applications Building Blocks 16 11/25/2020

What’s Next ? ? Supplier Network e. Procurement Spend Visibility e. Sourcing Contract Management Catalog e. Invoicing e. Payment Category Procurement Contract Compliance 17 System 1 Suppliers Invoices / PO’s System 2 Suppliers Invoices / PO’s GL / Cost Center Item, etc 11/25/2020 Tyco ERP & AP Systems System 3 Suppliers Invoices / PO’s System N Suppliers Invoices / PO’s GL / Cost Center Item, etc

Competency - Based Training Supplier Performance Management Team Management Strategic Sourcing Total Cost Management Supply Chain Competencies: Fact - Based Decision Making Commitment to Continuous Learning 1. Leadership / Behavior Results-Oriented Leadership X Communications and Relationships X Data Management & Analysis X Disciplined Problem Solving X 2. Sourcing Supplier Management X X Purchasing Strategic Sourcing X Advanced Procurement X X 3. Supply Chain Logistics and Distribution X Inventory Management X Demand Management X Optimized Organization 18 11/25/2020

The Future of Supply Chain 19 11/25/2020 • More Strategic Roles in Supply Chain • Extended Collaboration with Supply Base • More Aggressive use of Technology • Continued Globalization of the Supply Chain • Larger Talent Pool from Universities with Supply Chain Specialization