CMD presentations

Demand Supply Network
Management
Juha Putkiranta
Senior Vice President,
Demand Supply Network Management
Scale advantage
Device Volumes
Nokia
(M)
Samsung
Motorola
Sony Ericsson
140
120
LGE
100
80
60
40
20
2001
2002
2003
2004
2005
2006
2007
2008 *
*Sources: Company reports up to 3Q 2008
182
© 2008 Nokia
Capital Markets Day 2008
Responding to customer needs
250 Sales Package Variants
170 Handset Variants
Nokia N96
183
© 2008 Nokia
Capital Markets Day 2008
Combining responsiveness and efficiency:
Excellent ability to adapt
Suppliers
Engine Operations Supply Operations
Manufacture to order
150 suppliers for 120 billion components
15 devices each second 24/7
200 devices in average customer order
184
© 2008 Nokia
Capital Markets Day 2008
Advantages in rapidly
changing markets
Flexible inventory management:
Flexible Manufacturing
• 75% of inventory held by suppliers immediately
prior to assembly
Manufacturing Flexibility:
• ~20% of manufacturing done by sub-suppliers –
adds flexibility
• Booming Market = We managed for upside better
than others
• Contracting Market
• We are already biased for downside
• Our organization has experience
• Less important = capacity/supply constraints
• More important = managing costs
185
© 2008 Nokia
Capital Markets Day 2008
-120%
-80%
-40%
0%
+40%
+80% +120%
Product Sales Volume vs Plan
Nokia Demand Supply Network
Architecture
Cost effective
Pull driven
Innovation
186
© 2008 Nokia
Capital Markets Day 2008
Responsiveness
Global reach
Ecosystem
Eco-System: Fast response for
markets needs
Komarom industrial village
187
© 2008 Nokia
Capital Markets Day 2008
High responsiveness combined with
low inventories
Order to delivery
High
Days of supply
Low
1996
188
© 2008 Nokia
Capital Markets Day 2008
2008
Summary
Ensuring efficiency and flexibility while
creating customer value
Variation Management
Global Manufacturing
Scale and Efficiency
189
© 2008 Nokia
Capital Markets Day 2008
… and extending the
lead further
Superior Powers of
Collaboration
Jean-Francois Baril
Senior Vice President
Sourcing
Connecting the Inside with
the Outside
Customer Satisfaction
Operational
Excellence
191
© 2008 Nokia
Capital Markets Day 2008
Supplier
Network
Great
Products
Margin advantage vs.
competition

Percent of operating profit
Operational mode
80%
60%

40%
Supplier portfolio
20%
0%
-20%

Collaboration
Q3'06 Q4'06 Q1'07 Q2'07 Q307 Q4'07 Q1'08 Q2'08 Q3'08
NOKIA
LGE
Source: Nokia, company reports
192
© 2008 Nokia
Capital Markets Day 2008
Motorola
Sony Ericsson
Samsung
RIM
Operational mode = Scale and cost
advantage
R&D and supplier
collaboration
Operational flexibility
150
Terminal Vendor Shipments (M)
Nokia 6300
100
-120% -80%
-40%
0%
Retail price in €
125
+40% +80% +120%
Product Sales Volume vs Plan
75
50
Gross margin %
25
0
04
05
06
Source: Nokia, company reports
193
© 2008 Nokia
Capital Markets Day 2008
07
08
Jan 07
June 08
Working only with the best
suppliers
Lowest
Total Cost
Investment
Capability
Leadership
and
values
Product
Performance
194
© 2008 Nokia
Capital Markets Day 2008
Time to
Market
Nokia
#1 customer
Balanced supplier portfolio
Software
& Content
Hardware
Shares by commodity
195
© 2008 Nokia
Capital Markets Day 2008
# of Suppliers
“Kiwi-bird” shaped supplier
portfolio
Sharp peak of
innovative
companies for
picking new
technologies
Weight on a
few large
suppliers
No long tail
of legacy
suppliers
Company Confidential
196
© 2008 Nokia
Capital Markets Day 2008
Unleashing the power of
collaboration: 1+1=11
Human and business leadership
Supplier
Nokia
• Capabilities
• Technology
planning
• Scale
• Innovation
• Product
Passion and Trust
Co-creation
Transparency
Rewards
197
© 2008 Nokia
Capital Markets Day 2008
• Logistics
Risk management resilience
2/5
Collaboration
2/5
Supplier portfolio
1/5
Robust processes
..and “a pinch” of leadership
Company Confidential
198
© 2008 Nokia
Capital Markets Day 2008
Responsible supplier
management
• Supplier requirements for Ethics, Labour, Health & Safety
and Environment since the 1990s
• > 50 on-site supplier assessments annually with active
development programs
• Environmental improvement targets for key suppliers
• #1 Dow Jones Sustainability Index - Communication
Technology category (2008)
• #1 in Greenpeace Electronics Ranking (Nov 2008)
• Active participation at industry level (e.g GeSI)
Company Confidential
199
© 2008 Nokia
Capital Markets Day 2008
Thank you.