Survival Minimum y Strategic Iniciatives

Executing ZBB requires an iterative

processes to define and adjust “survival
minimum” and “Strategic Initiatives”

Executing ZBB process

Current State Survival Strategic investments Strategic Improvement initiatives or process redesign Reviewed
minimum optimum strategic
______________________________________________________________________________________________________________________________________________ nnlimum

Identify current state for 3 Identify investments 4 Identify improvement

families to be considered
FTE’S, Spend, Workload
based on strategic activities Optimal and reviewed spend,
choices Activities to simplify, outsource considering corporate
FTE's, Workload, strategic and automate (Improvement strategic guidelines, ensuring
investments initiatives or process redesign) continuity of the operation,
growth and sustainability

2 Identify minimum of survival

Activities required to ensure
continuity of operations
(distnbution and manufacturing)

Survival minimum is the budget required to sustain the operation and ensure a service level
Illustration: Typical waterfall of a ZBB budget construction

process strategic initiatives improvement initiatives or

> SM activities are understood

minimumredesign
Current State Survival Strategic
Reviewed
optimum strategic optimum
The needs of spend for the SM must be based on the drivers selected for the packages
Quantity (Q.) Price (P) Prices should
be defined
through
2x 40K •---------- contracted
negotiations
and/or
Crusher Rotors
Tons/yea
r Life tons
Humidity
%
Budget
benchmarking

The drivers used in the calculation of spend

need to be selected, analyzed and
communicated as explained in the previous
process for reviewing drivers

CMT example:

When creating the SM is necessary to explicitly relate how the budget P's and/or Q’s to estimate the budget are determined by the drivers

The strategic initiatives are those spend activities budgeted with the purpose of reaping a future
benefit for the operation
Illustration: Typical waterfall of a ZBB budget construction

Identify investments based on strategic or > SI proposed by each plant/ operation will be prioritized with a benefit/risk analysis
> Leverages the current PMO process and prioritization

Identify improvement
activities
Activities to simplify, outsource and automate
(Improvement mitiatrves or process redesign)

Reviewed
strategic

Current State Sales

improvement Survival minimum
growth Cost reduction
SI CAPEX
optimum

Strategic optimum SI SI Improvement

initiatives or
process redesign

Some Sis might have been identified in the development of SM

The entities and ZBB cells must prioritize Sis based on relevance for
their business, feasibility and impact for the company
Also, dedicating all resources to capture identified savings should be a priority

to maximize ZBB monetary and cultural impact

> Time availability to support

business and define action plans
> Accountability across the Pe
organization
> Collaboration between areas

opl
e
> Standardized execution
in allocation, methods, channels
> Strict, constant and granular
spend follow up_________________

Years