OLYMPUS Investor Day 2017

Business Process Reengineering
Yasushi Sakai
Chief Improvement Officer (CIO)
Olympus Corporation
September 13, 2017

Disclaimer2This material contains forward-looking statements that reflect management’s current
views, plans, and expectations based on information available at the time ofpreparation. These forward-looking statements are not guarantees of future
performance and involve known and unknown risks, uncertainties, future businessdecisions, and other internal and external factors that may cause the Company’s actual
results, performance, achievements, or financial position to be materially different
from any future results expressed or implied by these forward-looking statements.
Additionally, this information is subject to change without notice. Accordingly, otherinformation should be used in addition to this material when making investment
decisions.
Olympus Corporation assumes no responsibility for any damage resulting from the useof this material.

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Background for 16CSP and Business Process Reengineering Project
16CSP
Strengthen foundations and develop an aggressive business portfolio
for sustainable growth
Become leading global player in medical field16CSP Priority Strategies

Take action to grow businesses

Acquire necessary management
resources in a timely manner andfully leverage these resources

Enhance management on global andGroupwide basis

Advance forward-looking
preparation to realize continued
growthPursue further business efficiency
improvements

Strengthen Quality/Regulatory Assurance
and Internal control, promote strict
complianceBusiness Process Reengineering
Goal3

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Ensure accomplishment of 16CSP strategies and robust growth thereafterby operational efficiency and productivity in strengthening management
and business infrastructure
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Management and Business Base Issues to Be Addressed in
Accomplishing 16CSP Strategies
Optimize business process management and management and business infrastructure, currently
optimized for individual businesses and regions, from a global, Groupwide perspective to improve
operational efficiency and productivity while also reinforcing management systems and governance inorder to make Olympus a stronger and more productive company

Reform Approaches

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Current Issues

To make business andmanagement platform morerobust and efficient• Optimization of business processes for individual regions, businesses,and functions• Optimization of IT systems for individual businesses and functions• Dispersion and redundancy of standard corporate processes among
regions and functions

To implement governancesystems to sustain highprofitability• Clarification and thoroughness of Companywide management
resource allocation standards• Thoroughness and commitment of all organizations to targets, KPIs,
and profitability

To build stronger and more
effective corporate organizationand human resource
management systems• Reinforcement and streamlining of global governance systems• Optimal allocation of human resources and construction of relatedsystems

To transform cultural DNA andworking styles• Improvement of innovation and reform awarenessNo data copy / No data transfer permitted

Vision to Be Achieved through Business Process Reengineering Project
Realize highly efficient and highly value-added operations on a level worthy of our status as
the greatest “Business to Specialist” Company and cultivate a corporate culture andconstitution that continuously evolves and grows with the Company and its employees throughstructural reforms and awareness and corporate culture reforms【Structural Reforms】
Function enhancement
and efficiency
improvement<Reform Approaches>To make business and management platform
more robust and efficient
To implement governance systems to sustainhigh profitability
To build stronger and more effective corporate
organization and human resource managementsystems【Awareness and Corporate Culture Reforms】<Reform Approach> To transform cultural DNA and working styles(entrench culture of constant, voluntary improvement)
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Overview of Issues and Business Process Reengineering Project①
Advance reforms through four approaches via Groupwide effort exceeding boundaries
of businesses, functions, and regions
Reform Approaches

To makebusiness andmanagementmore robustand efficient6

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Priority
Measures

Initiatives
 Improve development management and efficiency
 Enhance and streamline sales and marketing
processes
 Standardize, consolidate, and streamline corporate
business processes

Improvementof process
productivity

Groupwide
optimizationof businessprocesses

Visualizationand fullutilization ofinformation

 Consolidate IT platforms based on optimized
Groupwidebusiness processes
optimization
 Standardize and integrate ICT systems on a globalof IT systems
basis

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Overview of Issues and Business Process Reengineering Project②
Advance reforms through four approaches via Groupwide effort exceeding boundaries
of businesses, functions, and regions
Reform Approaches

To implement
governance

Priority
Measures

Initiatives
 Practice selection and concentration with regard toR&D themes Strengthen product lifecycle management withemphasis placed on total costs and optimize lineups
based on product portfolios
 Thoroughly manage expenses versus benefits of IT
investments

Maximizationof investment
efficiency

Increased
selection andconcentration

Increasedemphasize on
profitability

Enhancement  Reinforce governance systems for sustaining highof profit
profitability through globally systematized target
management
management and performance monitoring

systems tosustain highprofitability

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Overview of Issues and Business Process Reengineering Project③
Advance reforms through four approaches via Groupwide effort exceeding boundaries
of businesses, functions, and regions
Priority
Measures

Initiatives

Reinforcem
ent oforganizatio
nalcapabilities

Reinforcementof matrixorganization
structure Clarify roles of regions, businesses, and functions tobuild stronger and more effective corporate
organization
 Optimize and streamline organizational structure

Fullutilizationof human
resources

Globalutilization ofhumanresources Enhance global human resource management
 Construct systems for optimal assignment of humanresources

Corporate
culture ofongoing
growthCultivation ofchangeoriented
mind-set Cultivate change-oriented mind-set and frameworks
through awareness reforms targeting all employees Improve efficiency through working style reforms

Reform Approaches

To build stronger
and more effective
corporateorganization andhuman resource
management
systems

To transform
cultural DNA andworking styles

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Accomplish 16CSP targets(operating profit margin)
through implementation of16CSP strategies andproductivity improvement via
BRP
Note: Operating profit per employee isused as the indicator for productivity.

Over 90% improvement inproductivity(Operating profit per employee)
Higher sales andoperational efficiency
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4000.15
Operating profitmargin

300

Improvementin productivity

0.1200Operating profit peremployee100(¥ million)

00.05

～～

Four-Year Period Endingwith Fiscal 2021
（FY2017 → FY2021）

Operating profit per employee

16CSP Strategies and Business Process Reengineering Benefits

FY2016FY2017

FY20210（Final fiscal year of 16CSP）
Operating profit
margin13%

10%Over15%

Operating profit peremployee(¥ million)

310

220

Over
420

16CSP Strategies and Business Process Reengineering Benefits【16CSP Operating Profit Margin Targets】
FY201612%・・・

FY2021

Improvement・・・

15%+3pts.

FY2017

FY2021

Improvement

Breakdown of Operating Profit
Margin Improvement
Manufacturing
productivity improvement＋1pts.

Process productivity
improvement＋2pts.

Breakdown of Operating Profit
Margin ImprovementManufacturing
productivity
improvement10%

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15%

No data copy / No data transfer permitted+5pts.

R&D productivity
improvement

Increase operating margin by 5pts. (from fiscal 2017) by fiscal
2021 through sales growth andcost structure improvement

Initiatives＋1pts.

• Optimization of global manufacturing structurefrom a long-term perspective＋2pts.

• Increase development speed• Select R&D themes based on ROI and allocate
appropriate resources

Sales and marketingproductivity
improvement＋1.5pts. • Increase sales and process productivity

Standard corporate
process productivityimprovement＋0.5pts.

• Reinforce sales and marketing functions• Strengthen functions, increase efficiency, andreduce costs

Example of Initiatives①
Enhance R&D capabilities and improve efficiency and productivityPractice selection and concentration with regard to R&D
themes Evaluate and prioritize R&D themes
 Enhance frameworks and processes for evaluating
themes Evaluate and prioritize themes Allocate appropriate resources to innovative R&D
themesSelect R&D themes
based on ROI
Allocate appropriate
resources

Improve development management and efficiency
 Enhance and standardize all processes spanning fromproduct planning to launch and strengthen
management
 Standardize and enhance process management anddevelopment resource management
 Promote inter-function resource reallocations andappropriately allocate development resources

Increasedevelopment speed

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Haruo Ogawa [Chief Technology Officer (CTO)]

Ratio of R&D expenditures to revenue: Reduction of 2.0 pts. [FY2017→FY2021]

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Improvement of Development Management and Efficiency
Increase development speed and efficiency by reinforcement of development management
and concurrent development systems【Current R&D Processes】
Development
project

Business plan
product roadmap

Planning

DesignR&D

Manufacturing

Planning process

Design process

Function confirmation
process

Mass production
confirmation process【Future R&D Processes】

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Business plan
product roadmap

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LaunchLaunchPlanning process

Development
project

Registration
Product
registration
process

Design process

Function
confirmation
process

Mass production
confirmation
process

Product
registration

Reinforce development management(enhance and standardize R&D processes and strengthen PMOs)
Strengthen
concurrent
development
systems

R&DManufacturing
QA / RA, product registration

Shortendevelopment
lead timeExample of Initiatives ②Enhanceand improve efficiency of sales and marketing processes
ポートフォリオマネジメントの強化

Akihiro Taguchi [Head of Sales & Marketing Group (CSMO)]

Step up customer relations management
 Strengthen sales process governance on a global scale Improve productivity through standardization, visualization, andmonitoring of sales processes
 Reinforce and improve efficiency of sales and marketing
functions on a global basis
 Strengthen account management
 Bolster sales training

Improve productivity of sales promotion activities Pursue optimization and efficiency improvements with regard
to global sales promotion activities and materials
 Globally standardize sales support processes

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Ratio of sales and marketing expenses to revenue:
Reduction of 1.5 pts. [FY2017→FY2021]

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Reinforce sales andmarketing functions
Increase sales andprocess productivity

Example of Initiatives ③Improve
productivity of corporate business processes
ポートフォリオマネジメントの強化Yasushi Sakai [Chief Improvement Officer (CIO)] and others

Refine business and management base andinfrastructure Globally standardize master data and business processes
 Standardize and integrate IT platforms and optimize
related expenses on a global basis
Enhance and streamline supply chain
 Strengthen product lifecycle management (optimize
processes encompassing sales, production, and service
conclusion)
Enhance and improve productivity of corporate service
processes
 Promote shared services to improve efficiency
 Reduce expenses by consolidating indirect materialpurchasing

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Ratio of corporate and other expenses to revenue：
Reduction of 0.5pt. [FY2017→FY2021]

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Strengthenfunctions, increase
efficiency
Reduce costs

Promotion System
Construct a solid global promotion system and perform thorough progress monitoring on a monthly basis

BPR ProjectMonthly basis
monitoring

BPR Project Structure

Monitoring ofeach initiative

JPUS

EU

APAC

Composition

SteeringCommittee• BUs, Functional Departments, andregional (US, EU, APAC) Heads

Project Owner• Chief Improvement Officer (CIO)

PMOs
施策リーダー
施策リーダー
施策リーダー
InitiativeOwner

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GHQ

施策リーダー
施策リーダー• Comprised of dedicated BPR
organizations and global BPR staff• Member of Executive ManagementCommittee

施策リーダー
ProjectLeader• General Manager Level

各施策メンバー
各施策メンバー
各施策メンバー
ProjectMember• Cross-function membershipcomprised of representatives fromeach function

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Business Process Reengineering Road Map
Generate benefits in phases; maximize benefits while pursuing further improvement to realize continuous growth

FY2018To make business andmanagement platform morerobust and efficient

To implement governancesystems to sustain highprofitability

To build stronger and more
effective corporate organizationand human resource
management systemsTo transform cultural DNA andworking styles
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Improve development management and efficiency


FY2019-FY2021


Step up customer relations management andimprove productivity of sales promotion activities

Standardize master data and business processes
Standardize and integrate ICT systems

Enhance governance systems to sustain high profitabilityStrengthen product lifecycle management with emphasis
placed on total costs

Thoroughly manage expenses versus
benefits of IT investments

Enhance global human resourcemanagement

Cultivate change-oriented mind-set and frameworks
through awareness reforms targeting all employees

Consolidate IT platforms based on
optimized business processesContinuous enhancement

Continuous improvement

Reinforce organization and improve efficiencyNo data copy / No data transfer permitted

Selection and concentration withregard to R&D themesContinuous improvement

Promote shared services to improve efficiency, reduce
expenses by consolidating indirect material purchasingContinuous improvement

Continuous implementationand improvement

Continuous implementation andimprovement

Optimize and streamline organizational structure

Construct systems for optimal assignment of
human resources

Improve efficiency throughworking style reforms

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