Collaborative Demand Planning: A Requirement for Successful Integrated Business Planning (IBP)

1. 1 © 2014 Steelwedge Software, Inc. Confidential. Single Line of Sight: Plan, Perform, Profit Agility Webinar Series Collaborative Demand Planning: A Requirement for Successful Integrated Business Planning (IBP)

2. 2 © 2014 Steelwedge Software, Inc. Confidential. Agenda •KPMG •Introductions •Integrated Business Planning—KPMG PoV •Critical Collaborative Demand Planning Elements for Successful IBP •Steelwedge •Platform Overview •4 Keys to IBP Success •Collaborative Planning Workflows, Analysis and Reporting

4. © 2014 Steelwedge Software, Inc. Confidential. 4 © 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 2 member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Agenda THANK YOU Critical Collaborative Demand Planning Elements for Successful IBP 1 Introductions 2 Integrated Business Planning – KPMG PoV 3

5. © 2014 Steelwedge Software, Inc. Confidential. 5 © 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 4 member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG Presenters: Mark Levy and Peter Yu Background Mark is a Managing Director in KPMG’s Advisory Services practice where he is the leader for the Integrated Business Planning (IBP) service offering He has 25 years of experience in strategy and operations serving companies with complex product portfolios and extended supply chains. Mark has spent the bulk of his career improving processes and systems across multiple tiers of the value chain with a focus on cross-functional and cross-enterprise solutions. Before resuming his consulting career, he was VP Products at RiverOne responsible for defining and building a multi-tier collaborative SaaS solution that was acquired by i2 Technologies in 2006. Mark holds degrees from Stanford, Wharton, and Penn Engineering. Mark T. Levy Managing Director, Customer and Operations Advisory Services KPMG LLP Irvine, CA Tel 949-885-5870 marklevy@kpmg.com Peter J. Yu Director, Customer and Operations Advisory Services KPMG LLP Chicago, IL Tel 312-665-1397 pjyu@kpmg.com Background Peter, a director in KPMG Advisory Services, has 16 years experience in supply chain transformation consulting experience in the Hi-Tech, Consumer Packaged Goods, Retail, Industrial Products, and Automotive Industries. He has expertise in Integrated Business Planning (IBP/S&OP) process improvements, and is one of the leading members of IBP/S&OP offering team at KPMG. Peter also has a strong background in global supply chain processes and systems management with a focus on advanced supply chain planning (Global Demand, Supply, Inventory, Capacity Planning) across a number of industries. Peter holds graduate and undergraduate degrees in Industrial & Operations Engineering and Computer Science from the University of Michigan, Ann Arbor.

6. © 2014 Steelwedge Software, Inc. Confidential. 6 © 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 6 member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Experience based client confidence Driving value across the extended enterprise supply chain KPMG culture of accuracy KPMG tradition of delivering measurable results Customer & Operations has a global network of over 3,000 partners & practitioners working across supply chain and operations, customer analytics, business integration and innovation. AMERICAS > 850 Professionals & Partners across Strategy & Operations EMEA > 1400 Professionals & Partners across Strategy & Operations Our Differentiators  Focus on total value delivered: Comprehensive view to maximize value from customers’ customers to suppliers’ suppliers  Sustainability of benefits: Overriding focus on structural improvements and knowledge transfer to deliver sustainable benefits  Genuine insight: Experienced practitioners with methods, domain knowledge, industry insights and cross-functional capabilities to tackle complex challenges  Strategic solution provider relationships: Allows us to provide clients with differentiated, market-leading solutions  Trusted advisor: Objectivity in recommendations and solution design  Global reach: Network of professionals in all major sectors and countries to address global client needs – with global centers of excellence 850+ supply chain professionals globally (250 in America, 500 in EMEA and 100 in ASPAC) KPMG’s Customer & Operations Advisory Overview ASPAC > 850 Professionals & Partners across Strategy & Operations

7. © 2014 Steelwedge Software, Inc. Confidential. 7 © 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 8 member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG’s Operations Practice: Balancing Multiple Objectives – Revenue, Assets, Cost, and Risk  Deliver value from product and service innovation  Optimize asset portfolio  Profitably enter new markets or channels  Profitably deliver the customer experience  Build scalable supply chains  Effectively collaborate with customers and channel partners  Configure supply chains to achieve low cost  Engineer planning and execution to optimize performance  Implement continuous and step-change improvement programs  Deliver compliance requirements and manage enterprise / operational risk profile  Build flexible and resilient supply chains  Measure, monitor and govern Executive Agenda

8. © 2014 Steelwedge Software, Inc. Confidential. 8 © 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 10 member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 5 Pillars of Supply Chain Excellence: Principles to Design and Operate Customer Centric Supply Chains We work with our clients to drive value across the extended supply chain Manage innovation and design supply chains that support, enhance and enrich the customer experience Design, configure and integrate operations networks and supply chains across the extended enterprise supply chain Transform the traditional supply chain into a demand driven multitier network— eliminating information latency and improving end-to- end visibility Design and implement lean and flexible operations and supply chain processes across the extended enterprise supply chain Identify sources of operational risk and help them use flexibility, extended enterprise visibility and analytics to be more resilient Purpose Built Globally Integrated Demand Driven Lean & Agile Resilient • Supply Chain Risk Assessment • Supply Chain Resiliency Strategy & Implementation • Lean Six Sigma • Product Lifecycle Management • Working Capital/ Cost Optimization • IT Enabled Process Transformation • Supply Chain Collaboration • Demand Driven Operations • Operations Strategy • Integrated Business Planning • Value Chain Management • Supply Chain Segmentation • Supply Chain Scalability • Cost to Serve

9. © 2014 Steelwedge Software, Inc. Confidential. 9 © 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member 12 firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Our Point of View Integrated Business Planning (IBP) Definition and Objectives Integrated Business Planning (IBP) brings strategic planning, finance, supply chain, sales, marketing and product development into a unified planning operating model to drive transformational performance improvement decisions …enables an organization to optimally collaborate and address critical, cross-functional business decisions across the product lifecycles… …and delivers cross-enterprise alignment of planning and execution processes to improve predictability and financial performance while managing risk Integrated Business Planning (IBP) harmonizes financial and operational processes with customer demand…

10. © 2014 Steelwedge Software, Inc. Confidential. 10 © 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 14 member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Our Point of View IBP Process Model Synchronized with E2E Supply Chain Planning IBP is enabled by multiple planning processes Supply Planning Product & Portfolio Strategy Product Roadmap (NPI/EOL) Strategic Planning Strategic Plan Forecasting Sales Forecast Budget/ AOP AOP/ Budget/ Marketing Forecast Customer Collaboration Vendor / TPM Collaboration Vendor Commits Inventory Constrained Demand-Supply Plan Operations Scenarios Demand Planning Unconstrained Demand Plan Financial Analysis (Pre-IBP) Demand- Supply Scenarios Pro forma Financials Refined Ship Plan 1 2 3 4 5 6 Executive IBP 7 Statistical Forecast SC Strategy Inventory Plan Assumptions Package Capital Planning Plan of Record Fcst/Orders Inventory Promos BOM KEY: IBP Owned e2e SC Planning Proposed Ship Plan Webinar Focus

11. © 2014 Steelwedge Software, Inc. Confidential. 11 © 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 16 member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Our Point of View IBP Leading Practice Process Flow IBP COE Owned Product Sales Marketing SCM / Ops Finance Partners Financial Analysis (Pre-IBP) Forecasting Bottoms Up Sales Forecast Vendor / TPM Collaboration Product & Portfolio Strategy Product Roadmap Account Pipeline Tops Down Market Forecast Market Forecast Baseline Statistical Statistical Forecast Consensus Process Demand Planning Unconstrained Demand Plan Supply Planning Ops Scenarios Constrained D / S Plan Customer Collaboration Consensus Unconstrained Demand Plan Pro forma Financials Constrained Demand-Supply Plan Refined Ship Plan Financial Scenarios E x e c u t i v e I B P Cycle Prep Assumptions Package Inventory Plan AOP/ Budget/ Capital Vendor Commits Fcst/Orders Inventory Promos Inventory BOM Webinar Focus

12. © 2014 Steelwedge Software, Inc. Confidential. 12 © 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 18 member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Our Point of View KPMG IBP Process Framework ■ Forecasting: Delivers unconstrained forecasts to Demand Planning from Sales, Marketing, Product Management, et al using a variety of techniques (pipeline management, promotional forecasting, and co-planning/CPFR) ■ Demand Planning: Uses multiple forecast inputs to create a demand plan aligned with financial goals. Demand Planning refines the plan through a rapid meeting cadence and feeds the approved consensus demand plan to Supply Planning 1.0 Collaborate with Customer 2.0 Generate Forecast 3.0 Manage Demand 1.1 Capture customer key data (i.e. POS, forecast, inventory, etc.) 1.2 Conduct analysis to Identify issues, disconnects, promo impacts, and measure performance 1.3 Refine customer forecasts based on analysis and key events 1.4 Collaborate with customer to align forecast, promo, transitions plans, and resolve issues 1.5 Make commitments to customer 1.6 Track KPIs and highlight on-going issues and root-causes 2.1 Review Assumptions Package 2.2 Create statistical baseline forecast (sell-thru preferred) 2.3 Capture sales pipeline, and create forecast, including event / promotional lifts 2.4 Understand TAM and market trends to create top down Marketing forecast input 2.5 Publish unconstrained forecast(s) to Demand Planning 3.1 Publish Assumption Package 3.2 Identify major changes from previous cycle, and convert sell-thru to sell-in 3.3 Investigate inconsistencies between assumptions and forecasts (i.e. Promos, NPI/EOL) 3.4 Compare and identify major gaps between operational plan vs. financial targets 3.5 Create proposals to close gap with financial plan, if feasible (i.e. promos, price) 3.6 Drive consensus demand planning process 3.7 Track KPIs including plan accuracy and highlight ongoing issues and root causes Forecasting vs. Demand Planning Definitions

13. © 2014 Steelwedge Software, Inc. Confidential. 13 © 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 20 member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Our Point of View Successful IBP requires consensus demand planning with published assumptions package and defined consensus business rules Lift Library Product Lifecycle (NPI/EOL) Clear DP vs. Forecast RACI Governance & Compliance Master Data Management Published Assumption Package Consensus Business Rules Rapid Demand Consensus Process COE Aligned Incentives Executive Decisions Must Be Cross-functional to Be Compelling Supply Planning and Co-Planning E2E Single Version of the Truth Scenario Analysis KPIs A B C Change Management Taxonomies, Analytics, Reporting Parallel Financial Analysis Executive Decisions Must Be ‘Teed Up’ Clearly Executive IBP Requires Executives

14. © 2014 Steelwedge Software, Inc. Confidential. 14 © 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 22 member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Selected, critical collaborative demand planning elements for successful IBP Critical Demand Planning Oversights Leading Practices Consensus demand plan not final before IBP meetings leads to limited focus on decision making and waning executive participation Get demand consensus ahead of IBP meeting • Go through the process – Do not skip steps • Ensure critical inputs and data are validated • Assumptions Package and Consensus Rules A Lack of assumptions package impedes fact-based discussion and encourages arguing about the “numbers” Forecast based on published assumptions • Make documented assumptions explicit and available to all early in the IBP process B Lack of consensus demand planning business rules to apply against multiple demand inputs bogs down process Define consensus demand planning business rules • Include exception based ‘guardrails’ • Refine based on continual planning performance analysis C

15. © 2014 Steelwedge Software, Inc. Confidential. 15 © 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 24 member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. A Consensus Demand Plan ■ Get demand consensus ahead of IBP meeting – Do not skip process steps ■ Ensure all critical inputs and data are validated Client E2E IBP Time Spent on Debating Demand Executive IBP Time Spent on Debating Demand Client X 25% 10% Client Y 60% 40% Client Z 70% 50% 0% 10% 20% 30% 40% 50% 60% 70% 80% E2E IBP Time Spent on Debating Demand Executive IBP Time Spent on Debating Demand Time Spent Debating Demand during IBP Client Z Client Y Client X

16. © 2014 Steelwedge Software, Inc. Confidential. 16 © 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 26 member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. A Consensus Demand Plan How much time is spent during the Executive IBP meeting debating demand? a) 0% - 20% b) 20% - 40% c) 40% - 60% d) over 60% e) Don’t know / NA

17. © 2014 Steelwedge Software, Inc. Confidential. 17 © 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 28 member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. B Assumptions Package ■ Generate Assumptions Package and make it available to all early in the process ■ Forecast based on fact-based assumptions Assumption Element Promotion calendar with lift and/or Big Deal pipeline Description 26 week view of planned promotions with estimated lift and/or Big Deals with expected unit forecast Typical Owner Marketing / Sales Assumption Element NPI launch assumptions Description Assumptions for products with no history; launch date by channel Typical Owner Product Management # Key Elements 1 Product roadmap with target ASPs 2 Promotion calendar with estimated lift / Big Deal pipeline 3 NPI launch assumptions 4 Product substitution assumptions 5 Key customer summary 6 Market growth rate / TAM 7 Market share actuals and targets 8 Revenue / Inventory bets 9 Assortment plan 10 Base seasonality

18. © 2014 Steelwedge Software, Inc. Confidential. 18 © 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 30 member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. B Assumptions Package How accessible are current key assumptions to process participants? a) Essentially, not accessible b) 1-2 elements are available to those in the ‘know’ (e.g., product roadmap on a server) c) 25 - 50% of key elements are fresh and accessible to participants d) 50% - 75% of key elements are fresh and accessible in a synchronized manner e) Over 75% of key elements are fresh and accessible in a synchronized manner

19. © 2014 Steelwedge Software, Inc. Confidential. 19 © 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 32 member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. C Selected consensus demand planning business rule options Define business rules to accelerate consensus planning – and refine based on performance ■ Option 1: Time-Horizon Select different forecast across time horizon based on forecast performance e.g., when mismatch is < X%, select Sales forecast for 1 - 6 months, there after Marketing/Brand forecast For Product X Period 1 Period 2 Period 3 Period 4 Statistical 85 86 88 89 Marketing 62 68 70 72 Sales 55 56 56 57 Consensus 62 65 66 67 50% 35% 15% ■ Option 2: Weighted Average Develop weights for each forecast stream based on forecast performance E.g. 50% weight to sales, 35% weight to marketing, 15% weight to statistical ■ Option 3: Combine techniques For Product X Period 1 Period 2 Period 3 Period 4 Statistical 85 86 88 89 Marketing 62 68 70 72 Sales 55 56 56 57 Consensus 55 56 70 72

20. © 2014 Steelwedge Software, Inc. Confidential. 20 © 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 34 member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. C Consensus demand planning business rules Do you apply demand planning consensus business rules today? a) Yes, integrate per Option 1 (Time-Horizon) b) Yes, integrate per Option 2 (Weighted-average) c) Yes, integrate with a combination of options and/or other business rules d) No, integrate without business rules e) No, no multiple forecast streams for business rule use

21. © 2014 Steelwedge Software, Inc. Confidential. 21 © 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent 36 member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Our Point of View Successful IBP requires consensus demand planning with published assumptions package and defined consensus business rules Focus on assumptions Get demand consensus ahead of IBP Accelerate gap closure with rules

22. © 2014 Steelwedge Software, Inc. Confidential. 22 THANK YOU © 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.

23. 23 © 2014 Steelwedge Software, Inc. Confidential. “ Steelwedge has grown into the market's leading S&OP solution in the cloud. ” Rating: Strong Positive  Global market share leader  Offices: USA, Europe, Japan & India  Founded in 2002, 50%+ year over year growth  Global organization focused on global delivery (~500 employees)  Cloud-based Integrated Business Planning platform  100% cloud-based for rapid deployment & value realization Leader in Global Cloud-Based S&OP

26. 26 © 2014 Steelwedge Software, Inc. Confidential. Key 1: Create a scalable & agile process Third Party Systems – SAP, Oracle etc Budget Mkt Trend NPI File Pricing Model Compare Rev/Unit to DPM S&OP RCCP Rev Fcst DPM Access Family Roll-Up Manual Complex Security Risk Error Prone Agile Decision Making?? Manual SFS

27. 27 © 2014 Steelwedge Software, Inc. Confidential. Drive Agility, Speed and Accuracy with Steelwedge Third Party Systems – SAP, Oracle etc DPM Access Manual SFS Make sure technology ACCELERATES the process & supports adoption

28. 28 © 2014 Steelwedge Software, Inc. Confidential. 28 Key 2: Its about how you get to one number… Statistical Forecast Demand Forecasting Requirements 1.Maintain a 3 year detailed forecast at the customer/product level 2.Allow field sellers and product reps to make updates to the forecast Marketing Consolidated Plan Sales Statistical forecast can be leveraged as baseline to sales forecast Jan-11 Feb-11 Mar-11 Stat Forecast 100 120 112 Regional 100 118 114 Product Rep 200 120 115 Consensus 150 120 115 Sales forecast can be defaulted to statistical forecast (if desired ) Can be run at higher/global level and integrate product pricing and NPI/EOL assumptions Business rule can drive defaults as well as find exceptions to review Illustrative Demand Plan Demand templates and process can be configured to meet specific requirements. Illustration below depicts demand input captured at the customer/product level. Decisions on inclusion of stat forecast and work flow would be determined by the business during the design phase. Reason & Notes are captured with all changes Business Rules Simplify Process System Drives Gaps/Exceptions Review

29. 29 © 2014 Steelwedge Software, Inc. Confidential. 29 Key 3: Drive process through exceptions! Plan monitoring drives “real time” S&OP 3.Drive forecast accountability at the field seller level 4.Focus on value add & consistent performance metrics Performance metrics are available to review demand plan performance for specific roles and at planning levels defined by the business. Demand plan performance could be reviewed at the value center, region, market, field seller, customer level, etc. Plan Monitoring for out of cycle exceptions & performance focus

30. 30 © 2014 Steelwedge Software, Inc. Confidential. 30 Volume (Lbs) ASP $/Lb Revenue PROD 1/Cust 1 10 $2 $20 PROD 1/Cust 2 20 $3 $60 PROD 1/Cust 3 30 $2 $60 PROD 1/ Cust 4 40 $2 $80 PROD/Customer Customer Market Family PROD/Customer PROD Trade Product Market Family Key 4: Integrate financials “throughout” the process… Financial Integration 5.Integrate volume plans with financial forecast 6.Enter financial inputs at different levels (ASP, standard cost, unit freight cost) Volume plans can be translated into financial plans by using ASP, Standard Cost and Freight unit cost inputs. This data can be entered at different levels. Finance RCM Finance Supply Chain Finance Logistics ASP Freight Unit Cost PROD Trade Product Supply Family Data Owner TBD by Standard Cost PROD 1/Cust 1 10 $2 $20 PROD 1/Cust 2 20 $2 $40 PROD 1/Cust 3 30 $2 $60 PROD 1/ Cust 4 40 $2 $80 1 2 3 PROD 1/Cust 1 10 $2.2 $22 PROD 1/Cust 2 20 $3.3 $66 PROD 1/Cust 3 30 $2.2 $66 PROD 1/ Cust 4 40 $2.2 $88 If ASP is entered at the product level, ASP is pushed Customer to each customer buying that PROD If changes are made at the PROD level after customer specific updates are made, these changes overwrite the PROD/Customer updates Updates made at the PROD/Customer level are pushed back up and ASP is recalculated for the PROD Volume (Lbs) ASP $/Lb Revenue PROD 1 100 $2 $200 PROD 1 100 $2.2 $220 Volume (Lbs) ASP $/Lb Revenue PROD 1 100 $2.44 $244 Integrate financials throughout the process vs just at the end!

31. 31 © 2014 Steelwedge Software, Inc. Confidential. 31 Collaborative Planning Workflow (Example) Field Seller receives email notification to update forecast Team Performance updates forecast volume and value Product Rep receives email that field seller forecast has been updated Product Rep updates forecast Volume and value Plan of record created in Steelwedge Performance report sent to Field Seller and Product Manager Field Seller reviews demand performance against rev targets Product Rep reviews demand performance report Account Managers Sales Mgmt/ Forecast Team A workflow can be configured to facilitate the collection of demand data and push out updates to the demand plan. Email notifications can be set to send performance reports to demand plan owners and stakeholders.   

33. 33 © 2014 Steelwedge Software, Inc. Confidential. New Opportunities and Run-Rate New Opportunities Give Sales Management Complete View for Vetting Process Drill to Details Quantitative and Qualitative Information

35. 35 © 2014 Steelwedge Software, Inc. Confidential. Consensus Vs. Finance GAP in EMEA Leverage Analysis, Workflow & Reporting: Work Finds You Exception Details w/ drill down to notes & reason codes Exception Details w/ drill down to notes & reason codes