Revenue Growth or Cost Control? Strike the Right Balance with S&OP and Demand Planning Technology

1. © StrataBridge 2014 WE GROWTH

2. © StrataBridge 2014 Chris Turner Co-Founder, StrataBridge We are a Boutique Consulting Firm. We advise fast-moving, brand-led organisations on strategy, innovation, and operations. We help organisations achieve sustainable growth in unpredictable circumstances. We’re specialists in joined-up decision-making – Sales and Operations Planning (S&OP), Integrated Business Planning (IBP) et al – as a means to delivering strategy. We’ve worked with companies of all shapes and sizes, from the UK to Europe, from the Americas to Asia and from the Middle East to Africa. We help companies create their future. Our ideas, processes and interactions are designed to allow organisations to bridge the gap between where they are and where they want to be. A (very) Brief Introduction

3. © StrataBridge 2014 So, what’s the BIG Idea, Question and Opportunity? A rapidly and continually changing context is opening-up increasing opportunities for growth against a backdrop of unprecedented change and new risks Many (possibly most?) organisations decision- making processes (particularly ‘S&OP’, ‘IBP’ etc.) have been designed on the (often implicit) assumption of ‘control’ How do we adapt routines we’ve refined for operational efficiency to enable similar degrees of strategic flexibility?

4. © StrataBridge 2014 Some Structure and Thought- Provokers… Mindset trumps Process – Think ‘Eco-system’ not ‘system’… What’s going-on out there (and with you)? Big trends and growth drivers… Adapting the decision-making ‘eco- system’ – Both Control and Growth…

5. © StrataBridge 2014 Mindset trumps Process – Think ‘Eco-system’ not ‘system’… What’s going-on out there (and with you)? Big trends and growth drivers… Adapting the decision-making ‘eco- system’ – Both Control and Growth… Some Structure and Thought- Provokers…

6. © StrataBridge 2014 Thinking about this webinar… and developing a Growth Mindset © StrataBridge 2014

7. © StrataBridge 2014 Results ‘Eco-System’ Design/Behaviour Strategy Thinking about this webinar… and developing a Growth Mindset

8. © StrataBridge 2014 "Invention is by its very nature a disorderly process," says current CEO George Buckley, who has dialled back many of McNerney's initiatives. "You can't put a Six Sigma process into that area and say, well, I'm getting behind on invention, so I'm going to schedule myself for three good ideas on Wednesday and two on Friday. That's not how creativity works.” "You cannot create in that atmosphere of confinement or sameness," Buckley says. "Perhaps one of the mistakes that we made as a company—it's one of the dangers of Six Sigma—is that when you value sameness more than you value creativity, I think you potentially undermine the heart and soul of a company like 3M.” McNerney declined to comment for this story. Control, Growth and ‘Culture’…

10. © StrataBridge 2014© StrataBridge 2014 How do you expect your companies growth prospects to change over the coming year or two compared to the last year or two? • Significantly increase • Moderately increase • About the same • Moderately decrease • Significantly decrease Understanding your context… your opportunities and expectations for Growth…

11. © StrataBridge 2014 2009 2011 2012 2013 2014 20152010 10% 40% 50% 60% 30% 20% How do you expect customer demand for your company’s products or services to change, if at all, in the next six months? Source: McKinsey Global Economic Conditions Snapshot Quarterly Survey April 2009 - June 2014 Increase Stay the same Decrease Don’t know 47% 43% 9% 1% Understanding the external context…

12. © StrataBridge 2014© StrataBridge 2014 60%Asia 14% Africa 11% Europe 8% North America 6% South America 0.5% Australia A tipping balance: Understanding the external context – Big Trends pointing towards growth…

13. © StrataBridge 2014 2011 2030 2050 PPP Rank Country GDP @ PPP (2011 US$bn) Country Projected GDP @ PPP Country Projected GDP @ PPP 1 US 15,094 China 30,634 China 53,856 2 China 11,347 US 23,376 US 37,998 3 India 4,531 India 13,716 India 34,704 4 Japan 4,381 Japan 5,842 Brazil 8,825 5 Germany 3,221 Russia 5,308 Japan 8,065 6 Russia 3,031 Brazil 4,685 Russia 8,013 7 Brazil 2,305 Germany 4,118 Mexico 7,409 8 France 2,303 Mexico 3,662 Indonesia 6,346 9 UK 2,287 UK 3,499 Germany 5,822 10 Italy 1,979 France 3,427 France 5,714 11 Mexico 1,761 Indonesia 2,912 UK 5,598 12 Spain 1,512 Turkey 2,760 Turkey 5,032 13 South Korea 1,504 Italy 2,629 Nigeria 3,964 14 Canada 1,398 South Korea 2,454 Italy 3,867 15 Turkey 1,243 Spain 2,327 Spain 3,612 16 Indonesia 1,131 Canada 2,148 Canada 3,549 17 Australia 893 Saudi Arabia 1,582 South Korea 3,545 18 Poland 813 Australia 1,535 Saudi Arabia 3,090 19 Argentina 720 Poland 1,415 Vietnam 2,715 The World in 2050 – Actual and Projected top 20 economies based on GDP in PPP terms Source: World Bank – 2011 Actuals PWC – 2030, 2050 Estimates Understanding the external context – Big Trends pointing towards growth…

14. © StrataBridge 2014 Disproportionate & Sustainable Growth Growth Move Criteria: • Favourable demographics • Macroeconomics • Market ‘maturity’ – where on the ‘curve’ • Channel dynamics • Competitive landscape/intensity • Attractiveness vs. Winability Sources of Growth: • Market Momentum – e.g. Geographies/Categories/Segments with high growth rates/potential (short-medium- long term) • Share Gain – e.g. win share from existing competitors/block new competitors • Grow Participation – e.g. expand geographic/category participation • Grow Total Market – e.g. innovation to grow the total market and take the greater share of growth • Create options for future growth – e.g. selective moves designed to create more upside than downside for future growth • M&A Innovation Drivers and Intersections: • Our Purpose, Proposition and Brands • Consumer Trends, Insights and Unmet Needs • Technical evolution, development and breakthroughs • Shopper, market, trade, channel, competitor landscape and evolution Defining the ‘Strategic Portfolio Role’: • Disproportionate Growth/Growth/Market Entry/Maintain/Defend/Deem phasise/Exit • Exploit/Experiment/Explore • Both Growth and Learning Plotting the Routes to Growth – e.g. Growing from the ‘Core’: Implications across the Business: • Connecting trends, insights and innovation – Where to play? How to Win? What do we need to do? • Developing a ‘joined-up’ response • Choices, trade-offs and consequences – ‘optimisation of the ‘whole’ Developing your ‘Growth Map’ – Where to Play? and How to Win?…

16. © StrataBridge 2014 A Fundamental Conflict – The Control ⇆ Growth Paradox… The Pursuit of ‘Growth’ The creation of new value for customers and shareholders, driving the need for new stuff – new products, new services, new markets, new business models, etc. – by definition, increasingly different from what we currently do… The Desire for ‘Control’ The focus on continuously tightening the grip on how we do things today – driving predictability and productivity by fine-tuning our knowledge of, and control over, our existing business portfolio – products, customers, channels, etc.

17. © StrataBridge 2014 The Hungry Beast and the Ugly Baby – Protecting the New… © Pixar Animation Studios Originality is fragile, initially awkward, unformed, vulnerable and incomplete. New ideas are ‘ugly babies’ that need nurturing in order to grow. They have a hard time coexisting with the ‘beast’; any large group that needs to be fed an uninterrupted and consistent diet in order to function. As a business becomes successful an inordinate amount of energy is directed toward feeding the breast – protecting what has worked so far. The key to preventing this is balance. Ed Catmull Co-founder Pixar and President Disney Animation Studios Creativity Inc. “ ”

18. © StrataBridge 2014 Adapting our decision-making approach to reflect our ‘uneven knowledge’ of the world

19. © StrataBridge 2014 Heuristic Principles/ Rules of Thumb Algorithm Repeatable/ Reliable/ Formulaic 0101001110110101001 Code Repeatable/ Reliable/ Formulaic Automated ‘Outsourcable’ Adapting our decision-making approach to reflect our ‘uneven knowledge’ of the world

20. © StrataBridge 2014 Algorithm Repeatable/ Reliable/ Formulaic Mystery Hunches/ Questions/ Paradox Heuristic Principles/ Rules of Thumb Adapting our decision-making approach to reflect our ‘uneven knowledge’ of the world

21. © StrataBridge 2014 Mystery Hunches/ Questions/ Paradox Algorithm Repeatable/ Reliable/ Formulaic Heuristic Principles/ Rules of Thumb Adapting our decision-making approach to reflect our ‘uneven knowledge’ of the world

22. © StrataBridge 2014 Heuristic Principles/ Rules of Thumb Algorithm Repeatable/ Reliable/ Formulaic Mystery Hunches/ Questions/ Paradox Exploration ExploitationExperimentation Adapting our decision-making approach to reflect our ‘uneven knowledge’ of the world

23. © StrataBridge 2014 Heuristic Principles/ Rules of Thumb Algorithm Repeatable/ Reliable/ Formulaic Mystery Hunches/ Questions/ Paradox ExplorationExploitation Experimentation Adapting our decision-making approach to reflect our ‘uneven knowledge’ of the world

24. © StrataBridge 2014 Value Time Creating New Value – The Sigmoid Curve Increasing the ‘area under the curve’ Lower Investment More Cash Generated Increased Longevity Later Investment Faster Payback Multiple Levers; Two Dynamics: • Magnitude • Timing (Levers and dynamics are not mutually exclusive)

25. © StrataBridge 2014 Development Growth Maturity Decline Time Value Creating New Value – The Sigmoid Curve Increasing the ‘area under the curve’

26. © StrataBridge 2014 Development Growth Maturity Decline ‘Known’ Precision/ Fine-tuning Continuous Improvement Analyse Assume Probe Time Value Creating New Value – The Sigmoid Curve Increasing the ‘area under the curve’

27. © StrataBridge 2014 Development Growth Maturity Decline ‘Unknown’ Bets & Options Lead with Hypothesis Probe Assume Analyse (Explore) ‘Knowing’ Learn- by-Doing ‘Lead’ or ‘Lag’ Assume Probe Analyse (Experiment) ‘Known’ Precision/ Fine-tuning Continuous Improvement Analyse Assume Probe (Exploit) ~ Ditto ~ ‘Growth -1 ’ + How to profitably exit or jump to the next curve? Time Value Creating New Value – The Sigmoid Curve Increasing the ‘area under the curve’

28. © StrataBridge 2014© StrataBridge 2012 Consistency Standardisation Proceduralisatio n Change Innovation Experimentation Learning, Competitive Advantage & Results fuelled by… Efficiency Productivity Agility Adaptability Hierarchical and Centralised Flat, Networked and Distributed Performance Beliefs… Organisational Construct and Location of Power… Analytical Exercise Fixed Destination/Direct Route Systemic Intervention Overarching Direction/Course Correction Mechanical Formulaic Wanting Answers Organic Dialogue-based Asking Questions Data-driven Numbers based Insight-driven Assumptions based ??1+2=3 Approach to Strategy… Decision-making Routines… Supporting Information Focus… Process (People are there to ‘enact the process’) People (Process provides ‘enough structure’) Obedience Compliance Competence Creativity Stretch Passion Automate the Processes Enable the People Results Driven Through… Talent Hired For… Technology used to… C o n t r o l G ro wt h More Volatile More Uncertain New ‘Rules’ Volatile Uncertain Changing ‘Rules’ External Environment - Competitor, Customer, Consumer Landscape & Behaviour - & Macro Trends Stable Predictable Consistent ‘Rules’ Volatile Uncertain Changing ‘Rules’ External Environment - Competitor, Customer, Consumer Landscape & Behaviour - & Macro Trends Decision- making Contexts Mindsets and Characteristics

29. © StrataBridge 2014© StrataBridge 2012© StrataBridge 2014 C o n t r o l G ro wt h Striking the ‘Right Balance’? In general, how would you rank your organisational DNA on the 'Control-Growth Spectrum’? 1 2 3 4 5 More 'Control’ More 'Growth’ About right What do you need to strike the right balance to deliver your strategy and desired business results?

30. © StrataBridge 2014 So, what’s the BIG Idea, Question and Opportunity? A rapidly and continually changing context is opening-up increasing opportunities for growth against a backdrop of unprecedented change and new risks Many (possibly most?) organisations decision- making processes (particularly ‘S&OP’, ‘IBP’ etc.) have been designed on the (often implicit) assumption of ‘control’ How do we adapt routines we’ve refined for operational efficiency to enable similar degrees of strategic flexibility?

31. © StrataBridge 2014 Chris Turner mobile: +44 7802 252 003 e-mail: chris.turner@stratabridge.com web: www.stratabridge.com … and over to Ed

33. 33© 2014 Steelwedge Software, Inc. Confidential. “ Steelwedge has grown into the market's leading S&OP solution in the cloud. ” Rating: Positive  Global market share leader  Offices: USA, Europe, Japan & India  Founded in 2000, 50%+ year over year growth  Global organization focused on global delivery  Cloud Based Integrated Business planning platform  100% cloud-based for rapid deployment & value realization Steelwedge: The S&OP Company

34. 34© 2014 Steelwedge Software, Inc.. Pre-ESOP Ground Reality: Trying It With Spreadsheets Demand Planning, SCM/APS Systems ERP, Financial, & Transactional Systems SAP, Oracle, etc. Industry Data Consolidation, Review, Overrides Data Collection, Reconciliation Consensus Process ESOP Operations Marketing Sales Finance Manual Complex Security Risk Not Scalable What’s going on? Big Trend Visibility? Systems Landscape Exploring opportunities? Decision-making eco-system?

35. 35© 2014 Steelwedge Software, Inc.. Change Your Reality; Drive S&OP Adoption & Values Time L1 L2 L3 L4 Q1 Q2 Q3 Step Change Maturity & Performance Avoid Process Failure Q4 Value Accelerated Time to Value “Companies can have a hard time getting past basic levels of S&OP without technologies like Steelwedge to support the process” -Tim Payne VP Supply Chain Analysis, Gartner

36. 36© 2014 Steelwedge Software, Inc.. Best Practice S&OP Aligns People, Process & Systems “We continue to look at S&OP as an aspect of business that needs terrific improvement… It’s hard to argue this shouldn’t be a central piece of management software” –Rob Kugel, Ventana Research

37. 37© 2014 Steelwedge Software, Inc.. S&OP Success with Steelwedge Demand Planning, SCM/APS Systems ERP, Financial, & Transactional Systems SAP, Oracle, etc. Industry Data Single Cross-Functional Planning Environment Automated Planning Prep Interactive planning for: • All S&OP Stakeholders • Plan Review • Opportunity/Risk • Upside/Downside • Planning Overrides • Assumptions • Scenarios • Consensus Process • Pre-S&OP • Executive S&OP • Audit Trail Systems Landscape Product / Sub-Family Customer Revenue Product / Family Territory / Region Revenue Product / Family Promotions Revenue Product / Family Region Units & Revenue Product Stock Locations Units and Inventory Family / Series Territory / Region Revenue, Margin & Cash Family / Series / BU Geo Revenue, Margin & Cash Product Production Site Units and Capacity Family / Series / BU Geo Revenue, Margin & Cash Family / Series / BU Geo Revenue, Margin & Cash Planning TermsStakeholders Account Managers Sales Managers Marketing Demand Planners Supply Planners Production Planners Finance Executives Customers Suppliers Cross-functional Planning Environment

38. 38© 2014 Steelwedge Software, Inc. Confidential. Managing the Translation between Functions Sales, Marketing, Product Management, Demand Planning Demand Inventory, Production, Procurement and Allocations Supply Profit & Loss, Balance Sheet Finance Executive Dashboards Executive

39. 39© 2014 Steelwedge Software, Inc. Confidential. Planning Dashboard Steelwedge Enterprise Enabled Excel Slice of view (hierarchy) Time series of key figures Planning data for review and updates Planning Views Combine Planning, Analytics in Familiar UI Capture institutional knowledge / assumptions

40. 40© 2014 Steelwedge Software, Inc.. Return on Investment is Substantial and Sequential 50-70% Reduction 15-30% Improvement 20%-25% Reduction 25% Reduction in Stock-outs 1-2% Lift in Revenue 3-5% Margin Increase Time $5M to $10M in Committed Savings per $1B in Revenue (avg. over all customers)

41. 41© 2014 Steelwedge Software, Inc.. Steelwedge is a strong leader in S&OP and IBP “Steelwedge is an ideal solution for a heterogeneous environment with multiple S&OP processes with inputs from multiple ERP and APS technologies.” Lora Cecere Founder and CEO, Supply Chain Insights “Steelwedge has grown into one of the market's leading S&OP solutions". “Steelwedge has proven that it provides a capable and scalable Stage 3 S&OP solution suitable for global deployments.” Tim Payne Research Vice President, Supply Chain Research Group, GARTNER Steelwedge was among the highest ranked in capabilities scoring and was one of “the vendors that were notable in portfolio strategy and portfolio benefits delivered.” Simon Ellis Supply Chain Practice Director, IDC

42. 42© 2014 Steelwedge Software, Inc. Confidential. Crawl – Walk – Run Approach • Key to success is incremental value • Crawl: plan ahead with end in site • Walk: implement single solution • Run: measure, improve, expand • Sprint: align, integrate, monitor • Start with quick win as phase 1 & foundation • Expand the roll-out adding value as you go

43. 43© 2014 Steelwedge Software, Inc. Confidential. Why Steelwedge? • Cross-functional, Collaborative Planning Solution • Flexible, Scalable and Easy to Use • Accelerated Time to Value • Market’s Leading Cloud-based S&OP Solution • 100% S&OP Focus & Best Practices • Leverages Existing Investment in Systems