Consumer Products andFood & Beverage Vertical UpdateStephen Dombroski, QADHeidi Evilampi, Oras GroupShaun Phillips, QAD DynaSysMay 7, 2019

Safe HarborConsumer Products and Food & Beverage Vertical Update

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This presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to significant risks and uncertainties. Actual results and events may differ materially from those set forth in these forward-looking statements. These risks and uncertainties are detailed in QAD’s SEC filings, including its latest Annual Report on Form 10-K and in particular the section titled “Risk Factors” therein and other periodic reports subsequently filed by QAD with the Securities and Exchange Commission.

This presentation contains references to certain financial measures that have been adjusted to exclude certain expenses and other specified items. These financial measures differ from comparable measures calculated and presented in accordance with accountingprinciples generally accepted in the United States of America (“GAAP”) in that they exclude unusual or non-recurring charges, losses, credits or gains. Management believes that financial presentations excluding the impact of these items provide useful supplemental information that is important to a proper understanding of the Company’s results. These presentations should not be viewed as a substitute for results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP financial measures presented by other companies.

This presentation is intended to outline QAD’s general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, functional capabilities, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functional capabilities described for QAD’s products remains at the sole discretion of QAD.

QAD undertakes no obligation to update forward-looking statements.

IntroductionConsumer Products and Food & Beverage Vertical Update

Stephen DombroskiDirector of Consumer MarketsQAD

Heidi EvilampiManager, ERP and IntegrationsOras Group

Shaun PhillipsProduct ManagerQAD DynaSys

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AgendaConsumer Products and Food & Beverage Vertical Update

• Current Consumer and Food & Beverage Industry Trends• Disruptors Impacting our Industry• Oras Group QAD Cloud ERP EE 2016 Upgrade• Demand and Supply Chain Planning for Consumer Markets• Related Sessions of Interest at Explore

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Stephen Dombroski

Industry Trends and DisruptorsConsumer Products and Food & Beverage Vertical Update

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Industry TrendsConsumer Products and Food & Beverage Vertical Update

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Increased Transportation Costs

Changing Consumer Preferences

Regulatory Compliance

Expanding Supply Chains

Increased IT Costs

Trade Spend and Promotions

Consumer Products and Food & Beverage Vertical Update

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MAKE TO ORDER AT SCALE

DIGITAL TRANSFORMATION

OF MANUFACTURING

ANYTHING AS A SERVICE (XAAS)

Technology is Changing the Rules

Anything as a Service (XaaS) ScenarioConsumer Products and Food & Beverage Vertical Update

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Current State• Impact consumer products, consumer electronics• Warranties and repair contracts evolving• Smart appliances• Interconnecting with food products

Future Offering• Smart technology• Connectivity to consumers• Automatically notify of repair needs and

automated schedule of repair appointments• Reorder food

Make to Order at Scale ScenarioConsumer Products and Food & Beverage Vertical Update

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Current State• Consumers want customized products• Retail is changing – consumers go on-line to

customize the products they want

Future Offering• Shopping mall of the future• Stores become boutiques and customize products• 3D printing for food and beverage allows for

printing containers in stores and customizing products

Digital Transformation of Manufacturing ScenarioConsumer Products and Food & Beverage Vertical Update

Current State• Traceability is still a manual process in many cases• The ability to track materials and ingredients from

original source is a requirement in many vertical segments

• Authenticity and origin of materials is criticalFuture Offering

• Sensors in fields to detect crop issues• IoT sensors and real time analytics• Smart technology• Blockchain• Product lifecycle connectivity

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Heidi Evilampi

Case Study: Oras GroupQAD Cloud ERP EE 2016 Upgrade

Consumer Products and Food & Beverage Vertical Update

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Oras GroupConsumer Products and Food & Beverage Vertical Update

• Mission: We make the use of water easy and sustainable• Vision: We will be the European market leader of advanced

sanitary fittings

• Headquarters in Rauma, Finland• Net sales 2018: 227.7 M€• Personnel: 1443

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Oras GroupConsumer Products and Food & Beverage Vertical Update

• One company - two strong brands• Together more than 100 years of experience

- Hansa founded in 1911- Oras founded in 1945- Acquisition 2013

• Own sales force in 20 countries• 4 factories• 2 logistic centres

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Oras Group QAD Project PathConsumer Products and Food & Beverage Vertical Update

• QAD customer since 1994• OraPro

- All processes documented and redesigned- QAD 2007 installed in Finland in 2009

• Roll-out Oras Group - QAD 2007 installed in rest of the sites in 2010 – 2012

• Roll-out to new Oras Group sites - Hansa acquisition 2013- Baan −> QAD 2007 to all sites 2014 – 2017

• QAD Cloud: 2 environments,15 domains in 4 months 2016

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What to do after QAD 2007 live at all sites?Consumer Products and Food & Beverage Vertical Update

• QAD Engagement workshop results• Old version & customizations

- No patches or further development- Adobe layout tool not supported- Lot of Excel workarounds in finance- New modules and functionalities not available- Process development would mean further customizations

• Goals- EE finance and new finance processes- Enable new features, modules in operations- More flexible layout tool- Less customizations to ensure faster and more agile process development

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QAD ArchitectureConsumer Products and Food & Beverage Vertical Update

• 3 Manufacturing sites - 8 Sales sites, 2 3PL sites, 470 users• Functions in use

- Purchasing- Manufacturing

- Advanced Repetitive- Kanban

- Order delivery process- EMT & EDI- 3PL add-on- QAD Warehousing

- Finance• 14 software integrations with QAD

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Upgrade to QAD Cloud ERP EE 2016Consumer Products and Food & Beverage Vertical Update

• Realignment project for operations• New implementation for finance• Project duration 9 months

- 8 sales sites- 3 manufacturing site - 2 outsourced warehouses

• QAD 3PL add-on• Intercompany eInvoicing• I19 for local reporting• New layout tool

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Upgrade to EE 2016Consumer Products and Food & Beverage Vertical Update

• Project team - Oras Group core team (2 sites)

- Project manager- 7 for operative functions- 3 for finance

- QAD project manager and 3 consultants- Oras Group Key users involved from all sites

• Regular follow up calls• On site planning for finance and data migration• 3 on site test weeks• QAD project cost 680 k€

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Lessons LearnedConsumer Products and Food & Beverage Vertical Update

• Before project- Scope of project and customizations- Planning methodology - Project team roles

• Planning- Documentation of customizations- Scope limited, not too many new tools trained- Finance setups – operations workshops

• Implementation- Data migration time consuming- Test plans and result reporting - Time between test sessions

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Benefits FinanceConsumer Products and Food & Beverage Vertical Update

• Expectations- AP invoice integration replaced by QAD eInvoicing to increase

transparency, reliability and flexibility- Automatic IC invoice process to reduce manual work- Replace customization with bank drivers to increase flexibility and

reduce manual work- Replace customized local reports with I19- Improved data visbility and reporting to reduce manual Excel work

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BenefitsConsumer Products and Food & Beverage Vertical Update

• Expectations in operations- More flexible and reliable layout tool - New functions and modules available- Faster process improvements

• Additional benefits- Excelerator instead of CIM loads for mass updates- Hotfixes available or built if needed- Faster support by better knowledge of our version

• Customization reduction of 40 %

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Next StepsConsumer Products and Food & Beverage Vertical Update

• New 3PL site – spring 2019• Manufacturing development project autumn 2019 – 2020

- QAD Engagement workshop- Evaluation project- Roadmap

• QAD eInvoicing- Evaluation project Autumn 2019

• QXtend• Logistics Accounting 2020• Channel Islands

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Demand and Supply Chain Planning for Consumer Goods

Consumer Products and Food & Beverage Vertical Update

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Shaun Phillips

Hype Cycle for Consumer GoodsConsumer Products and Food & Beverage Vertical Update

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Sounce: Gartner, 2018

Predictive AnalyticsConsumer Products and Food & Beverage Vertical Update

Cluster Analysis

Analyse Sales characteristics• Seasonality• life-cycle profile, • capacity consumption • cost, • price,

Complex Sales Behavior

Examples• On/Off sales periods. • Low frequency / High Volume• Step changes.

Data Cleansing

Identify & correct• Missing data• Duplicate data,• Rogue data• UOM errorsPredict the expected values.

SHORT HISTORYSPARSE HISTORY

TREND SHIFT

Trade Promotions PlanningConsumer Products and Food & Beverage Vertical Update

How to move from a statistical forecast to a promotional net forecast

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Promotional uplift1st delivery Last delivery

1er day in store Last day in store

Cannibalization

Statistical Forecast

Adjusted base Line

Net Forecast

Trade Promotions PlanningConsumer Products and Food & Beverage Vertical Update

Use Cases

Time PhasedPrice Reductions

Temporary Product (Promo labelled)

Buy ‘n’ get x% off ‘n+1’

Functionality

• Promotion Simulation (What-If)• Profitability Analysis• Daily Increments• Determine Promotional Uplift• Customer/Location Specific• Cannibalisation Effect• Halo Effect

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SummaryConsumer Products and Food & Beverage Vertical Update

QAD is executing on new technology initiatives forConsumer Products

• Machine learning - Embedded in forecasting decisions

• Baseline forecasting- Automated cleansing of events- Complementary to Trade Promotions Analytics

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Questions and AnswersConsumer Products and Food & Beverage Vertical Update

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Stephen DombroskiDirector of Consumer MarketsQAD

Heidi EvilampiManager, ERP and IntegrationsOras Group

Shaun PhillipsProduct ManagerQAD DynaSys

Highlighted SessionsConsumer Products and Food & Beverage Vertical Update

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Welcome to Supply Chain Planning 2020

Shaun Phillips – Project Manager, QADTuesday 4:15 PM -5:15 PMRhythms 1

Rapid, Agile & Effective – Imperial Brands Moves to the QAD

Cloud

Marcin Kandora, Business Engagement LeadTuesday 4:15 PM - 5:15 PM Rhythms 2/3

The Next Generation of Demand Planning:

Intelligent and Real-Time

Shaun Phillips – Project Manager, QADWednesday 3:00 PM – 4:00 PMRhythms 1

Thank You!Consumer Products and Food & Beverage Vertical Update

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