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Optimize Inventory and Fulfillment

Presenter’s NamePresenter’s Title

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The following is intended to outline our 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, or functionality, and should not be relied upon in making purchasing decision. The development, release, and timing of any features or functionality described for Oracle’s products remains at the sole discretion of Oracle.

Safe Harbor Statement

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Agenda

• Leadership in High Tech Distribution

• Optimize Inventory and Fulfillment

• Results Achieved by Oracle Customers

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7 of the top 10 Semiconductor companies run Oracle Applications

9 of the top 10 Fabless Semiconductor companies run Oracle Applications

5 of the top 10 Electronic Manufacturing Services (EMS) companies run Oracle Applications

All of the top 25 Electronic OEMs run Oracle Applications

Oracle in High Technology

Did You Know?

14 of the top 25 High Tech Distributors run Oracle Applications

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The Challenges We’re Hearing

“How can I manage the supply chain to deliver products faster and more profitably?”

“The global supply chain has become a continuum of complexity, with sophisticated information requirements at every level. Manufacturing is migrating around the world from one low-cost manufacturing site to another, with challenging consequences to all players.”

Greg Frazier, Avnet, Electronic News

Supply Chain Complexity

Customer Responsiveness

“How do I speed up customers’ deliveries without adding headcount?”

“Having someone readily available is very important to our customers, and increasing no-touch orders makes our staff better able to respond to our customers’ needs.”

Pamela Weber, Arrow Electronics, Indian River Consulting Group

“Responsiveness to customers is integral to the Digi-Key culture; it’s in our DNA. Further, I believe responsiveness to customers is integral to Digi-Key’s success.”

Mark Larson, President & CEO Digi-Key, Electrical Design News (EDN)

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“How can I easily add or modify service offerings?”

“There's a new era in IT distribution, and it has less to do with beating Dell onto the UPS truck and more with building the processes that allow managed services, vertical market solutions, and new technologies to solve the most complex business problems...”

Scott Campbell, Channel Reseller News (CRN)

Managed Services

Low Margins “How can I improve profitability when low margins are a fact of life?”

“There are no magic bullets. We started with a lean sigma concept. It’s a matter of how do we improve step by step, region by region, process by process. It’s just work. Real focus on the top line—value-add business—coupled with continuous improvement that keeps your expenses low.”

Bill Mitchell, President & CEO Arrow Electronics, Electronic News

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Strong Weak

Perfect Order InventoryCash-to-Cash SCM Costs

Source: AMR Benchmark Analytix

Why Is Demand Driven Important?Demand Driven leaders have:• 15% less inventory• 17% stronger order fulfillment• 35% shorter cash-to-cash cycle times

Which translates to:• 60% better profit margins • 65% better EPS • 2-3X the ROA

“How can I manage the supply chain to deliver products faster and more profitably?”

“The global supply chain has become a continuum of complexity, with sophisticated information requirements at every level. Manufacturing is migrating around the world from one low-cost manufacturing site to another, with challenging consequences to all players.”

Greg Frazier, Avnet, Electronic News

Supply Chain Complexity

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Agenda




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Optimize Inventory & Fulfillment

Requirement Oracle Capability The Oracle Difference

Minimize inventory rebalancing between DCs

Strategic Inventory Positioning

Unique incorporation of risk and uncertainty in determining inventory levels and locations

Balance volume discounts with optimal inventory levels

Inventory & Cost Optimization

Exclusive optimization of inventory based on volume pricing incentives

Optimize purchasing to line-card demand

Demantra Sales & Operations Planning

Only enterprise suite with integrated, real-time sales and operation planning

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• Profitably balance supply, demand, and budgets– Make allocation decisions while trading off service levels and

cost– Balance the needs of many customers in different channels– Examine throughput on the most critically constrained

resources or suppliers and profitability by product family

• Workflow-driven collaborative planning – Enable a workflow driven collaborative process that includes

Finance, Sales, Marketing, Purchasing and external stakeholders

– Configurable planning platform adapts to business process– Web-based portal supports internal and external collaboration

• Exception-based performance monitoring– Adjust demand or supply plan as conditions change – Drive continuous improvement– Create sales incentives and promotions to close gaps

Leverage POS data to drive supply-demand balancing

Demantra Real-Time S&OPOptimize Purchasing to Line-Card Demand

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Sense Demand

Understand Demand

Respond toDemand

ShapeDemand

The Demand Driven Company Runs on Real-time Information

Oracle’s High Tech Distribution Vision …Demand Driven Adaptive Planning

Precise prediction of demand to identify potential problems+ Better optimization of supply enables response

Results in more profitable revenue

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Evolve to Real-Time Sales & Operations PlanningProfitably Balance Supply, Demand, and Budgets

Customers

Suppliers

Develop predictable business plans

Shape demand to meet financial goals

Align supply chain to support plan

Monitor performance to plan

Shape demand to close gaps

Drive fulfillment decisions

Finance

Supply Plng Sales

Marketing

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Demantra Real-Time S&OP Enabling the Next Generation Best-in-class S&OP Process

• Move from a periodic reactive process to a real time proactive process

– Combine demand review, supply review, product review, and management review into a collaborative real time sales and operations planning process

– Combine strategic and tactical decisions

• Start quickly with best practice templates and easily adapt to your business

• Sense, shape, and respond to demand– Start with more accurate consensus

forecast– Shape demand by managing product

introductions and sales promotions– Profitably balance supply, demand, and

budgets

• Drive tactical decisions into execution and monitor performance

Sales and Operations Planning Process

Product ReviewDemand Review

Supply ReviewExecute and Measure

Sense

Shape

Respond

Management Review

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Sense Demand – Get to More Accurate NumberImproved Demand Management – The First Step to Demand Driven

• Get real-time visibility to all demand signals– Sales, marketing, customers, stores – multiple units of measure

and currencies– Include POS information in real time– Move from a regimented periodic to a continuous demand planning

process– Forecast at a more detailed level – store, shelf

• Leverage advanced analytics to accurately predict demand

– Use any combination of quantitative or qualitative data to establish your base line forecast

– High precision statistical forecasting, no statistical background required – Superior Bayesian-Markov forecast analytics

– Forecast based on attributes and characteristics such as color, size, style, and so on

• Get quickly to an improved consensus number– Use multi-dimensional analysis to adjust, allocate, and rollup– Collaborate with internal and external constituents– Workflow driven forecasting exceptions ensures responsiveness– Track changes through comprehensive audit trails– Capture contract win assumptions with assumption based

forecasting

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Shape Demand – Real-Time S&OPLeverage Best-in-class Sales and Operations Planning from Demantra

Measure internal inputs and

provide incentives to generate better inputs

Measure internal inputs and

provide incentives to generate better inputs

Improve demand visibility with customer collaboration

Improve demand visibility with customer collaboration

All the detailedinformation you need

to make the RIGHT decisions

All the detailedinformation you need

to make the RIGHT decisions

Automatically detect outliers while

forecasting for new product introductions

Automatically detect outliers while

forecasting for new product introductions

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Consolidate All S&OP Data Real TimeCapture Historic and Future Supply and Demand in a Single Data Store

• Move from a static periodic process to an iterative real time process

– Capture demand and supply signals continuously, closer to the point of consumption and at a more detailed level

• Manage all supply and demand data in a central and secure repository

– Customer and supplier forecasts– POS or other channel data– Sales and marketing forecasts– Financial forecasts and budgets– User-defined data (spreadsheets)

• Configurable and extensible– Meta data driven hierarchies and

dimensions– Integration profiles to bring in

additional external data streams

ConstraintsMarketing forecast

SupplyData

CHANNEL DATA

Customer sales

CollaborationWorkbench

Supply and Demand Hub and Seeded Worksheets

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Respond- Holistic Supply and Distribution PlanCross-enterprise Synchronized View of Supply and Demand

• Plan all distribution holistically– All central and regional distribution centers, customer

and supplier facilities– Bills of distribution and transfer rules– Product family and item level planning– Alternate components, resources, processes, suppliers,

facilities, and ship methods– End-item substitution

• Determine optimal supply allocation:– Fair share allocation– Inventory policy at multiple levels (max, target, sfty stock)– Inventory rebalancing (circular sourcing)– Shipping method selection and load consolidation– Global forecast -> local allocation of supply across

distribution network• Automatically generate transfers

– Create internal transfers – Create consolidated shipments– Integrated with OTM for carrier and mode selection

• Automate replenishment– Suppliers manage your DC inventories– Manage your customers’ inventory

DemandPlanning

Multi-PlantPlanning

Demand

Distribute

DistributionPlanning

Supply

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Respond – Holistic Supply and Distribution PlanImprove Global Distribution Efficiency and Service Levels at Lower Cost

• Distribution Planning – Existing in 11i.10– Complete supply chain visibility– Bills of distribution and sourcing rules– Global forecasting– End-item substitution– Alternate components, suppliers, facilities, and ship methods– Model customer and supplier facilities– Supplier capacity constraints

• Distribution Planning - Added in Release 12– Fair share allocation– Inter-organization load consolidation– Inventory re-balancing– Distribution focused productivity enhancements – New Distribution Planner Workbench– Release and reschedule internal sales orders– Added new distribution planning specific exceptions

• Trip under utilized, item with a projected stock-out, items below safety stock inventory level, items below target inventory level, items above maximum inventory level, allocation constraint, planned order uses an inventory rebalance source, item shipment consolidated to a later date

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Vtech Builds a Consumer Driven Supply Chain With Oracle/Demantra

CUSTOMER PERSPECTIVE“Demantra's solution allows us to collaborate with our customers in a single, consistent planning environment where changes in forecasts dynamically update replenishment and shipment plans. This next generation CPFR solution allows VTech to maintain its lead in the consumer electronics business by delivering the highest possible service levels, while reducing current inventory levels.”Nick Delany, Senior Vice President

RESULTS• Increased order fill rate from 55% to over

95%• Increased inventory turns from 3x to 6x per

year• Reduced logistics costs by 65%• Reduced retail compliance fines by 85%• Reduced price protection claims by 40%• Rapid time-to-benefit with implementation

in 90 days

COMPANY OVERVIEWVTech is one of the world’s largest suppliers of corded and cordless phones and a leading supplier of electronic learning products. Founded in 1976, Vtech manufacturers innovative, high quality consumer electronics products, and distributes them to markets worldwide in the most efficient manner.

CHALLENGES/OPPORTUNITIESLegacy systems a hodge-podge of incompatible hardware and softwareInefficient planning and execution leading to rising costsExcess inventory; poor response to market requirements

SOLUTIONSReal-time Sales and Operations Planning

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• Answer the tough questions:– What impact does tiered pricing from my supplier

have on the item cost?

– What is the optimum volume to order?

– How much inventory should I hold, when?

– What is the impact of changing service level on my cost?

– How could I react to a disruption in supply due to unforeseen events? Should I multi-source?

– What are my most profitable channels or products to invest in?

– Where should my point of postponement be?

Inventory & Cost OptimizationBalance Volume Discounts With Optimal Inventory Levels

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Leverage resiliency in your supply chain for tactical responses

• Cost modeling • What-if simulations • Sourcing strategy • Safety stock strategy• Network modeling and alternates• Asset rationalization • Risk related to unplanned events

Optimize Profit Potential

Strategic Network Optimization (SNO)

• Cost modeling • What-if simulations • Network modeling • and alternates • Asset rationalization • Risk related to unplanned events

Inventory Optimization (IO)

• Model distribution of variability (demand, supply, lead time)

• Budget and capacity constraints• Time-phased min,

max, and target service levels

Inventory policiesTarget inventory levels Identification of point of postponement

Network structureSourcing rulesSuppliers and EMSand Dis facilitiesShipment methods

Inventory & Cost OptimizationManage Distribution Risk With Profitability and Postponement in Mind

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Panduit, Worldwide

Manufacturer of electronic data communication components10 manufacturing facilities in US, China, Singapore, and Puerto RicoProducts include cable routing, wiring accessories, wiring ducts, patch panel and cords$500M annual revenue

Variety of disconnected legacy systemsUnconstrained MRPOrganizations incl. distribution centers were planned separatelyNo consensus forecasting process; difficult to adjust historical dataNo global visibility to needs of all warehousesNo simultaneous view of constrained material and capacity

Moved to daily planning cycle for their distribution planningImplemented consensus forecasting process (monthly)Better insight into and improved forecast accuracyImplemented IO for monthly safety stock planningIntegrated planning and execution, reduces overall cycle time Integrated demand, supply, and inventory planningSimultaneous analysis of constrained material and capacityImproved planner productivityBetter visibility to their global inventory position

COMPANY PROFILE BEFORE ORACLE

AFTER ORACLE

Benefits

• Improved customer response times• Global visibility to all demand and supply• Real-time integration between planning and execution• Improved planner productivity

33,000 planned items250,000 SKUs1000+ customers100+ suppliersDaily planning, monthly forecasting and safety stock planning

PLANNING BENCHMARK

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Strategic Inventory Positioning Minimize Inventory Rebalancing Between DCs

• Evaluates sourcing & distribution strategies in the context of net delivered cost

– Analyze the effect on working capital and cash flow of increasedlead times to support outsourcing and off-shoring locations

– Determine single versus multi-sourcing strategy– Consider the increased buffer stock needed to hedge against

increased variability

• Rationalizes your asset strategy for profitability– Determine best locations and the right number of assets in value

chain– Consider all costs: opening and closing costs, inflows from

salvage, fixed and variable costs

• Considers the entire global virtual network– All distribution centers and customer facilities – All geographies and markets– All sources and modes of transport

• Enables frequent network re-evaluation– Merger and acquisitions are more common – Have impact on

locations of your distribution centers and use of local transportation providers

– Rapidly changing logistics costs

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• Push supply from central DCs and plants through distribution network

– Allocate and push inventory with safety stock and target inventory levels

• Safety stock levels determine minimum requirements

• Target inventory moves excess outwards from plants and suppliers

• Set maximum inventory levels for upper limits

• Reduce inventory costs by rebalancing before pulling additional supplies from the central warehouse

• Automate rebalancing via rules

Inventory Balancing

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Load Consolidation

• Distribute using load size constraints– Schedule transfers and ship early to utilize

existing loads– Delay shipments for target inventories until a

load is available

• Release inter-organization transfer dates to transportation management for execution

Truck utilization targets

Sourcing rules with multiple ship methods

Define shipment limits per modeof transport

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Distribution Planner WorkbenchImprove Planner Productivity – All Key Data in a Single Place

• Global visibility of suppliers, demands, and constraints for faster decision making

• Improved planner productivity– Automate routine decisions for fair share allocation,

load consolidation, and inventory balancing– Exception management to enable planners to focus

on the real problems – Embedded distribution plan metrics

• Comprehensive multi-dimensional analysis

– Inbound and outbound shipments by organization in the horizontal plan

– Allocation decisions by customer and organization

• Find opportunities to improve load consolidation

• Integrated with Oracle EBS– Release and reschedule both internal requisitions and

internal sales orders simultaneously

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Adaptable – Segment the Problem As Needed

• Adapts to your current business model

– Single plan or multiple plans

• Evolve planning model at your own pace

– Re-configure easily by modifying plan options instead of re-implementing or re-modeling

• Multiple models can co-exist

One holistic plan for distributors

One DPP, multiple MPS for manufacturers with distribution networks

DPP for all Distribution Centers

MPS Org 1 MPS Org 2 MPS Org 3

Distribution planning for all Organizations

Multiple Distribution Plans

DPP for all Distribution Centers

DPP Org 1 DPP Org 2 DPP Org 3

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Integrated With Oracle E-Business Suite

Adjust Allocations

Release trips and create internal

sales orders

Run distribution plan Consolidate Loads and Moves

Select Modes and Carriers

Book and Tender Loads

Pick ReleaseShip Confirm

Track and Trace

Real-time Transportation Re-plan

PROCESS

Oracle APS Processes

Oracle Transportation Management Processes

Oracle Shipping Processes

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Company• Headquartered in Mexico, Interceramic produces, distributes, and sells through

company owned stores and franchises ceramic tile and other household fixtures.• Interceramic is one of the largest companies in the world dedicated to the production

and commercialization of ceramic floor and wall tile

Planning problem solved• Plans production, distribution, and retail replenishment

Unique aspects of implementation• 91 Distribution centers, stores, and franchises• 4 Plant warehouses 7 Manufacturing plants• 3000 BOMs, 100,000 SKUs

• High automation of planning process• Improved customer service levels• Improved interdepartmental coordination• Improved inventory visibility

Live on ASCP, IO, and DP since 2002 Interceramic, Mexico and USA

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Summary

• Only enterprise suite with integrated, real-time sales and operation planning

• Exclusive optimization of inventory based on volume pricing incentives

• Unique incorporation of risk and uncertainty in determining inventory levels and locations



Demantra Sales and Operations Planning

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The Only Complete Distribution Solution

PlatformPlatform

PeoplePeopleProcessesProcesses

PartnersPartners

CustomerResults

CustomerResults

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Channel Optimization Solution Footprint

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Most ComprehensiveHighest RatedBest-SellingOnly vendor in Gartner and Forrester leader quadrants for all Middleware components.

••32,000+ Customers Deployed 32,000+ Customers Deployed

••70% of World70% of World’’s 50 Largest Firmss 50 Largest Firms

••$1B+ Business $1B+ Business

SOA Vendor of Choice

Source: Forrester Research ranking of Application Platform Servers, April 2005

Market-Leading Middleware Platform

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950 customers participating in Customer Advisory Boards

500 Industry & Product strategy council members

35 Fusion strategy council members

1300 participants in early customer adoption programs

425 user groups

30,000 applications customers

220,000 database customers

5000 middleware ISVs

1700 application ISVs

9000 database ISVs

30,000 middleware customers

29,000 developers, support engineers and consultants

Oracle’s People Advantage

275,000 customers

benefiting from shared innovation

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Agenda




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reduced on-hand inventory by 50% utilizing Demand Planning and integrated logistics management

used Demantra S&OP to improved order fill rate from 55% to 95%, increase inventory turns 3x-6x and reduced logistics cost by 65%

reduced inventory by $40M via global inventory visibility with Demand Planning and ASCP

improved forecast accuracy and reduced planning cycle time using ASCP

What Customers are Achieving in Inventory and Fulfillment…

http://www.inboundlogistics.com/planner/logos/2006/370_logo.jpg

http://www.vtech.com/

http://images.google.com/imgres?imgurl=http://www.fujixerox.com.my/about/images/fuji-logo.gif&imgrefurl=http://www.fujixerox.com.my/about/about.asp&h=69&w=200&sz=6&hl=en&start=4&tbnid=wGMGLLhvM3ZOVM:&tbnh=36&tbnw=104&prev=/images%3Fq%3Dfuji%2Bxerox%2Blogo%2Basia%26svnum%3D10%26hl%3Den%26lr%3D

http://www.canon-europe.com/index.asp

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Inventory and Fulfillment

“Demantra is a best-in-class provider of demand management, sales & operations planning, and trade promotions management solutions. With this acquisition, Oracle plans to offer customers a compelling, comprehensive solution for the extended enterprise that enhances demand visibility with powerful analytics for more accurate demand-driven planning, forecasting and modeling.”

“G-Log’s TMS product is a functionally rich solution and one of the few on the market that supports both domestic and international transportation across multiple industries. About 40% of G-Log’s customers are manufacturing and distribution companies, roughly 10% are retailers, and nearly 50% are logistic serviceproviders that use the solution on behalf of many their clients.”

“In this evaluation, [Oracle] EBS establishes itself as the market-leading solution for order completion to cash. Other strengths in process support include partner, pricing, sales configuration,quoting, distribution and logistics, installation and repair scheduling, warranty, contract enforcement, and reverse logistics.”

http://www.arcweb.com/Common Images/ARC logo-advgrp-150pix.jpg

http://www.connellpurchasing.com/images/AberdeenLogo.gif

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The Oracle Difference

Only Oracle…

• Provides an enterprise suite with integrated, real-time sales and operation planning

• Incorporates optimization of inventory based on volume pricing incentives

• Uniquely incorporate risk and uncertainty in determining inventory levels and locations

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