Advancements in Supply Chain Management

Presenter

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

Achieving excellence in a Global Logistics Network is key..

Warehousing& Storage

Carriers

Customers

Shippers

Consolidators

Cargo HandlersLogistics Service Providers

Freight Forwarders

Top Pressures for Transportation

35%

35%

44%

45%

61%

61%

63%

0% 25% 50% 75%

Required to support my firm's market expansion or acquisitionplans

Increasing complexity and lengthening of inbound supply chain

Need to reduce inventory outages/stockouts to remain competitive

Tightening freight capacity and increasing accessorial costs

Market pressure to reduce total delivered cost

Customer demands for shorter cycle times, more frequentdeliveries, and delivery perfection

Increased internal and customer demand for accurate deliverystatus and cost information

% of Respondents Rating Very or Extremely Influential

Source: Aberdeen Group, 2004

Customer-centric pressures

Changing supply chain pressures

10.8%

10.5%

9.5%

8.0%

4.4%

2.4%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%

CPG

Industrial Equipment

Industrial Mfg

Retail

Electronics

Pharmaceuticals

Source: Values extrapolated from the Establish-Davis Benchmarking Study as presented at 2005 CSCMP Annual Conference

Total Logistics Cost as % of Revenue

5

4.8%

4.7%

4.3%

3.6%

2.0%

1.1%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0%

CPG

Industrial Equipment

Industrial Mfg

Retail

Electronics

Pharmaceuticals

Source: Values extrapolated from the Establish-Davis Benchmarking Study as presented at 2005 CSCMP Annual Conference

Transportation Cost as % of Revenue

6

Source—AMR 2005 TMS Worldwide Outlook

Forecast Transportation Spend by Region

7

Forecast Transportation Spend by Vertical

Source—AMR 2005 TMS Worldwide Outlook

Key Challenges faced within a Global Logistics Network

• Lengthening of the Supply Chain

• Difficulty & Cost Inefficiencies in Transportation Execution

• Lost Sales/Mismatch in Supply & Demand

• Import/Export Compliance Procedures

• Disconnect between International and Domestic

Transportation

• Lack of Strong Technology support

• Lack of Experience and Skill Sets

• …

Characteristics of a World Class Transportation Logistics Network

• Optimal Design of Global Supply Chain

• Integrated Planning and Execution Processes

• Integrated International and Domestic Logistics

• Global Logistics Visibility

• Dynamic Logistics Routes

• Logistics Process Automation

• Collaboration with Supply Chain Partners

• Compliance to Changing Regulations

• Making the Financial-Supply Chain Connection

What are the Leaders doing?

• Laggards are taking the full brunt of rate increases and capacity/performance shortfalls

• Leaders are taking action to avoid these problems by:

• Trying to Improve overall service and financial performance

• Investing in the right place• Focusing on Value• Thinking End to End• Leverage Technology (Network

Design, Logistics, Visibility, Analytical Solutions, etc..)

• Tapping local Talent• Manage Risk

RevenueRevenue

CostsCosts

Working Capital

Working Capital

Fixed Capital

Fixed Capital

Shareholder Value

Shareholder Value

ProfitabilityProfitability

Invested Capital

Invested Capital

Laggard’s Silo View

Leader’s Holistic

Approach

Lower raw materials and finished goods inventory without sacrificing customer satisfaction or raising logistics costs

Shorter “order-to-$$$” cycles

Greater customer satisfaction (i.e., higher market share, greater gross margins)

more competitive delivery availability

Lower cost of goods sold - low freight rates at each business unit

Fewer physical assets (i.e., trucks, trailers, and much higher asset utilization

In other words…Leaders act as internal “XPL’s” or even as profit centers…and every transport move has a “buy-side” and a “sell-side”

• Answer the tough questions:

• What impact do changing costs have on my sourcing strategy?

• What is the real total cost of outsourcing including the impact on working capital and cash flow?

• Where should my point of postponement be?

• Where should I hold how much inventory, when?

• 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?

• What is the impact of mergers and acquisitions on my supply network and capital asset budget?

Strategic Network Optimisation

Network Optimization – Proven Value

Copyright ©2006, Oracle. All rights reserved. Oracle & Skope Industries Confidential

• Largest dairy co-operative in NZ

• Over 25 Sites in NZ

• 7 Sites in Australia

• Approximate 20,000 employees

• Increasing presence worldwide

SNO Case Study – Milk Processing

Copyright ©2006, Oracle. All rights reserved. Oracle & Skope Industries Confidential

Milk Processing - The Problem…

• One raw input

• Multiple manufacturing sites

• Multiple products

• By-products

• Multiple demand markets

• Supply chain ‘push’

Copyright ©2006, Oracle. All rights reserved. Oracle & Skope Industries Confidential

The Fonterra model…

• Over 30 sites modeled

• 110+ final planning products

• 2 Markets (domestic + export)

• 1.4M Variables

• 0.9 Million constraints

• Build time of 12 mins

• Average Solve time of 10 minutes

• Peak memory usage of 1.5G

• Solved model size - 250M+

• Reporting time – 25 Mins

Copyright ©2006, Oracle. All rights reserved. Oracle & Skope Industries Confidential

User Comments

• Significant Benefits

• Shorter planning Cycles

• Ability to do what if analysis

• Reliable product with known history

• Support & development available

Execute Locally… • Using multiple languages and currencies- English, Spanish, German, French, Chinese (simplified)- Support for all currencies, including in-system conversions- Screen customization by region / country, user groups

• Accommodate region-specific rules and regulations

Control Globally… • All inbound POs and outbound customer deliveries

• Transfers between facilities, in different countries- Distribution centers – mfg - Intermediary nodes

• Visibility into in-transit & at-rest inventory throughout network

Manage Centrally… • All operational information in one location- Increase leverage for procurement- Apply best practices across regions- Evaluate processes holistically- Perform network analysis

• Cleanse data for single source of true rates & routes• Single IT infrastructure to cut support & maintenance costs

Transportation ManagementManage All Transportation Needs in One System

• World leader in agricultural and construction equipment

businesses

• 2006 annual revenue of $13 billion, with 30 manufacturing plants

and 25,335 employees globally

• Sales in 160 countries through more than 11,500 dealers and

distributors

• Ships over 300,000 pieces of outbound whole goods and 1

million inbound shipments to support the global manufacturing

Case New Holland- Case Study

Case New Holland- CNH is Global

BrazilBelo HorizonteCrawler excavators,tractor loader backhoes,crawler dozers, wheel loaders, graders

CuritibaTractors, combines

PiracicabaSugar cane harvesters,coffee harvesters,planters

CanadaSaskatoon, SKPlanting, seeding equipment

Mexico* Queretaro

Tractors, components

* GuanajuatoTractors

United StatesBelleville, PAHay, forage equipment

Benson, MNSprayers, floaters,cotton pickers

Burlington, IATractor loader backhoes,forklifts

Calhoun, GACrawler excavators,dozers

Dublin, GACompact tractors

Fargo, NDTractors, wheel loaders

Goodfield, ILSoil management(tillage) equipment

Grand Island, NECombines

New Holland, PAHay and forage equipment

Racine, WITractors, components

* Rocky Mount, NCEngines

Wichita, KSSkid-steer loaders

Manufacturing Locations

* Unconsolidated Joint Venture

Case New Holland- CNH is Global

AustriaSt. ValentinTractors

BelgiumAntwerpComponents

ZedelgemCombines, forageharvesters, large rectangular balers

ChinaHarbinTractors

ShanghaiTractors

FranceCoexGrape harvesters

CroixComponents

Tracy-Le-MontComponents

GermanyBerlinWheeled excavators,wheel loaders,graders

IndiaNew DelhiTractors

* PithampurTractor loaderbackhoes

ItalyImolaTractor loader backhoes, mini-excavators

JesiTractors

San MauroCrawler excavators,wheeled excavators

Pakistan* Dera Ghazi Khan

Tractors

PolandPlockCombines, balers

Turkey* Ankara

Tractors

United Kingdom**Basildon

Tractors, engines

UzbekistanTashkentTractors, cotton pickers

LecceMidi wheeledexcavators,telehandlers,dozers, wheel loaders

ModenaComponents

Manufacturing Locations

** It includes both CNH and Unconsolidated Joint Venture Plants* Unconsolidated Joint Venture

• Background - US was outsourced to 3PL, Europe was

running in-house on legacy systems, little control over

inbound transportation

• Objective - Wanted to reduce freight costs and increase

visibility by streamlining and controlling logistics operations

inhouse

• Technology - Selected Oracle Transportation Management

for global transportation platform

• Results - Went live in US in Nov 06 and Europe in Jan 07…

six months after vendor selection complete

Case New Holland- Project Overview

Case New Holland- Vendor Selection Process

Dec 2005Nov 2005

Recommendation

Began with a list of 42

possible TMS Vendors

Lean Logistics Manhattan Assoc. Manugistics Meridian IQ Nistevo Corp QLogitek Red Prairie SAP Transplace CTSIOracle/G-LogLogility*Descartes*

Oracle/G-LogManhattan SAPRed Prairie CTSI

Oracle/G-LogManhattan SAP **

Oracle/G-Log

Recipients of CNH TMS RFI

Semi-finalists chosen after demos

Chosen to demonstrate their product to CNH

Jan 2006 Jan 2006 Feb 2006

* Logility and Descartes chose not to respond

** SAP has chosen not to participate in the post demo activities

• Global development/implementation

• Oracle OTM system was designed as a global system, not

a domestic system adapted for global use

• Rated at or near the top in all of the CNH RFI and Demo

scoring categories

• Strong client site references

• Integration experience with SAP

• Oracle’s On-demand option allowed for quick installation

• Innovation leadership to drive continued transformation

Case New Holland- Why Oracle?

Phases

Case New Holland- Implementation Phases and Status

North American Logistics European Logistics

NA Phase II – NA Inbound from NA Suppliers•Material - NA Suppliers to NA Plants•Material - NA Suppliers to Non-NA Plants (Port)•Material - NA Supplier to NA Supplier•Service Parts - NA Suppliers to NA Depots

NA Phase IV - Outbound Service Parts •NA Depot to NA Dealer•NA Depot to Non-NA Dealer•Non-NA Depot (Port) to NA Depot•NA Suppliers to Non-NA Dealer•Non-NA Suppliers (Port) to NA Depot•NA Depot to NA Depot

NA Phase I – NA Plant Outbound and Direct Ship •Wholegoods - NA Plant to NA Dealer•Wholegoods - NA Plant to Non-NA Dealer (Port)•Wholegoods - NA Supplier to NA Dealer•Service Parts - NA Suppliers to NA Dealer

EU Phase I - Inbound Material•EU Suppliers to EU Plants•EU Suppliers to Non-EU Plants•Non-EU Suppliers (Port) to EU Plants•EU Plant to EU Plant•EU Supplier to EU Supplier

EU Phase II - Inbound Service Parts •EU Suppliers to EU Depots•Non-EU Suppliers (Port) to EU Depots•EU Depot to EU Depot•Non-EU Depot (Port) to EU Depot•EU Dealer to EU Depot•Dealer to EU Suppliers

EU Phase IV - Outbound Wholegoods •Dealer to Dealer•EU Plant to EU Dealer•Non-EU Plant (Port) to EU Dealer•EU Plant to Non-EU Dealer

EU Phase III - Outbound Service Parts •EU Depot to EU Dealer•EU Depot to Non-EU Dealer•Non-EU Depot (Port) to EU Dealer•EU Suppliers to EU Dealer•EU Suppliers to Non-EU Dealer (Port)•Non-EU Suppliers (Port) to EU Dealer

NA Phase III – NA Import, NA Intracompany, NA Returns•Wholegoods - NA Dealer to NA Dealer•Wholegoods - Non-NA Plant (Port) to NA Dealer•Material - Non-NA Suppliers (Port) to NA Plants•Material - NA Plant to NA Plant•Service Parts - Non-NA Suppliers (Port) to NA Depots•Service Parts - NA Depot to NA Depot•Service Parts - Non-NA Depot (Port) to NA Depot•Service Parts - NA Dealer to NA Depot•Service Parts - NA Dealer to NA Suppliers

Oracle’s OTM

*One Global Domain

CNH Wholegoods

Plants

Carriers

Request for Pick-up

Planned Shipmentw/ OTM Shipment Id

Tender Response via EDI, Portal or email

Invoice w/ OTM Shipment Id

Planned Shipment

w/ OTM Shipment ID

Master Data Interfaces

Item Master

Location Master

Freight PaymentPayment made when Invoice matches Planned

Shipment, unless Routing Guide Shipment

RIQ (Sell Rates)

Case New Holland- Outbound Integration

CNH SupplierLeveraged

CNH Supplier Portal

Carriers

Request for Pick-up

Planned Shipmentw/ OTM Shipment Id Invoice

w/ OTM Shipment Id

Planned Shipment (NA)

or Actual Shipment (EU)

w/ OTM Shipment Id

Oracle’s OTM

One Global Domain

Routing Guide (NA Only)

CNH Receiving

Actual Shipment (EU only)

w/ OTM Shipment Id

Tender Offer via EDI, Portal or email

Tender Response via EDI, Portal or email

Freight PaymentPayment made when Invoice matches Planned

Shipment, unless Routing Guide Shipment

Master Data Interface

Location Master

Case New Holland- Inbound Integration

Case New Holland - Project Results and BenefitsReduced Freight Costs• Inbound and outbound transaction costs • Lower headcount• Lower cost carrier selection• Payment based on actual shipped weight

Increased Visibility• Supplier communications (know when something is shipped)• Shipment data (weight, supplier, carrier selection)• Freight rates, freight payment and damage claims• Dealer destination charges

Increased Control • Carrier KPIs: Service level, cost, quality• Supplier compliance to core carriers

RESULTS• Reduced headcount from 20 to 12• Reduced expense $365k (Nov ’06 –

March ’07)• CNH anticipates OTM to lower the

cost of transportation and planning activities by approximately $72MM

Value Proposition• Optimal Design of Global Supply Chain - Design Resilient Supply

Networks• Integrated Planning and Execution Processes - Robust multi

mode/Multi leg transportation planning; advanced inventory management

• Global Logistics Visibility - Single global view of all logistics information; seamless ERP, SCM, and device integration

• Increase Logistics Operations Efficiency - Automated warehouse operations, RFID support, synchronized shipping and transportation

• Collaborate with Supply Chain Partners - Seamless execution flows, Carrier Sourcing, Automated settlements, transaction-centric collaboration

• Drive Continuous Improvement and Best Practices - Closed-loop Business Intelligence, Advanced analytics and reporting, integrated event management

Oracle Supply Chain Logistics Solutions

Domestic

International

Strategic(3-18 months)

Tactical(1-3 months)

Carrier Selection, Contracts

& Rates

Operational / Transactional(NOW – 60 days)

Supply Network Design

Inventory Optimization

Load Planning &

Optimization

Load Tendering

Freight Forwarders

Visibility of Events and Charges

Key Performance Indicator Trends & Action Plans

Freight Bill Settlement &

Payment

Carrier Performance Monitoring

Freight Claims Handling

Private Fleet Operations

Global Trade Planning, Customs Compliance & Charges

Execution

Oracle Transportation Management (OTM)Oracle Strategic Network Optimization (SNO)

Oracle Inventory Optimization (IO)

Oracle SNO Customers…

Oracle Transportation Management Customers…

Logistic

Service

Providers

Manufacturing

Retail

AQ&Q U E S T I O N SA N S W E R S