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CorporateOverview

• NewEngland’sLeadingDistributorofWine&Spirits-Nations7th largest

• PrivatelyownedbyCarmine&CarlMartignetti

• Establishedin1908- 3rdgenerationownershipbytheMartignettiFamily

• OperationsinMassachusetts,RhodeIsland,NewHampshire,Vermont&Maine

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CorporateOffices&Operations–Taunton,Massachusetts

• Salesof10.5millioncasesannually

• 1150+TotalEmployees-525+SalesPositions

• DistributionCenters-1.2millionsquarefeet

• Servicing11,000+restaurants,hotelandretailers

CompanyHistory

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2016

1908 1933 1986 1991 1992

EstablishedGroceryBusinessinNorthEndofBoston

RepealofProhibitionandformationoftheMartignetti(Carolina)distribution/wholesalecompany

Carmine&CarlMartignettipurchasecompany

AcquireddistributorChas.Gilman&Sons

AcquiredPastene WineCompany

2004 2005 2006 2007 2008

AppointedexclusivespiritsdistributorinMaine-10yearcontract

ExpandedNorwoodwarehouseandconsolidatedClassicWineImports

AcquiredUnitedLiquors,greatlyexpandingthecompany’soverallspiritsandwinesalesandportfolioofferings

ConsummatedsuppliertradethatresultedinMartignettiexclusivitywithDiageoandPernodRicardandHorizonexclusivitywithBacardi

FormedpartnershipwiththeMancinifamily- RhodeIslandDistributing

1993 1994 1998 1999 2000

AcquiredJetWine&Spirits,establishingMartignetti CompaniesofNewHampshire,MaineandVermont

AcquiredSilenus WineCompany

FormedMartignettiCompaniesofRI,whichcreateda5-state,regionalNewEnglandSalesOrganization

ConstructednewcompanyheadquartersinNorwood,consolidatingallexistingMAwarehouseoperations

AcquiredClassicWineImports

2009 2013

AcquiredCommonwealthWine&Spirits,bringingtheE&JGalloportfolioandotherselectfinewinesandspiritstothecompany

SecuredProximoappointment.CompletedstrategicsuppliertradebringingAbsolutandentireTreasuryWineEstatesportfoliotothecompany

NewCorporateHeadquartersandDistributionFacility–TauntonMASummer2016

2014

MaineSpiritscontractexpires,re-establishedthreestatebrokeragebusinessinNorthernNewEngland

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KeySuppliers

NewCorporateHeadquarters&DistributionCenter

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NewCorporateHeadquarters&DistributionCenter

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Industry’sMostTechnicallyAdvancedDistributionCenter&SalesOperation

• ConsolidatedTwoDistributionCenters

• AdvancedWarehouseRoboticsandMaterialHandlingSystems

• SolarPowered

• LEEDSCertified

• HydrogenPoweredVehicles

$150MMProject– CompletedSummer2016

• ConsolidatedTwoDistributionCenters

• 130Acres– 700,000+sf

• SolarPowered

• LEEDCertified

• HydrogenPoweredVehicles

KeyFeaturesofNewCorporateFacility

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CentralLocation–State’sLargestBusinessPark

OpenFloorPlan–toFacilitateCollaboration

Video- ConferencingCapabilities

WebEnabled“SmartBoards”

MultipleProductEducation&TrainingRooms

Customer/SupplierHospitalityCenter

Sales&TechnologyTrainingCenters

DedicatedSalesMeetingRoomforeachDivision

AdvancedRobotics&MaterialsHandlingSystem

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SUPPLYCHAINPROFILEShippingjustunder9Mcasesperyearto8,500customersinMA• Delivering7.5Mcaseson12,500trucksperyear(3rd partydeliversinWesternMA)

InBoundLogistics:• OceanFreight/Rail/OvertheRoad

– PointofOriginfreight: 3.4Mcases– Gallocases: 1.8Mcases– Pier/drayagecases: 1.8Mcases

Pricingdepartment9

PURCHASINGPROFILE

• 500vendors– Top100vendors=85%ofinventory

• 12,000skus• $120MaverageinventoryinMA• 6turnsperyear

– Gallo:16daysonhand– FineWine:someonlyturn1-2timesperyear

**WealsobuyforNH(controlstate)andVisionWine&Spirits,anationwideimportcompany

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MartignettiCompanies

InventoryPlanning&ReplenishmentTeam

MartignettiCompaniesInventoryPlanning/StaffProfile:• SeniorVicePresidentreportstoOwnership

• 2Directors

• 10InventoryManagers/25PortfolioManagers>>6SalesVP’s

• InventoryManagersRangeinExperiencefrom3-38Years

• Rangeinagefrom32-63

Howwedecided

• JDA– E3wastheincumbent;13YearsExperience

• BlueRidge

• Localvendor/E3creator

TheBLUERIDGEAdvantageBusinessProcess/Integration• Gainedin-depthknowledgeofourbusinessandprocesses• Ledtostrongintegrationanddetailedprojectplanning• GoodcollaborationwithbothteamsTrainingandSupport• Indepthtrainingonsitefortwoweeks• WeeklyLifelinecalls• ResponsivesupportFunctionality• EventsandForwardBuyingareeasytoinputandunderstand• SlowmoveralgorithmhelpstokeepproductinstockReports• SupplyChainAnalytics(SCA)• ReportscanbesetuponautomaticemailscheduleInterface• Easytounderstand/simplelayout• Abilitytoseehistory&forecastdatainbothgraphicalandnumericalformat

BlueRidge-MartignettiCompaniesProjectScope:• BusinessProcessAnalysis(4daysonfrontend)

• ForecastingandReplenishmentSolution(SupplyChainPlanning-SCP)

• PlatinumLifelineService

• Education(3-4daysessions):Breakthrough/Guidepost/Advanced

• SupplyChainAnalytics(SCA)

BlueRidge– Earlydays• October1golivedate• 23YearVeteranInventoryManagerretiredinAugust/positionfilleddayafterLaborDay• Someinconsistentsaleshistory/companymoveoneyearearlier• Aggressivetimetableforitemsetups,linking;ledtomistakes• Noexpectedoutofstockreport• Gallomovedtoanew,localDC• Californiawildfires• Sales:Lackofcommunicationonprograms• ServiceLevels(i.e.,safetystock)tooaggressive• Leadtimeadjustments• Culture/TrustingtheProcess• Holidayseason• Political&OpportunityBuysareheavyinthe4th Quarter/$8Mthisyear/early2018

SevenEssentialElements• DemandForecast• LeadTimeForecast• OrderCycleOptimization• SafetyStock&ServiceLevelManagement

• DemandPlanning&Replenishment• SpecialOrders• OrderConstraintsValidation

HistoricOnHand$OnOrder$MA

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Out of stock comparison

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BlueRidge– Earlydays

• Learningcurve• Trustingthesystem/Interruptions• Training• Lifeline

• SupplyChainAnalytics

• BlueRidgeTipoftheWeek

SupplyChainAnalytics

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TIPOFTHEWEEKYoushouldperiodicallyrunanOCOonyourvendorstokeepupwithanychangestothevendorsvolume.

• Sincewe’vebeenonthesystemforabout6months,nowisagoodtimetoreviewyourvendorsandruntheOCO’s.

OtherreasonstorunanOCO:• NewBrandsoritemshavebeenaddedtothevendor• BrandsorItemshavebeenlostorremovedfromthevendor• Newactivityorchangesinforecastsonseveralitems

22TIPOFTHEWEEK

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When entering a Forward Buy that is specifically for a Price Increase, make sure to choose Price Increase as the Deal Type. If you leave it at the default of Off Invoice, the cost of the item will be changed when it comes over to AX – to whatever you entered as the discount.

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In most cases, when forecasting a slow mover (less than 5 or 10 cases per week), it’s best to not use a seasonal profile.Something that is truly not seasonal should be on a flat line profile. This will allow a greater deviation and keep enough safety stock to cover those occasional spikes.

The example below shows an item that does not have true seasonal activity, and has an average of less than 1 case per week.You will get better results from a flat line forecast:

Whatgetsmeasuredgetsdone….APROCESSTOCREATEMOREMEANINGFULMETRICS

• Overstocks• ForecastAccuracy• WeightedAverageInStock/ServiceLevel• DaysofSupplyByBuyer• SKUCount• AgedInventory• FreightCPC

HistoricOverstock$MAwithOverstock%GOAL=20%

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Overstocks

• CurrentAverageInventoryLevelis$115M/1,100,000cases• Inventoryoveroneyearold,$4M/27,000cases

• Political/ForwardBuys,$8M/50,000cases

• ‘Other’overstocks,$18M/135,000cases

• Current,overstockdollars,$30M/212,000cases 26%dollars/19%cases

• OverstockGoal/ToleranceLevel:$23Mtotal/162,000cases=20%/15%respectively• Reduce‘other’overstocksby$7M

Overstocks

• Salesbehindplanby$11MFYTD/COGS,$8.5M• DemandForecast

• Componentsofsafetystock:• Leadtime,Quoted,Total,Deviation• ServiceLevel• OrderCycleOptimization:AcquisitionCost/CarryingCost

• BuyerstrustingtheSOQ

• Buyersorderingearlierthanneeded/orderingtomeetshippingconstraints

• ManagingPainPoints:OutofStockvs.Over-Stock

Overstock$byBuyer

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OverstockUnitsbyBuyer

Overstock%byBuyer

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Overstock$byTop10Vendors

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Overstock$byTop10Items

OverstockUnitsbyTop10Items

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ForecastAccuracy:Comparestheforecastforlastperiod(oneweek)totheactualdemand.

Wewanttosmoothouttheanalysisbylookingat4and8weekperformanceasatruemeasureofourforecastingaccuracy.Wearestillworkingonareporttouseatleast4weeksofhistoryandaveragethatforForecastAccuracy. Workinprocess—3weeksofdatasofar.

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ForecastingAccuracybyBuyer- FA

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Historic1WeekForecastAccuracy

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Historic4WeekAvg ForecastAccuracy

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Historic8WeekAvg ForecastAccuracy

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OUT OF STOCK COMPARISON

40• WeightedAverageServiceLevel—ComingSoon!

DOScomparisonYTDthroughMarch2018

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DOScomparisonwithinventoryandsales

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