GTM implementation in UPM

including sanctions data interface

with DescartesAntti Vehkala – IT Service Owner Logistics

UPM

CONTENT

• UPM – The Biofore company

• History of OTM / GTM in UPM

• GTM usage in UPM

• Q&A

| © UPM

UPM TODAY

Turnover 2014: EUR 9,9 billion

Personnel: 21 000

Shareowners: over 90 000

• Plywood products

UPM Plywood

• Label materials for product and information labeling

UPM Raflatac

• Magazine papers in Europe and the USA

• Newsprint and fine papers in Europe

UPM Paper ENA

• Fine papers in China• Label papers

globally

UPM Paper Asia

• Hydro-, nuclear- and condensing power (incl. shares in energy companies)

• Electricity production and trading

UPM Energy

• Pulp• Plantations• Biofuels• Sawmills

UPM Biorefining

UPM Biocomposites

UPM Biochemicals

| © UPM

IN BRIEF

UPM – The Biofore Company

Public4 24 February 2014

UPM Biorefining UPM Biorefining consists of pulp, timber and biofuels businesses and

plantation operations. UPM has four modern pulp mills in Finland and Uruguay and four sawmills

in Finland. UPM‘s biorefinery for producing wood-based renewable diesel will start up in summer

2014 in Finland. The main pulp customers are producers of tissue, speciality papers and board as

well as the oil and petrochemicals industry for biofuels Timber customers are construction,

joinery and furniture industries. UPM aims to grow as a reliable pulp supplier and seeks growth

in advanced biofuels.

UPM Energy generates cost competitive low emission energy and operates in physical and

derivatives trading on the Nordic and Central European energy markets. UPM’s energy generation

capacity consists of hydropower, nuclear power, condensing power and wind power.

UPM Energy aims to grow on the Nordic CO2 emission-free energy market.

UPM Raflatac manufactures self-adhesive label materials for product and information

labelling for label printers and brand owners in the food, personal care, pharmaceutical and retail

segments, for example. UPM Raflatac is the second-largest producer of self-adhesive label

materials worldwide. UPM Raflatac aims to advance in growth markets and strengthen its position

in specialty labelstock products.

Our products are made of renewable raw materials and are recyclable. With our new business structure we will drive transformation and seek to further develop our business portfolio.

| © UPM

UPM Paper Asia serves growing markets with fine papers in Asia and labelling materials

globally. The operations consists of the UPM Changshu paper mill in China and labelling and

packaging materials production lines at the UPM Tervasaari and UPM Jämsänkoski mills in Finland.

The main customers are retailers, printers, publishers, distributors and paper converters.

UPM Paper Asia seeks growth in office papers in China and the Asia-Pacific region, and in labelling

materials worldwide.

UPM Paper ENA (Europe and North America) produces magazine paper, newsprint and

fine papers for a wide range of end uses in 18 modern paper mills in Europe and the United States.

The main customers are publishers, retailers, printers and distributors. UPM has a global paper

sales network and an efficient logistics system. UPM Paper ENA focuses on cost leadership and

improved profitability to secure cash flow.

UPM Plywood offers plywood and veneer products, mainly for construction, transport and

other manufacturing industries. UPM is the leading plywood supplier in Europe, with production

in Finland, Estonia and Russia. UPM Plywood aims to improve profitability and the value offering

and service packages for selected end-use customers.

Other

operations

Wood Sourcing and Forestry secures competitive wood and biomass for all UPM businesses using

wood and manages UPM-owned forests. In addition, UPM offers a wide range of wood trade and

forestry services to forest owners and forest investors. UPM Biocomposites and UPM Biochemicals

units are also included in Other operations.

IN BRIEF

UPM – The Biofore Company

Public5 24 February 2014

| © UPM

SALES NETWORK AND PRODUCTION

PLANTS

65 production plants in 15 countries:

- Europe: 55

- USA 5

- Brazil 1

- Uruguay 1

- China 2

- Australia 1

- Malaysia 1

- South-Africa 1

Global sales network

HISTORY OF OTM & GTM IN UPM

OTM & GTM IN UPM –

ENABLER OF CHANGE

- 2005 Local logistics

systems with local processes

2005-2010Global OTM

implementation

2010-2012Harmonizing organization

and processes

2012 -Optimizing Processes

2005-2009Paper

products

2010Non-Paper products

2012-2013Integration of

Myllykoski Paper

2012 GTM implementation

2013 Biofuels

integration

2015 GTM Descartes

integration

BUSINESS DRIVERS FOR

GTM IMPLEMENTATION

• Following business drivers triggered sanctions party screening project in UPM and have since been turned to benefits:• Risk mitigation

– Ensure cargo is moving without unexpected delays – Demurrage avoidance

– KYC and compliance with sanctions regimes

• AEO Certificate application for UPM

• German Customs Authority had set sanction party screening as prerequisite for electronic export clearance

• Fully automatic screening solution was needed because huge amount of trading partners

• All ad hoc screening solutions and manual option were immediately ruled out

GTM IMPLEMENTATION AND USAGE IN UPM

SCREENING SOLUTION REQUIREMENTS

• Functional & Business – Consolidated trading partner master data to be used in batch job screening

– Full audit trail for screening results available

– Estimated volumes:• Estimated number of 300 000 trading partners includes:

• Estimated annual growth of trading partners = 3%

– ’Consolidated EU sanctions list’ as primary sanctions data source• Other lists optional

• Technical:– One global instance

– Data security• On-premise (in-house) installation required

• Customer and other trading partner data not to leave UPM network

ORACLE GTM SELECTION

• RFX process arranged with five different sanction party screening solution

providers in Q4/2012

• Oracle GTM selected based on functional match, license costs and lowest

estimated implementation effort

• Quality of screening algorithms was emphasized for minimizing false

positive hits

• Implementation was done with existing OTM AMS vendor

• Internal UPM resources from IT and UPM’s supply chain worked closely with the

implementation partner during the project

SANCTIONED PARTY SCREENING –

SOLUTION DESIGN

OTM / GTM

SANCTIONED PARTY SCREENING –

CONCLUSION

• The sanctions regimes are not a new phenomenon. Regimes have been in

place for a long time. However the main drivers behind the matter being /

becoming increasingly important:– Situation in Russia / Ukraine

• Restrictions are more extensive (previously concerned limited markets only)

• Restrictions change frequently

– Banks are facing increased fines especially in the US

• Banks are imposing strict sanctions clauses and increasingly conducting sanctions due diligence on

their clients

Corporate wide global TMS in UPM has been a solid platform for ensuring

global trade compliance

– All trading partners and related trade transactions are available in one

TMS platform for fully automated sanctions party screening