Will Blockchain Transform Your Digital Supply Chain? Confidential – Oracle Internal/Restricted/Highly Restricted

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Gartner Predicts 2018: Future of Supply Chain Operations paints a picture of a world where technology innovation — from artificial intelligence to Blockchain — is intertwined with supply chain management (SCM) strategy and operations. This means SCM is on its way to becoming technology-centric as opposed to simply technology- enabled…… Copyright © 2018, Oracle and/or its affiliates. All rights reserved.

Today’s Challenges Headline 36 pt Calibri 51% 37% 28% 46% Demand to launch products quickly before competitors 37% Customer mandates for faster, more accurate, and more unique fulfillment 28% Growing complexity of global operations 46% Manage rising supply chain costs Source: Aberdeen Survey 2017 Copyright © 2018, Oracle and/or its affiliates. All rights reserved.

Economic Impact of Counterfeiting $75B Estimated Impact of Counterfeiting in US Semiconductor Manufacturers per year Counterfeit Auto Parts in USA per year $12B $991B Total International Trade in Counterfeit and Private Goods in USA by 2022 Source: Frontier Economics ,2017 Semiconductor Industry Association,2016 Federal Trade Commission, 2018 Copyright © 2018, Oracle and/or its affiliates. All rights reserved.

Disruption in Manufacturing Is Accelerating Companies must move fast to thrive Industry 4.0 Pace of innovation New business models Globalization Hyper connectivity is improving quality, efficiencies, and opening up new opportunities More than ever it is challenging to keep up with rapid innovations in products, services, capabilities, and processes New digital capabilities are enabling creative service and business models for increasing revenue and customer satisfaction Companies must adapt to increasing and diverse compliance, accounting, sustainability, and competitive pressures New technologies are serving as both disruptors and catalysts for significant industry change Copyright © 2018, Oracle and/or its affiliates. All rights reserved.

Digitally Connected Supply Chain Enabling the digital supply chain with new technologies Enterprise, IOT, DaaS and Big Data Blockchain Cloud Services Adaptive Intelligence and Machine Learning Advanced User Interaction Engineering and Design CX, CPQ and Order Mgmt Materials Planning Prototype and Manufacture Shipping and Logistics Real World Field Use Service and Depot (PD / PDH / Ideation) (CX / CPQ / OM / GOP) (SCM / IBP) (ERP / SCM / MES) (WMS / OTM / GTM) IoT-Enabled (Service and Depot Repair ) Voice of the Digital Twin Voice of the Customer Voice of the Factory Voice of the Product Voice of the Customer Copyright © 2018, Oracle and/or its affiliates. All rights reserved.

Interconnected The technology most likely to change the next decade of business is not the social web, big data, the cloud, robotics, or even artificial intelligence. It’s the Blockchain... Harvard Business Review ‘The Impact of Blockchain Goes Beyond Financial Services’ $176 Billon Business value-add of blockchain by 2025 Let's start with perhaps the least understood but potentially the most important - Blockchain. Marc Andreesen called Blockchain "one of the most fundamental inventions in the history of computer science" and Klaus Schwab, founder and executive chairman, World Economic Forum called Blockchains "the heart of the fourth industrial revolution" So what's the big deal? Blockchains provide a method by which any transaction between parties in a network can be shared across the network ensuring no single point of failure, and in such a way that enforces the validity of the entire transaction thread. So its not just for crypto-currencies like Bitcoin. Its not even just for Financials. It can be used for any systems that requires security, verifiability, and multi-party collaboration and access. Sounds like Supply Chains to me. So what's happening at Oracle with Blockchains? 10% of the Global GDP Will be stored in Blockchain technology by 2027 Copyright © 2018, Oracle and/or its affiliates. All rights reserved.

Why Blockchain for Digital Supply Chain? Limited visibility of the products Gaps exist between systems within and across enterprise boundaries. EDI and XML messaging are often out of sync and move data only one stop down the supply chain. High transaction costs Current supply chain transaction costs are high due to multiple ecosystem partners. Due to shorter product life cycle, any variation or delay has high transaction cost. Monitoring counterfeits and quality of products Limited automation of ascertaining product quality in transit and taking proactive actions. Difficult to track and trace counterfeit parts, country of origin and identifying conflict minerals. Meeting compliance requirements Regulatory compliance requirements are country specific and cost of non compliance is very high. Difficult to implement effective supply chain compliance program across multiple partners. Copyright © 2018, Oracle and/or its affiliates. All rights reserved.

Potential Benefits of Supply Chain with Blockchain Improve Transparency and Experience 20% to 30% Reduce Operating Expenses 10% to 15% Increase Speed of Settlements 15% to 25% Reduce Organizational Risks 10% to 15% Increase Revenue 2% to 4% Source: Accenture Copyright © 2018, Oracle and/or its affiliates. All rights reserved.

Key Features of Blockchain All parties maintain encrypted records of transactions Altering would require overriding the whole distributed network Tamper-Proof Non-Refutable Records Data stored across network and not centrally Better Security and availability: No centralized point of vulnerability Decentralized Set of embedded rules agreed by the parties for interaction Smart code facilitates, verifies and enforces the negotiation of an agreement or transaction Smart Contract Copyright © 2018, Oracle and/or its affiliates. All rights reserved.

How Blockchain Works Improved supply chain execution # Cryptographic hash ensures that any tampering with a particular block is easily detected Transaction record and history # Blockchain node with transactions Changes to the ledger are triggered by new transactions Blockchain node with transactions New transaction New transaction Each blockchain participant validates the changes using the same consensus protocols Peer network of nodes – each node maintains the ledger of transactions Copyright © 2018, Oracle and/or its affiliates. All rights reserved.

Example: Blockchain for Supply Chain Increased transparency, automation, and compliance Supplier A (China) Manufacturer (Mexico) OEM (USA) Certificates of origin Batch numbers Processing dates Shipment dates Shipment date Order number Enterprise Resource Planning Supply Chain Management Supplier B (Chile) Certificates of origin Batch numbers Processing dates Shipment dates Smart Contracts: Quality checks for suppliers against specifications Automatic release of shipment after checks pass Shipment date Order number Smart Contracts: Check supply chain Certificates of Origin for authenticity of parts Automatic release of product from inventory to shelves after checks pass Copyright © 2018, Oracle and/or its affiliates. All rights reserved.

Example: Blockchain Track and Trace Transparency and traceability across the supply chain Address Common Challenges Provenance – Where did this come from? Genealogy – What is it composed of? Authentication – It is what it says it is? Conformance – Is it what I asked for? Benefits of Blockchain Approach Blockchain to control item lifecycle transaction sequence Verified, immutable chain of custody No reliance on centralized / 3rd party hub Shipment Exceptions Paperwork Customs Acceptance Compliance Associate Mfg. Assembly Test Certifications Payment Vision Operations Raw Materials Supplier SCM Cloud Copyright © 2018, Oracle and/or its affiliates. All rights reserved.

Blockchain Enabled Smart Contracts Programatic automation Contract is converted into code Blockchain ensures transparency and security Flexibly change contracts Automate contract terms Automate contract exceptions per T&C’s Improve accuracy Copyright © 2018, Oracle and/or its affiliates. All rights reserved.

Example: Smart Contract Alert: Excessive Vibration has occurred three times, send replacement for critical sensitive part Associate Manufacturing To send a replacement subassembly Address excessive vibration while in-transit Smart contract rules to deal with vibration Single event – Inspect on receipt Two Exceptions – Hold payment Three exceptions, replace critical part Copyright © 2018, Oracle and/or its affiliates. All rights reserved.

Sample Smart Contract Configurator Copyright © 2018, Oracle and/or its affiliates. All rights reserved.

Copyright © 2018, Oracle and/or its affiliates. All rights reserved.

Copyright © 2018, Oracle and/or its affiliates. All rights reserved.

Your Choice of Deployment Model Public Cloud Same cloud, your choice of location Oracle Blockchain Cloud Service Auto-Provision Integrate with Apps Manage & Operate Add Partners SaaS PaaS IaaS All subscription services — Managed by Oracle Copyright © 2018, Oracle and/or its affiliates. All rights reserved.

Next Steps Schedule a demo meeting Evaluate the potential for Blockchain in your environment Let us help you to adopt industry best practices in Blockchain Copyright © 2018, Oracle and/or its affiliates. All rights reserved.