Forecasting Process Sales and Operation Planning

Agenda Objectives of S&OP process Business Process Flow & status Forecasting Process S&OP Process

Objective of S&OP process Accurate consensus projections of future business results Accurate information to customers, source point, and internal organizations Coordinated action plans to ensure demand and supply are aligned Execution on business process integration model to ensure alignment between business management, innovation management, customer management & SC management

Business Process Flow Strategic Plan NO Annual Plan Demand Plan Import Plan Sales Plan Financial Plan Detail Operation Delivery Sales & Operation Planning YES

Forecasting Process

Forecast Objective GET ONE SET of figure that reflect real demand in market Improve forecast accuracy Reduce cost (w/o, WH, inventory…) Improve stock availability (including promotion, NPD) Improve Customer Service

Supply chain flow Sourced point Dumex VNDistributors Sub-distributors Primary sales In-market sales Stock transfering Current Trade Unconstrained demand with factors from trade and internal activities 14 days 28 days including GIT Ordering

Forecast Process flow History Sales NO Take out promotion, pipeline, OOS Cleaned History Baseline forecast Pre-Demand Plan Consensus Unconstraint Demand Level, Trend Forecast Meeting YES NPD plan (pipeline, running rate, launch date, cannibalization). Promotion Plan (incremental, period, cannibalization) Actual Sales Forecast accuracy improvement Market growth Company market size Company positioning strategy Competitor activities

Corrected Forecast + Promotion History (Including a Promotion) Past Future Corrected History Baseline Forecast Cleaned Historical Data Baseline + Incremental

Units Time Statistical forecast Sales lost in anticipation of promotion Sales lost because of stock build during promotion Incremental sales gain during promotion = - Net Gain Promotions – before and after period should be taken into consideration

Forecasting data & ownership Forecast dataOwnership M0M1M2M3M4M5M6M7M8M9M10M11M12M13 BaselinePlanning Managerfirmed PromotionMKT/Sales Managerfirmed NPDMKT Managerfirmed Pre Demand PlanPlanning Managerfirmed Consensus Unconstraint Demand Forecast Meeting MembersFirmed ProcessPlanning Manager Forecast data: Sales in market (IMS), by SKUs level, by Distributor & Nationwide with UOM in carton, ton, VND Sales is ownership of forecast data M2-M4 Marketing is ownership of forecast data M5-M13 Supply Chain is ownership on forecasting process

Forecasting Meeting Objectives: Primary:  A forum to get consensus on one set of figures that reflects real demand in the market which is unlimited by supply constraint and independent from target. Others: A forum to review previous month forecast error, causes of exception and key lessons learned for continued future forecast improvement. Schedule Weds of W2 Rules  Review Pre-demand plan and do homework before the meeting  Change only if significant  Ensure to reflect all promotion activities timely in the plan.  Own demand plan.  Own forecast accuracy. Attendees  Trade Marketing Manager  National Sales Director  Planning Manager / Customer Service Manager  SC Director  MKT Manager Output Primary:  12 months agreed unconstrained demand plan report for supply plan and financial review.  Agreed pipeline, quantity & timing for product launches  Input for S&OP Input Primary:  Pre-demand Plan from Demand Planning  NPD Volume Forecast Template Others  Operation Plan from Trade Marketing/Marketing  Sales Bottom Up from channels  Last Month Forecast Accuracy Report Process Owner: Supply Chain Director Roles  Expert adviser on trade issues, decision making  Owner of total demand plan to achieve the company target  Chairman of meeting/Expert adviser on statistical model  Owner of process  Owner of promotion/NPD in related brands Meeting Owner: Planning Manager

Sales & Operation Planning Process (S&OP)

 “S&OP” is a Process lead by Senior Management that, on a monthly basis, evaluates revised, time-phased projections for supply, demand, and the resulting financials.” What is S&OP?

S&OP Overview Outcomes Planning processes are linked and synchronized All functions have aligned incentives Operations capacity is efficiently used Operations has flexibility to minimize cost of goods sold Reduced uncertainty Higher asset utilization with appropriate capacity Lower operating costs due to better communication Improved customer service Higher revenue Opportunities identified Improved stock turns DemandSupply Customer Actions Key Account Planning Trade Promotions Consumer Promotions Competitor Actions Forecasts Options Lead Times Mfg. Capacity Constraints Scheduling Customer Service Goals Distribution Capacity Constraints Risks & Costs Flexibility Anticipation Risks & Costs Stock & Funding Policies Sales and Operations Planning is a process that balances demand plans and supply constraints proactively.

Objectives: Primary :  Ensure planned supply meets Demand plan as much as possible  Agree decision when supply can not meet demand  Discuss company stock & supply operation issue  Review & Ensure target achievement Attendees  MD  National Sales Director  SC Director  Planning Manager / Customer Service Manager  MKT Director, Marketing Manager  Financial Director Output Primary:  Agreed demand, supply, capacity, inventory actions  Confirmation on gap (if any) between current plan and target for action plan  Agreed sales plan (Sales in market)  Agreed financial plan (Sales to market) Input Primary:  Confirmed supply meet demand plan.  Propose option to meet demand plan  Propose capital Expenditure investment plan  Confirmed supply response to short notice Proposal Others  NPD & Promotion Plan  Stock situation Schedule Fri of Week 3 Time horizon: next 12 months. Focus M2-M6 Rules Circulate agenda before the meeting. Use standard presentation format. Highlight big issues. Mandatory meeting (supported by the Board). Review actions from previous meeting. Agenda owner leads the topic of discussion Minute of action written by action person Process Owner: MD Roles  Chairman/ensure actions are reach on demand and supply issues  Provide sales insight & agree on proposed plan  Meeting owner & facilitator  Provide brand development plan & agree on proposed plan  Provide agreement/comments on financial aspects on issues discussed Meeting Owner : SC Director S&OP Meeting