iSave Approval process Training

iSave Approval process Training

Savings Approval Process – Overview
Zycus iSave Idea Planned Executed Realized Ideas during planning period Allocate resources to project Deal Signed Validation of savings with back up documentation 1 3 Create project and input planned amount Negotiate w/ Suppliers Deal Signed Update annualized savings amount Sourcing team updates annualized realized savings amount Project Owner Offline > Finance Threshold? Does analysis need finance review? N > Sourcing threshold? N Y Y Y Does Savings calculation follow the standard? Upload required documentation Upload required documentation Y N Important Note: Project owner to click “Send for Approval” button in Executed and Realized stage irrespective of savings amount. Auto approval pop up appear in case project savings below threshold Names of sourcing (executed)/ finance (realized) managers to select per approval matrix in case project savings are above threshold 2 4 N Sourcing Approved? Finance Approved? Discussion with project owner Y Y Approved N N Approved Thresholds: Timing of Finance review – Post the upload of required documentation from sourcing Sample audit will be perform based on risk assessment Sourcing Finance Optional For Power & R.E., the process only applicable to manual projects In Zycus

Approval Thresholds Business Sourcing Threshold Finance Threshold
$ K Saving Healthcare 50 100** Aviation 250 EM Transportation 100 O&G Lighting 75 Power 200 500 Renewable Energy Corporate *** ** Irrespective of threshold, project lead needs to upload supporting documentation in realized stage *** IT Project thresholds for sourcing and finance approval would be $ 500K

Automated Approval Process
New Developments…optimized approval process Key Developments in Pipeline As-Is Process To-Be Process Screenshot Ref Automated Approval Process Manual process of selecting approvers Automated selection per Approval Matrix Sending each sub-division manually for approval Approvals would be at project level Manual process to determine whether project is required to be sent for approval Auto approval of projects below threshold Manual conversion of foreign currency to USD Tool would automatically convert local currency and determine if requires approval 1 2 3 Built into tool

Auto-mapping of approvers
1 Current State: Page 4 – Manual selection of sourcing/ finance approvers Future State: No Page 4 required. Automated selection of approvers per approval matrix “Add Stakeholder” section removed. Stakeholders would be automatically mapped based upon approval matrix provided by BU’s and regions

Check-box to enable Project-level workflow
2 Check box for enabling project level workflow Current State: No option to enable project level workflow Future State: Option now available to enable project level workflow Check-box to enable Project-level workflow

“Send for Approval/Review” button at the project level
Project level workflow 2 Current State: Sending separate approvals at Tier 2 stage Future State: Project level workflow built. No need to send approvals at Tier 2 stage “Send for Approval/Review” button at the project level

Auto selection of Sourcing approvers at Executed Stage
2 Auto selection of Sourcing approvers at Executed Stage Current State: 1. The approver table shows both sourcing and finance managers selected manually during “Add Stakeholder” section 2. Risk of selecting Finance approver during Executed Stage 3. Need to manually determine if the project is above threshold Future State: 1. Automated mapping of Sourcing Managers per approval matrix. 2. Only Sourcing Managers are available to be selected during Executed stage 3. No manual calculations required to determine if project is above threshold. If above threshold, the list of approvers would pop up. For projects above Sourcing threshold, list of sourcing approvers per the approval matrix would be pre-selected

Auto selection of Finance approvers at Realized Stage
2 Auto selection of Finance approvers at Realized Stage Current State: 1. The approver table shows both sourcing and finance managers selected manually during “Add Stakeholder” section 2. Risk of selecting Sourcing approver during Realized Stage 3. Need to manually determine if the project is above threshold Future State: 1. Automated mapping of Finance Managers per approval matrix. 2. Only Finance Managers are available to be selected during Realized stage 3. No manual calculations required to determine if project is above threshold. If above threshold, the list of approvers would pop up. For projects above Finance threshold, list of finance approvers per the approval matrix would be pre-selected

Auto-approval below threshold
3 Current State: Need to manually determine if the project is above threshold No auto-approval functionality currently present Future State: 1. Project owner to receive this auto-pop up if project is below BU threshold Auto pop up of the dialogue box notifying project lead that project would be auto-approved

Approval Matrix update process

Savings management project SMEs
Business, Commodity or Region Team First Name Last Name Location SSO Business Leader Verfied Business Aviation Jessica Hataway Cincinnati, Ohio Aaron Burkhart Y Transportation Sven Verbroekken Fort Worth, TX Sven Verbroekken Healthcare Kimberly Thompson Nevada Bret Estes Power Tara Wight Schenectady NY Randy Rowe Renewable Energy Corporate Shawanna Brown Atlanta, GA Energy Connections Hugo Rocha Garcia, NLE, MX Jaime Robles Oil & Gas Esther Akindele Houston, TX Milosz Bieda Appliances & Lighting David Csaba Budapest, HU Henry Nieman Global Research Center Anthony Sinopoli Niskayuna, NY Gary Blond Commodities IT Habeeb Alaidroos Alpharetta, Georgia Sam Guertin MRO Ed Landry Mike Bennett Facilities Mgmt Ron Reed Utilities Bruce Foust Georgia Richard Tutela Logistics Charles DeCalonne Mark Chadwick T&L/Fleet Jamie Blough Betty Sweetman Prof Services Srivani Nagavelli Hyderabad, Telangana, IN Florence Imadali Labor Services Region ASEAN Hooi Keng Teoh Kuala Lumpur, Malaysia Sanjeev Gupta India Kamaljit Singh Bangalore, India Tushar Cherekar China Melody Ma Shanghai, China Jason Wang MENAT Mohsin Abdul Ghani Dubai, AE Hisham Zorgan SSA Catherine Idun Accra, GH Anne Jason Adilson Paulo Luanda, AO LATAM Andre Araujo Rio de Janeiro, BR Carlos Milczwski Europe Fabrice Izzi Filip Mandic Russia Canada Mississauga, Canada Vivian Xiao ANZ Min-jung Lee Seoul Korea Hee Ju Yoon Korea & Japan Hiroyuki Kohyama Hino Japan

Go live support Who should I contact if I have questions about the standard (calculation method, process) or need any general support? Level 1 contact Level 2 contact Savings standard Your SME-a) SMEs to send the questions to level 2 contacts if the problems can’t be solved Refer name in previous slide Finance related Narumi Fukuda ( )/ Ankush Lodha ( ) Who should I contact if I have questions about how to use the tool? Users can send an the first level of support : Zycus provides 24 x 5 chat support to customers Support Zycus responds within 1 hour on weekdays and 24 hours during weekends Chat Support Sunday 20:30 hrs EST to Friday 20:30 hrs EST Who should I contact if I want to obtain the access to the tool? Fill in the attached form and send to your SME, SME to review the request and send to (a – Subject Matter Expert

Monthly Approval Matrix review process

Sourcing/ Finance approval matrix review
Frequency: Monthly Consolidate changes to Sourcing approval matrix Share the latest approval matrix with all the SMEs Analytics Governance Consolidate changes to Finance approval matrix Provide feedback on Sourcing approval matrix Business/Region SME Provide feedback on Finance approval matrix GOS finance GOS finance review tech-support Zycus Update user access in iSave Note: The process once stabilized could be managed on quarterly basis. Also, plan is to develop a standardized process to request/ modify access (Support Central workflow)

Proposed Back-up Documentation
Executed Stage: Project Plan CY and PY Executed Contract Bidding Summary and RFP (for Avoidance) Savings Calculation Realized Stage: All of the above Current Year Purchase Order, if applicable 3 Months of Invoice Back up documentation is mandatory for all projects above BU thresholds.

Sending projects for Sourcing Approval by
1 Sending projects for Sourcing Approval by Sourcing Lead

Sample Example…Price Deflation Example – IT
Scenario Key Consideration points: Aviation BU has managed to bring down the price of a laptop by € 100 after negotiations with the existing supplier. Baseline Cost per unit: € 1,100 New Cost per unit: € 1,000 Sub-BU wise anticipated volume details are as follows: Military Systems – 2000 units Commercial Engines units YOY deflation Total Baseline Cost: € 11,00 x 3000 = € 3,300,000 Total New Cost: € 10,00 x 3000 = € 3,000,000 Total Savings : € 3,300,000 – 3,000,000 = € 300,000 Savings Calculation: Per unit Military Systems Commercial Engines Total Baseline Cost € 1,100 € 2,200,000 € 1,100,000 € 3,300,000 New cost € 1,000 € 2,000,000 € 1,000,000 € 3,000,000 Savings (EUR) € € ,000 € ,000 € ,000 Savings (USD)* $ $ ,000 € ,000 € ,000 *Assuming 1 EUR = 1.10 USD Project owners to input Baseline Spend, Current Spend and savings numbers in Local currency Tool is configured with Op plan rates which would be automatically applied on project to convert savings into USD for the purpose of determining thresholds. When the user clicks on “Send for Approval” button, If the project is above threshold and needs approval, a dialog box with a list of Sourcing/Finance managers for that BU will appear on the screen and the Sourcing lead can select from the list. If the project savings is below threshold, the project will be auto-approved

iSave - Financial Savings Management
Update Executed savings for both sub-tiers and split it by time. Use “Send For Approval/Review” button to send the entire project at once for Sourcing approval

Select the required Sourcing managers for the list and the entire project will go to the managers for approval Note: If the project savings are below threshold no approval will be needed and the approval request will be auto-approved as shown below

Proposed Back-Documentation to be uploaded for Sourcing Review
iSave - Financial Savings Management Provide comments and attachments such as Contract, PO, savings calculation etc. Proposed Back-Documentation to be uploaded for Sourcing Review The project owner needs to upload the following back-up documentation for Sourcing approval: Project plan (indicating the expected current year volumes for laptops to ~3000 units) CY contract with the laptop supplier € 1,000 PY contract with the laptop supplier € 1,100 Savings calculation at Local Currency and USD values The project owner can add additional comments, if any, and then send the project for Sourcing approval Note: Refer slide 32 & 33 for exhaustive list of back-up documentation for different savings types.

View approval/review status and send reminders if needed
iSave - Financial Savings Management View approval/review status and send reminders if needed

Sourcing approval of projects at Executed Stage
2 Sourcing approval of projects at Executed Stage

The Sourcing Manager lands on this page after logging in the tool
iSave - Financial Savings Management The Sourcing Manager lands on this page after logging in the tool The Sourcing Manager has to click on “check savings” to initiate approval process

The Sourcing Manager has to click on “Go” to proceed
iSave - Financial Savings Management The Sourcing Manager has to click on “Go” to proceed The Sourcing Manager needs to review savings for all sub-tiers before approving the project savings

Review Methodology by Sourcing Manager
iSave - Financial Savings Management The Sourcing Manager would review accuracy of : Savings type/ category Spend and Savings calculations. Business, Commodity Type, Regions, Currency for the project. Back-up documentation could be utilized for the following - Review project plan to identify the expected volumes to be purchased Validate CY rate of € 1,000 in CY contract Validate PY rate of € 1,100 in PY contract Savings calculation to ensure that savings reported are as per the standard In case of any clarifications, Sourcing Manager can send the project back to Sourcing Lead for clarification. Review Methodology by Sourcing Manager The Sourcing Manager will approve savings project or send back for clarification based on the back-up documentation submitted by user after checking savings for all sub-tiers

The status of the project gets updated based upon the Sourcing Manager’s approval/rejection

Sending projects for Finance approval by
3 Sending projects for Finance approval by Sourcing Lead

Update Realized savings for both sub-tiers and split it by time. Use “Send For Approval/Review” button to send the entire project at once for Finance approval

Select the required Finance managers for the list and the entire project will go to the managers for approval Note: If the project savings are below threshold no approval will be needed and the approval request will be auto-approved as shown below

Proposed Back-Documentation for Finance Review
iSave - Financial Savings Management Provide comments and attachments such as Contract, PO, savings calculation etc. Proposed Back-Documentation for Finance Review The project owner needs to upload the following back-up documentation for Finance approval: Project plan (indicating the expected current year volumes for laptops to ~3000 units) CY contract with the laptop supplier € 1,000 PY contract with the laptop supplier € 1,100 Savings calculation at Local Currency and USD values Additional Documents for finance review- 3 months invoice for validation of actual volumes Current Year PO for volume and rate validation The project owner can add additional comments, if any, and then send the project for Finance approval Note: Refer slide 32 & 33 for a complete list of back-up documentation for different savings types.

View approval/review status and send reminders if needed
iSave - Financial Savings Management View approval/review status and send reminders if needed

Finance approval of projects at Realized Stage
4 Finance approval of projects at Realized Stage

The Finance Manager lands on this page after logging in the tool
iSave - Financial Savings Management The Finance Manager lands on this page after logging in the tool The Finance Manager has to select on “check savings” to initiate approval process

The Finance Manager has to click on “Go” to proceed
iSave - Financial Savings Management The Finance Manager has to click on “Go” to proceed The Finance Manager needs to review savings for all sub-tiers before approving the project savings

Review Methodology by Finance Manager
iSave - Financial Savings Management The Finance Manager would review accuracy of : Realized Spend and Savings calculations. Back-up documentation could be utilized for the following - Review project plan to identify the expected volumes to be purchased Validate CY rate of € 1,000 in CY contract Validate PY rate of € 1,100 in PY contract Savings calculation to ensure that savings reported are as per the standard 3 Months Invoice data to ensure expected volumes per project plan match actual volumes for 3 months CY Purchase Order to review the rate and volumes. In case of any clarifications, Finance Manager can send the project back to Sourcing Lead for clarification. Review Methodology by Finance Manager The Finance Manager will approve savings project or send back for clarification based on the back-up documentation submitted by user after checking savings for all sub-tiers

The status of the project gets updated based upon the Finance Manager’s approval/rejection

Back up Documentation Examples

Price Deflation Documentation -1/5 – IT
Scenario Back up Documentation Project owner to upload the following documents once savings are executed, for Sourcing review – Previous year contract & amendments – The previous year’s rate of $ 1000 to be validated from contract/ amendment Purchase Order (CY and PY): To validate current year and previous year volumes Current year contract & amendments - The current year’s rate of $ 1200 to be validated from contract/ amendment Savings calculation- Document (excel, word etc) providing detailed savings calculation. This should be as per the established standards. Additional documents to be uploaded once savings are realized, for Finance review - 3 Months Invoice – The invoices will be leveraged to validate actual volumes against savings calculation assumptions; and validate rate charged is per agreement Scenario 1: YOY deflation A negotiation has reduced the price of a laptop from $1200 to $1000. Volume anticipated: 100 units per annum Baseline Cost: 100 x $1200 = $120,000 Year 1 Baseline cost 120000 Savings 200*100=20K Revised base cost 100000 Strictly private and confidential – Internal use only. Not for distribution. For scenario planning purposes only & subject to information/consultation with Employees & their representatives as appropriate.

Price Deflation -2/5 - Facilities (Rental)
Scenario Back up Documentation Project owner to upload the following documents once savings have been executed, for Sourcing review – Previous year contract & amendments – The previous year’s rate of $ 1000 to be validated from contract/ amendment Purchase Order (CY and PY): To validate current year and previous year volumes Current year contract & amendments - The current year contract/ amendment to state annual deflation of 10% for 3 years Savings calculation - Document (excel, word etc) providing detailed savings calculation. This should be as per the established standards. Additional documents to be uploaded once savings are realized, for Finance review - 3 Months Invoice – The invoices will be leveraged to validate actual volumes rate charged against savings calculation assumptions and contract Scenario 2: YOY deflation A negotiation with supplier A has led to 10% YOY reduction in the rental for office premises for next 3 years. The rental for the previous year was $100K. Baseline Cost: $100K Particulars Year 1 Year 2 Year 3 Baseline cost ($K) 100 90 81 Rate of savings 10% Savings amount ($K) 10 9 Revised baseline cost ($K) 72 Strictly private and confidential – Internal use only. Not for distribution. For scenario planning purposes only & subject to information/consultation with Employees & their representatives as appropriate.

Price Deflation -3/5 – Professional, Labor Services
Scenario Back up Documentation Project owner to upload the following documents once savings have been executed, for Sourcing review – Previous year SOW – The previous year’s rate of $10K to be validated from SOW Current year SOW - The current year SOW to state professional fee as $90K for the same scope of services as compared to last year Savings calculation- Document (excel, word etc) providing detailed savings calculation. This should be as per the established standards. Additional documents to be uploaded once savings are realized, for Finance review - 3 Months Invoice – To validate that the volumes are aligned to savings calculation & assumptions; and rate is charged as per SOW Scenario 2: YOY deflation A negotiation with an auditing service providing vendor has led to 10K reduction in professional fees for audit. Baseline Cost: $100K OR A negotiation with a vendor providing temporary employees service has led to 10K reduction in fees for the service. Particulars Year 1 Baseline cost ($K) 100K Savings amount ($K) 10K Revised baseline cost ($K) 90K Strictly private and confidential – Internal use only. Not for distribution. For scenario planning purposes only & subject to information/consultation with Employees & their representatives as appropriate.

Price Deflation -4/5 – Logistics
Scenario Back up Documentation Project owner to upload the following documents once savings have been executed, for Sourcing review – Previous year contract & amendment s– The previous year’s price of $1.2 MM to be validated from contract/ amendment Current year contract & amendments- The current year’s price of $1 MM to be validated from contract/ amendment Purchase Order (CY and PY): To validate current year and previous year volumes Negotiation Tool template - The template should include information related to volume, old rates, new rates Savings calculation- Document (excel, word etc) providing detailed savings calculation. This should be as per the established standards. Additional documents to be uploaded once savings are realized, for Finance review - 3 Months Invoice – To validate that the volumes are aligned to savings calculation & assumptions; and rate is charged as per agreement Scenario 1: YOY deflation A negotiation has reduced the price of warehouse storage contract from $1.2 MM to $1 MM. Particulars Year 1 Year 2 Year 3 Baseline cost 1.2 MM Savings 0.2 MM Revised base cost 1 MM Strictly private and confidential – Internal use only. Not for distribution. For scenario planning purposes only & subject to information/consultation with Employees & their representatives as appropriate.

Price Deflation -5/5 – MRO
Scenario Back up Documentation Project owner to upload the following documents once savings have been executed, for Sourcing review – Previous year contract & amendment s– The previous year’s price of $50 to be validated from contract/ amendment Current year contract & amendments- The current year’s price of $45 to be validated from contract/ amendment Purchase Order (CY and PY): To validate current year and previous year volumes Savings calculation- Document (excel, word etc) providing detailed savings calculation. This should be as per the established standards. Additional documents to be uploaded once savings are realized, for Finance review - 3 Months Invoice – To validate that the volumes are aligned to savings calculation & assumptions; and rate is charged as per agreement Scenario 1: YOY deflation Supplier A has agreed to reduce the price of packaging boxes from $50 a box to $45. The volume of boxes estimated to be purchased this year is 100,000 units. Particulars Amount Baseline cost ($K) 5,000 Savings amount ($K) 500 Revised baseline cost ($K) 4,500 Strictly private and confidential – Internal use only. Not for distribution. For scenario planning purposes only & subject to information/consultation with Employees & their representatives as appropriate.

Deflation (Substitution) -1/3 – MRO
Scenario Back up Documentation Scenario 3: Substitution A decision has been made to substitute the current protective glass “A” from vendor X, with a new protective glass “B” from vendor Y Price of protective glass A is $ 60 Price of protective glass B is $50 Volume anticipated: 100 units Baseline Cost: 100 x $60 = $6000 Project owner to upload the following documents once savings have been executed, for Sourcing review – Previous year contract – The previous year’s rate of $ 60 for glass A from vendor X to be validated from contract Current year contract - The current year’s rate of $ 50 for glass B from vendor Y to be validated from contract Purchase Order (CY and PY): To validate current year and previous year volumes Documentation/ Communication of change- Documentation, internal communication or commentary substantiating rationale of the change in product from A to B Savings calculation- Document (excel, word etc) providing detailed savings calculation. This should be as per the established standards. Additional documents to be uploaded once savings are realized, for Finance review - 3 Months Invoice – To validate that the volumes are aligned to savings calculation & assumptions; and rate is charged as per agreement / contract Particulars Year 1 Year 2 Year 3 Baseline cost ($) 6000 5000 Savings ($) 1000 Revised base cost ($) Strictly private and confidential – Internal use only. Not for distribution. For scenario planning purposes only & subject to information/consultation with Employees & their representatives as appropriate.

Deflation (Substitution) -2/3 – Prof, Labor Services
Scenario Back up Documentation Scenario 3: Substitution A decision has been made to substitute auditing service company from A to B resulting into reduction in audit services cost by $100K. Baseline Cost: $500K OR A decision has been made to substitute security service company from A to B resulting into reduction in security services cost by $100K. Project owner to upload the following documents once savings have been executed, for Sourcing review – Previous year Contract & SOW – The previous year’s rate of $500K for auditing services to be validated from SOW Current year Contract & SOW - The current year’s rate of $400K to be validated from SOW with same scope of services Purchase Order (CY and PY): To validate current year and previous year volumes Documentation/ Communication of change- Documentation, internal communication or commentary substantiating rationale of the change in company from A to B Savings calculation- Document (excel, word etc) providing detailed savings calculation. This should be as per the established standards. Additional documents to be uploaded once savings are realized, for Finance review - 3 Months Invoice – To validate that the volumes are aligned to savings calculation & assumptions; and rate is charged as per agreement / contract Particulars Year 1 Baseline cost ($K) 500 Savings ($K) 100 Revised base cost ($K) 400 Strictly private and confidential – Internal use only. Not for distribution. For scenario planning purposes only & subject to information/consultation with Employees & their representatives as appropriate.

Deflation (Substitution) -3/3 – Logistics
Scenario Back up Documentation Scenario 3: Substitution A decision has been made to substitute warehousing contract service from A to B resulting into reduction in costs by 100K. Baseline Cost: 500K Project owner to upload the following documents once savings have been executed, for Sourcing review – Previous year contract/ amendment – The previous year’s rate of $ 500 from service provider A Current year contract/ amendment - The current year’s rate of $ 400 from service provider B Purchase Order (CY and PY): To validate current year and previous year volumes Documentation/ Communication of change- Documentation, internal communication or commentary substantiating rationale of the change from product A to B Savings calculation- Document (excel, word etc) providing detailed savings calculation. This should be as per the established standards. Additional documents to be uploaded once savings are realized, for Finance review - 3 Months Invoice – To validate that the volumes are aligned to savings calculation & assumptions; and rate is charged as per agreement / contract Particulars Year 1 Baseline cost ($K) 500 Savings ($K) 100 Revised base cost ($K) 400 Strictly private and confidential – Internal use only. Not for distribution. For scenario planning purposes only & subject to information/consultation with Employees & their representatives as appropriate.

Deflation (Replacement) -1/1MRO
Scenario Back up Documentation Project owner to upload the following documents once savings have been executed, for Sourcing review – Previous year contract/ amendment – The contract with the vendor for the purchase of cutting tool A Current year contract/ amendment – The contract with the vendor for the purchase of cutting tool B, validating the purchase in the current year Documentation/ Communication of change- Documentation, internal communication or commentary substantiating rationale of the change from product A to B Savings calculation- Document (excel, word etc) providing detailed savings calculation. This should be as per the established standards. Additional documents to be uploaded once savings are realized, for Finance review - 3 Months Invoice – To validate the total cost incurred in using cutting tool A is less compared to cutting tool B and the savings are realized Scenario 4: Replacement Changing a complete technology to achieve lower cost on expense (repetitive buy) Cutting tool A ($100 cost) uses 1000 pieces to machine 1 segment- total cost $100K. Cutting tool B ($80 cost) uses 500 pieces to machine 1 segment- total cost $40K. Moving from cutting tool A to B is causing total cost to reduce by $60K Due to technology impact unit price is not comparable and should not be used as main factor for decision. Deflation calculation should be made on the variance of the total cost of both solutions. Year 1 Year 2 Year 3 Baseline cost 100K 40K Savings 60K Revised base cost Strictly private and confidential – Internal use only. Not for distribution. For scenario planning purposes only & subject to information/consultation with Employees & their representatives as appropriate.

Netting Inflation from Deflation – 1/2 - Logistics
Scenario Back up Documentation Project owner to upload the following documents once savings have been executed, for Sourcing review – Previous year contract/ amendment – The previous year’s rate of $ 1MM and $ 1.2 MM for lane 1-10 and respectively to be validated from contract Purchase Order (CY and PY): To validate current year and previous year volumes Current year contract/ amendment - The current year contract/ amendment to validate current year’s rate of $ 0.8 MM and $1.5 MM Negotiation Tool template - Should include information about volume, old rates, new rates Savings calculation- Document (excel, word etc) providing detailed savings calculation. This should be as per the established standards. Additional documents to be uploaded once savings are realized, for Finance review - 3 Months Invoice – To validate that the volumes are aligned to savings calculation & assumptions; and rate is charged as per agreement / contract Scenario 1: Netting Inflation from Deflation A negotiation is completed for a transportation service across 15 lanes. Lanes 1-10 see a price reduction from $1MM to $0.8MM per lane Lanes see a price increase from $1.2MM to $1.5MM per lane Baseline Cost is $16MM 10 lanes x $1MM = $10MM 5 lanes x $1.2MM = $6MM Year 1 Year 2 Year 3 Baseline cost 16MM 15.5MM Inflation 1.5MM Deflation 2MM Revised base cost Strictly private and confidential – Internal use only. Not for distribution. For scenario planning purposes only & subject to information/consultation with Employees & their representatives as appropriate.

Netting Inflation from Deflation – 2/2 –All commodities
Scenario Back up Documentation Scenario 1: Netting Inflation from Deflation A negotiation is completed for two products as follows: Product A sees a price reduction from $100 to $80 per unit. Expected volume is 1000 units Product B sees a price increase from $ 70 to $ 80 per unit. Expected volume is 800 units Baseline Cost is $156,000 Product A units x $100 = $100,000 Product B – 800 units x $ 70 =$ 56000 Project owner to upload the following documents once savings have been executed, for Sourcing review – Previous year contract/ amendment – The previous year’s rate of $ 100 and $ 70 for products A and B respectively to be validated from contract Purchase Order (CY and PY): To validate current year and previous year volumes Current year contract/ amendment - The current year contract/ amendment to state prices as $ 80 each for both product A and B. Savings calculation- Document (excel, word etc) providing detailed savings calculation. This should be as per the established standards. Additional documents to be uploaded once savings are realized, for Finance review - 3 Months Invoice – To validate that the volumes are aligned to savings calculation & assumptions; and rate is charged as per agreement / contract Year 1 Baseline cost 156,000 Inflation (from product B) 8,000 Deflation (from product A) 20,000 Revised base cost 144,000 Strictly private and confidential – Internal use only. Not for distribution. For scenario planning purposes only & subject to information/consultation with Employees & their representatives as appropriate.

Deflation & Avoidance – 1/1 - MRO, Facilities, IT, Purchase service
Draft Working Document Deflation & Avoidance – 1/1 - MRO, Facilities, IT, Purchase service Scenario Back up Documentation MRO: GE pays $120K every year to supplier A for warehousing storage. Supplier A requested price increase to $200K yearly when renewing contract. OR Facilities: GE pays $120K every year to supplier A for janitorial services. Supplier A requested price increase to $200K yearly when renewing contract. IT & Telecom: GE pays $120K every year to supplier A for database and application management services. Supplier A requested price increase to $200K yearly when renewing contract. Purchased service: GE pays $120K every year to supplier A for legal services . Supplier A requested price increase to $200K yearly when renewing contract. Project owner to upload the following documents once savings have been executed, for Sourcing review – Previous year contract/ amendment/ SOW – The previous year’s rate of $ 120 to be validated Bidding Summary – Bidding summary from Vendor A, B, C and D Current year contract/ amendment/ SOW - The current year’s rate of $ 110 from Supplier B to be validated Purchase Order (CY and PY): To validate current year and previous year volumes Savings calculation- Document (excel, word etc) providing detailed savings calculation. This should be as per the established standards. Additional documents to be uploaded once savings are realized, for Finance review - 3 Months Invoice – To validate that the volumes are aligned to savings calculation & assumptions; and rate is charged as per agreement / contract Saving Calculation Price deflation = $120K-$110K=$10K Average of bids rule: ( )/4-110 = 185 – 110 =>75K Cost avoidance = min(80K, 75K)=75K Include Cost avoidance regardless of final price being inflationary or deflationary Supplier b, c, d quoted. b=150K, c=180K, d=210K Went with “b” (quoted original price of 150K, final negotiated price of 110K) Strictly private and confidential – Internal use only. Not for distribution. For scenario planning purposes only & subject to information/consultation with Employees & their representatives as appropriate.

Usage –MRO, Facilities, IT
Scenario Back up Documentation Facilities - The average number of pages printed by employees in a site is 300 a month. A new instruction issued by Sourcing team allows each employee to print max. 200 pages a month. The click charge per page is $0.1. Total savings= $ Utilities - Sourcing team’s decision to reduce number of refrigerators in cafeteria leading to reduction in electricity usage by 1000 units. Per unit cost - $5. Total savings = $5,000 IT & Telecom – Sourcing team’s decision to negotiate the data service limits for employees mobile phones leading to usage reduction in data costs amounting to $100K Project owner to upload the following documents once savings have been executed, for Sourcing & Finance review – Consumption reduction & efficiency analysis – Documentation substantiating sourcing team efforts in increasing process efficiencies leading to usage reduction Savings calculation- Document (excel, word etc) providing detailed savings calculation. This should be as per the established standards. Strictly private and confidential – Internal use only. Not for distribution. For scenario planning purposes only & subject to information/consultation with Employees & their representatives as appropriate.

New purchase (Budget Exists) -1/2 - IT, Facilities, MRO
Scenario Back up Documentation Facilities– A new purchase of office furniture from supplier A was finalized at $200K. The budgeted cost for the new purchase was $250K. Savings calculation: Cost avoidance = $250K - $200K = $50K MRO A new purchase of forklifts from supplier A was finalized at $2,000 a forklift. The budgeted cost for the new purchase was $2500 a forklift. The number of forklifts to be purchased is 5. Cost avoidance = $12,500K - $10,000 = $2500 IT & Telecom A new purchase of software from supplier A was finalized at $200K. The budgeted cost for the new purchase was $250K. Project owner to upload the following documents once savings have been executed, for Sourcing review – Approved Op Plan/ Budget – Approved budget supported with business rationale such as market price analysis, quote from vendors etc. Purchase Order (CY): To validate current year and previous year volumes Current year contract/ SOW - The current year contract/ amendment to state the final negotiated rate. Savings calculation- Document (excel, word etc) providing detailed savings calculation. This should be as per the established standards. Additional documents to be uploaded once savings are realized, for Finance review - 3 Months Invoice – To validate that the volumes are aligned to savings calculation & assumptions; and rate is charged as per agreement / contract Strictly private and confidential – Internal use only. Not for distribution. For scenario planning purposes only & subject to information/consultation with Employees & their representatives as appropriate.

New purchase (Budget Exists) -2/2 - Utilities, Purchased services
Scenario Back up Documentation Utilities- A new purchase of natural gas for a new site was closed at the rate of $20 per therm. The budgeted cost for the same was $25.The estimated consumption is calculated to be 1,000 therms. Purchased service- The budge for a purchase of new consulting service was $100K. After the negotiation with the vendor, the final price was agreed at $90K. Cost avoidance savings = $100K - $90K = $10K Project owner to upload the following documents once savings have been executed, for Sourcing review – Approved Op Plan/ Budget – Approved budget supported with business rationale such as market price analysis, quote from vendors etc. Purchase Order (CY): To validate current year and previous year volumes Current year contract/ SOW - The current year contract/ amendment to state the final negotiated rate. Savings calculation- Document (excel, word etc) providing detailed savings calculation. This should be as per the established standards. Additional documents to be uploaded once savings are realized, for Finance review - 3 Months Invoice – To validate that the volumes are aligned to savings calculation & assumptions; and rate is charged as per agreement / contract Particulars Amount Budgeted cost ($) 25,000 Actual cost ($) 20,000 Cost avoidance Savings ($) 5,000 Strictly private and confidential – Internal use only. Not for distribution. For scenario planning purposes only & subject to information/consultation with Employees & their representatives as appropriate.

New purchase (No budget but competitive bidding) – 1/2- MRO, IT, Facilities, Purchased Services
Scenario Back up Documentation MRO Business A does a new purchase of forklifts from vendor X and the final negotiated price is $100K OR Purchase Service – Business A does a new purchase from Consulting Company X and the final negotiated price is $100K Facilities – Business A does a new purchase of office equipment from X and the final negotiated price is $100K IT & Telecom – Business A does a new purchase of laptops from X and the final negotiated price is $100K Project owner to upload the following documents once savings have been executed, for Sourcing review – Bidding Summary – Bidding Summary of all bids received Current year contract/ SOW - The current year contract/ amendment to state negotiated price as $ 100K Purchase Order (CY): To validate current year and previous year volumes Savings calculation- Document (excel, word etc) providing detailed savings calculation. This should be as per the established standards. Additional documents to be uploaded once savings are realized, for Finance review - 3 Months Invoice – To validate that the volumes are aligned to savings calculation & assumptions; and rate is charged as per agreement / contract Three vendors quoted, X=$100K, Y =$120K, Z=$140K and X wins Saving Calculation Cost avoidance = ($100K+$120K+$140K)/3 - $100K = $20K Strictly private and confidential – Internal use only. Not for distribution. For scenario planning purposes only & subject to information/consultation with Employees & their representatives as appropriate.

New purchase (No budget but competitive bidding) – 2/ 2 - Utilities
Scenario Back up Documentation Utilities Competitive bids were sought from 4 different suppliers for purchase of natural gas for a new site. The estimated consumption is calculated to be 1,000 therms. The rates quoted by suppliers per therm are as follows: Supplier A - $20 Supplier B - $25 Supplier C - $15 Supplier D - $30K Supplier C was selected. Project owner to upload the following documents once savings have been executed, for Sourcing review – Bidding Summary – Bidding Summary of all bids received Current year contract/ SOW - The current year contract/ amendment to state negotiated price as $ 100K Purchase Order (CY): To validate current year and previous year volumes Savings calculation- Document (excel, word etc) providing detailed savings calculation. This should be as per the established standards. Additional documents to be uploaded once savings are realized, for Finance review - 3 Months Invoice – To validate that the volumes are aligned to savings calculation & assumptions; and rate is charged as per agreement / contract Saving Calculation Average of bids= ($20 + $25 + $ 30 + $15) / 4 = $22.5 Cost avoidance per therm = $ $15= $7.5 Total cost avoidance = $7.5*1000 = $7500 Strictly private and confidential – Internal use only. Not for distribution. For scenario planning purposes only & subject to information/consultation with Employees & their representatives as appropriate.

New purchase (No budget and only one available supplier)
Scenario Back up Documentation Vendor X is the only supplier on the market and the Catalogue price is $130K before negotiation No cost avoidance could be claimed, the negotiated price will be the baseline price Strictly private and confidential – Internal use only. Not for distribution. For scenario planning purposes only & subject to information/consultation with Employees & their representatives as appropriate.

Inflation & Avoidance – 1/3 – Utilities
Scenario Back up Documentation $10 per therm of natural gas was being paid to supplier A. The supplier demanded a price increase to $30 at the time of contract renewal. The estimated consumption is 1,000 therms. Bids were sought from 3 other suppliers and the rates quoted by the suppliers are as follows: Supplier B- $22, supplier C- $15, Supplier D- $25 Supplier C was selected. Savings calculation: In this case, both price inflation and positive cost avoidance should be reported. Price inflation per therm = $10 - $15 = $(5) Total price inflation = $(5)*1000 = $(5000) Price increase avoidance from supplier A: $30 – $15 = $15 Average of bids rule: ( )/4-15 = => $8 Cost avoidance per therm = min ($15, $8) = $8 Total cost avoidance = $8*1000 = $8000 Project owner to upload the following documents once savings have been executed, for Sourcing review – Previous year contract/ amendment/ Invoice– The previous year’s rate of $30 to be validated Bidding Summary – Bidding summary from Vendor A, B, C and D Purchase Order (CY and PY): To validate current year and previous year volumes Current year contract/ amendment - The current year’s rate of $15 from Supplier C to be validated Savings calculation- Document (excel, word etc) providing detailed savings calculation. This should be as per the established standards. Additional documents to be uploaded once savings are realized, for Finance review - 3 Months Invoice – To validate that the volumes are aligned to savings calculation & assumptions; and rate is charged as per agreement / contract Strictly private and confidential – Internal use only. Not for distribution. For scenario planning purposes only & subject to information/consultation with Employees & their representatives as appropriate.

Inflation & Avoidance – 2/3 – MRO
Scenario Back up Documentation $1000 was paid every year to supplier A for calibration services. The supplier demanded a price increase to $1500 yearly at the time of contract renewal. Bids were sought from 3 other suppliers and the rates quoted by the suppliers are as follows: Supplier B- $1100, supplier C- $1200, Supplier D- $1600 Supplier B was selected. Savings calculation: In this case, both price inflation and positive cost avoidance should be reported. Price inflation = $1000-$1200 = $(200) Price increase avoidance from supplier A: $1500 – $1000 = $500 Average of bids rule: ( )/ = 1350 – 1100 => $250 Cost avoidance = min ($500, $250) = $250 Project owner to upload the following documents once savings have been executed, for Sourcing review – Previous year contract/ amendment/– The previous year’s rate of $1000 to be validated Bidding Summary – Bidding summary from Vendor A, B, C and D Current year contract/ amendment - The current year’s rate of $1100 from Supplier B to be validated Purchase Order (CY and PY): To validate current year and previous year volumes Savings calculation- Document (excel, word etc) providing detailed savings calculation. This should be as per the established standards. Additional documents to be uploaded once savings are realized, for Finance review - 3 Months Invoice – To validate that the volumes are aligned to savings calculation & assumptions; and rate is charged as per agreement / contract Strictly private and confidential – Internal use only. Not for distribution. For scenario planning purposes only & subject to information/consultation with Employees & their representatives as appropriate.

Inflation & Avoidance – 3/3 – Facilities
Scenario Back up Documentation $120K was paid every year to supplier A for janitorial services. The supplier demanded a price increase to $200K yearly at the time of contract renewal. Bids were sought from 3 other suppliers and the rates quoted by the suppliers are as follows: Supplier B- $150K, supplier C- $180K, Supplier D- $210K Supplier B was selected (original price quoted was $150K but settled at $130K post negotiation) Savings calculation: In this case, both price inflation and positive cost avoidance should be reported. Price inflation = $120K-$130K = $(10) K Price increase avoidance from supplier A: $200K – $120K = $80K Average of bids rule: ( )/4-130 = 185 – 130 => $55K Cost avoidance = min ($80K, $55K) = $55K Project owner to upload the following documents once savings have been executed, for Sourcing review – Previous year contract/ amendment/– The previous year’s rate of $120K to be validated Bidding Summary – Bidding summary from Vendor A, B, C and D Current year contract/ amendment - The current year’s rate of $130K from Supplier B to be validated Purchase Order (CY and PY): To validate current year and previous year volumes Savings calculation- Document (excel, word etc) providing detailed savings calculation. This should be as per the established standards. Additional documents to be uploaded once savings are realized, for Finance review - 3 Months Invoice – To validate that the volumes are aligned to savings calculation & assumptions; and rate is charged as per agreement / contract Strictly private and confidential – Internal use only. Not for distribution. For scenario planning purposes only & subject to information/consultation with Employees & their representatives as appropriate.

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