1. 1 Key Findings in Demand Planning Process Dated: May 26, 2010

2. 2 Planning Accuracy Why are we putting so much "noise" in the Planning Process? Low forecast accuracy & High stock cover  impact to freshness, working capital, potential write-off, sales loss …

3. 3 @Budgetrate 2009 Planning in Supply Chain Planning in Supply Chain covers 2 main functions: Demand Planning & Supply Planning Demand Plan is the backbone of the business as it is key driver for supply planning, materials and resources planning, distribution planning (warehouse & transportation), working capital (stock of finished goods, R&P materials, account payable, account receivable)

4. 4 @Budgetrate 2009 Supply Planning in Supply Chain The mission of the Supply Planning group is to ensure the appropriate level of stock at each dispatch location to meet projected customer demand at the targeted customer service level, lowest cost to the business Supply Planner is accountable for the finished Goods inventory levels, stock availability at dispatch location, data integrity of item and planning parameters

5. 5 @Budgetrate 2009 Demand Planning in Supply Chain Responsibility for establishing the Demand Plan needs to be strongly enforced. The Demand Planner is responsible for establishing the Base Demand and for the Demand Planning process; as such, he (she) is the main interface to Marketing, Sales, Key Account Managers and Trade Marketing. Sales and Marketing (Generating Demand) are responsible for providing the event uplifts on an appropriate cycle, typically once a week. Demand Plan should be in detail for short-term (by SKU/ detail programs/ detail discussion) and can be at high level planning for medium n long-term.

6. 6 @Budgetrate 2009 Understand Demand Plan (1) ? Months Volume Historical Demand Large, Exceptional Events Past Events Uplifts Baseline Projected Baseline Planned Events Uplifts Planned Large, Exceptional Events

7. 7 @Budgetrate 2009 Months Volume Short Term: In Detail Medium Term: High Level Understand Demand Plan (2)

8. 8 Weekly Review: Follow up Promotions 0 20,000 40,000 60,000 80,000 W09W10W11W12W13W14W15W16W17W18W19 W20 W21W22W23W24W25W26W27W28W29W30W31W32W33 W34W35W36W37W38 W39W40W41W42W43 PUM Uplift higher than expected ? Or Base Demand higher than planned ? Base Uplifts Unfulfilled Actual DeliveriesDemand Plan Status of promotion must be checked 23456789 Product A

9. 9 Weekly Review: Follow up Launches 23456789 Product B 0 400 800 1200 1600 2000 W09W10W11W12W13W14W15W16W17W18W19 W20W21W22W23W24W25W26W27W28W29W30W31W32 W33 W34W35W36W37 W38W39W40W41W42W43 PUM New Product was ordered before official launch date ? Or was it not ready in time ? Pipeline fill... or more ? Base Uplifts Unfulfilled Actual DeliveriesDemand Plan

10. 10 @Budgetrate 2009 What we observed - General 1.Promotion Brief and Post Promotion Evaluation are being prepared by Sales team (without involvement & evaluation by Finance) 2.Average historical sales is being used as Base Demand for Promotion evaluation (used to be 100% incremental sales)  no official Base Demand agreed among SC/Sales/MKT 3.Up-to-date promotion plans are shared with SSD – SC just for POP/POS materials preparation 4.No official sharing or discussion about Trade Promotions / Post-dip promotion volume impacted to Demand Plan 5.The ratio of SKU split in sales forecast is not in-line with historical sales that this might cause incorrect supply planning and over/under stock

11. 11 @Budgetrate 2009 What we observed: Demand Planning Lacking of information & qualified discussion in Demand Plan meeting: + Trade activities impact sales : promotion, loyalty programs, merchandising … + Sales tactics unofficial planned in the previous meeting + Stock on trade report + Off-take tracking + Market survey updated from Marketing : retail audit, market size trend per stage, competitor updates… + Any Marketing activities related to consumer insight that impact to off-take + Learning lessons from last promotion/ launching/ forecast accuracy  Information should be shared in advance and discussed in the meeting

12. 12 @Budgetrate 2009 What we observed: S&OP meeting 1.Should discuss only unsolved points from the demand plan meeting  The management team (head of SC, Sales, Marketing, FA and MD) will certify for the action plans 2.Below points should be presented in S&OP meeting :  Supply Chain KPIs  Market sales/ Primary sales in volume and in value : per brand and in total  Reflect the growth vs. the market / competitor / company positioning  Supply forecast and Inventory levels : at RDC, at distributor & at sub- distributor, at shop in total (if possible)

13. 13 @Budgetrate 2009 What we observed: S&OP meeting  Stock aging report : highlight potential write-off => propose actions/ follow- up  Key activities : NPD launch, consumer promotion => align timeline/ volume  Proposals to close sales gap for the management review and discussion

14. 14 @Budgetrate 2009 Planning process proposal 3 Gap Balance 1 Prepare Demand Plan 4 S&OP 2 Demand Plan Market / Business Strategy Update Customer Plan and Brand Plan Master Commercial Planning Sales and Marketing activities S&OP Demand Planning Legend Top-Down Targets Master Commercial Planning provides: Brand Plan, Channel Category Plan and Customer Plan Activities and unresolved gaps are fed back to be further worked on over the next cycle(s)