Mike Baiocchi

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• Mike Baiocchi
• DAZ Systems, Inc.
• Implementation and Approach
• Trade Management
• mike.baiocchi_at_dazsi.com
• (714 360-0215)

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DAZ Systems, Inc. www.dazsi.com Focus on Success
Through Expertise and Experience

• Providing rapid, cost effective solutions
• Oracle Apps E-Business Suite (ERP, CRM, WMS)
• Upgrades of E-Business Suite
• Trade Management
• Data Warehouse/Data Mart
• Custom Development (interfaces, integration to
  disparate systems, web front ends, new software)

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Agenda

• Overview
• Issues to Solve
• What do we hear? / Case Studies / What we
  learned!
• Implementation Challenges
• Specific Functions
• Budgets
• Trade Planning
• Claims
• Indirect Sales
• Q A

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Who should be interested?

• Target Characteristics
• Co-Operative advertising driven
• Iterative selling driven
• In need of claim and deduction management
• These include
• CPG
• High Tech
• Life Sciences and Pharmaceutical
• Manufacturing and Distribution
• ANY Company with a Claim / Deduction Problem

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OVERVIEW- INCREASING TFM COST CONTINUES TO BE
A CONCERN
Sources Gartner Group, Cannondale Associates

• The estimated cost of trade promotions for US
  consumer goods manufacturers is 26 billion per
  year, or 13 of sales revenues second only to
  COGS as leading expense
• 61 of a consumer product goods companys
  marketing budget is spent on trade promotion
  funneled through retailers

Marginal Increase in Trade Fund Spend
Marginal Increase in Revenue
Trade fund spend is increasing at a faster rate
than sales!
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ISSUES TO SOLVE NONPRODUCTIVE SPENDING
Sources Gartner Group, Cannondale Associates

• Distributors
• - 84 do not believe they are getting a fair ROI
  for their trade dollars
• - There is a 50 variance between actual and
  planned results

Non Productive Spend
Inefficiency
Ineffectiveness
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ISSUES TO SOLVE LACK OF CONTROLS
Competition

• Compliance Concerns The historical looseness in
  contract negotiations between distributors and
  retailers brings the Sarbanes-Oxley act into
  clear focus
• Increasing Deductions Retailers are increasingly
  deducting from vendor payments.

Inefficiency
Ineffectiveness
Regulatory
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What do we hear? Why Marketing Expense Management?

• Compliance Requirements
• Profit Maximization
• Know What Works, How Well it Works, to Replicate
  Success

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What do we see/hear from companies?Case Study 1

• Distributor of Hair Care Appliances
• Revenue 800M - 1B
• Sells to Major Retailers / Discount Chains
• Operation Global
• Issues
• 27 (TWENTY SEVEN!) Sets of Books SOX Compliance
• Claims / Deductions Tracking
• Billbacks
• Returns Allowances

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Distributor of Hair Care Appliances cont

• Results
• SOX Compliance
• 1.2 Initial Decrease in Promo Expense
• Increased Customer Satisfaction
• Increased Market Share

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What do we see/hear from companies?Case Study 2

• Distributor of Consumer Electronics Products
• Revenue 800M - 1B
• Sells to Major Retailers / Discount Chains /
  Office Supply Chains / E Commerce
• Operation Global
• Issues
• Lack of Central Control Point - SOX Compliance
• Sell Through Feedback Loop / Verification
• Over Above Promotions
• Price Protection - SOX Compliance

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Distributor of Consumer Electronics Products
cont

• Results
• Containment of Sales/Marketing Creativity
• 98 Control of Promotion Process (Replaced Excel)
  
• Decreased Expense via Sell Through Verification
• SOX GAAP Compliance

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What we learned!
The Current Perspective

• Regulations being seriously enforced
• Shareholders are more demanding
• Competition is fierce
• Days of creative marketing and no serious
  tracking are over!

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IMPLEMENTATION CHALLENGES

• Transformation vs. Technology Software doesnt
  solve the problem! Software is a tool!
• Process lack of standardization in process and
  trade fund terms drives ad-hoc approach and
  increases complexity to manage
• Technology fragmented technology cannot support
  data and system integration requirements
• Organizational individuals within your
  organizations are comfortable with traditional
  approach no incentive to change
• Cultural belief that art, experience, and gut
  feel cannot be replaced by tools
• Partner expectations increasing retailer
  leverage and competition drives increasing
  expectation for trade fund support

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Oracle Integration Points
Supported Functionality
Oracle Product

• Offers
• Price Lists (for Chargeback solution)

Advanced Pricing

• Execution of offers
• Update of accruals and expenses in Budget
• Claim settlement by RMA

Order Management

• Postings for accruals and/or expenses

General Ledger

• Deduction and overpayment claim creation
• Claim settlement by credit, debit, write-off,
  others

Receivables

• Claim settlement by check

Payables

• Getting Cost of Good Sold for Offer ROI
  Calculator

Costing

• Budget, offer, claim, indirect sales, product
  use the product definitions

Inventory

• Trade Management publishes business events based
  on sales forecasts created by sales users. Such
  forecasts can be inputs into the Demand Planning
  application to impact demand plans.

Demand Planning
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Oracle Integration Points
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Other Integration Points
Support provided by Trade Management
Third Party Systems

• Budget creation API

Budget Planning Tools

• Claim / Deduction creation API
• Claim assignment API
• Configurable settlement workflow

Receivable or Payables

• Accounting entry interface table

General Ledger

• Third party sales import program

Order Management

• Business events

Demand Planning, Costing or any other systems
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Sales Force Automation

• Trade Management is a Sales Application for
  iterative sales products
• Difference between Trade Management Oracle
  Sales?

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Complete Promotion Solution
Trade Management is a Complete Promotion Solution

• Plan
• Set sales quota / target
• Create budget forcustomer / product
• Set budget thresholds
• Allocate to sales hierarchy
• Create account plan

• Execute
• Create offer
• Validate eligibility
• Price sales orders
• Calculate accrualsand discounts

• Settle
• Create check / credit
• Manage claims / deductions

Plan
Monitor
Settle
Execute
Analyze

• Monitor
• Capture POS data
• Update checkbooks / General Ledger
• Calculate actual ROI
• Verify field activities

• Analyze
• Analyze historical sales
• Forecast sales volume
• Calculate forecast ROI
• Review prior activities

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Key Differentiators

• Integrations Financials, Supply Chain
• Comprehensive Promotion Types
• Accrual Management and GL Integration
• Flexible and Retroactive Adjustments
• Indirect Sales Management
• Deduction Management
• Lockbox Integration
• Customer 360 View
• Robust Customer Relationship / Buying Group
  Support

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Budget Functions

• Creation
• Fixed
• Fully accrued with multiple parameters
• Allocation
• Top-down allocation along a territory hierarchy
• Allocation based on prior year sales
• Bottom-up submission
• Validation
• Budget-offer validation

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Budget Functions (continued)

• Sourcing
• Request funds
• Transfer funds
• Monitoring Usage
• Threshold alerts
• Recalculated committed
• Reconciliation
• Reconcile committed but not earned
• Reconcile earned but not paid

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Budget Functions (continued)

• Accruals Management
• Integration of all ordering channels
• General Ledger integration
• Account Generator workflow
• Manual adjustments
• Retroactive offer adjustments
• Spread lump sum offer postings
• Scan data offer accruals and adjustments
• Volume offer accruals and AP updates
• Third party accrual API with AP simulations

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Trade Planning Functions

• Account Manager Dashboard
• Creation of offers including lump sum, off
  invoice, accrual, promotional goods, order value,
  terms upgrade, scan data, volume and accrual
• Volume forecasting based on historical sales data
• Manufacturers ROI based on forecast volume and
  cost of goods sold, calculate forecast ROI

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Trade Planning Functions (continued)

• Advanced Pricing Integration
• All offer information passed directly to Advanced
  Pricing
• Uptake of Attribute Manager
• Multiple currency price lists
• Integration with All Ordering Channels
• Offers automatically or manually applied to
  orders
• Both hard and soft promotional limits

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Trade Planning Functions (continued)

• Performance Monitoring
• Actual ROI
• Based on actual sales data and cost of goods
  sold, calculate actual ROI
• Views
• Budget view
• Customer view

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Claim and Deduction Functions

• Creation
• Deductions and overpayments created in Oracle
  Receivables
• Claims and debit claims created in Trade
  Management
• Mass create claims
• API and claims import
• Assignment
• Claim territories, teams, and API

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Claim and Deduction Functions (continued)

• Task Management
• Tasks
• Action template defaults based on reasons
• Audit Trails
• Source
• History based on rules
• Attachments and notes

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Claim and Deduction Functions (continued)

• Discoverer
• Customizable
• Claim business area provides information on all
  customer transactions
• Associate Earnings
• View all customer earnings available for claims
• Search for customer earnings using multiple
  criteria such as transactions and products
• Buying group support

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Claim and Deduction Functions (continued)

• Claim Aging View
• Configurable aging buckets
• Grouped by customer
• Claim Details
• Split claims
• Related documents
• Duplicate claims
• Others

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Claim and Deduction Functions (continued)

• Oracle Receivables Integration Auto resolution
• Deductions from Oracle Receivables are passed
  automatically to TM with owners assigned.
• Automatic settlement by credit or debit memo.
• Oracle Payables Integration
• Automatically create invoices for check payments
• Order Management Integration
• Automatic creation of RMAs
• Access to discounts and order history to validate
  claims.

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Claim and Deduction Functions (continued)

• Autopay
• Accruals Management
• General Ledger integration
• Account generator workflow
• Scan data offer accrual adjustments
• Configurable Settlement Workflow
• Claim settlement workflow allows companies to
  customize their own, easy to maintain, functions

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Indirect Sales Functions

• Import
• WebADI
• XML Gateway (EDI 844, 867, 849)
• Direct SQL load into interface

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Indirect Sales Functions (continued)

• Processing
• Basic data completeness check
• Mapping of external to internal data
• DQM integration
• Chargeback validations
• Special pricing validations
• Dispute reconciliation
• Send to 3rd Party Accrual Engine for further
  processing
• Send to Inventory Tracking for tracking

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Indirect Sales Functions (continued)

• Mapping of external to internal data
• Price List
• End Customer
• UOM
• Item
• DQM integration
• Party
• Party Site
• Party Contact

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Indirect Sales Functions (continued)

• Chargeback validations
• Price List number
• Effective dates
• End Customer/Buying Group eligibility
• Product/Category eligibility
• Inventory
• WAC
• QP Attribute configuration Seller

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Indirect Sales Functions (continued)

• Special Pricing validations
• Special Pricing number
• Effective dates
• Quantity
• Price
• Product
• Customer

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Indirect Sales Functions (continued)

• Dispute reconciliation
• Automatic assignment of dispute code
• Ability to update dispute code on screen
• Ability to update data disputed and re-process
• Re-submission of disputed lines

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Indirect Sales Functions (continued)

• 3rd Party Accrual
• Indirect sales data can be sent to the 3rd party
  accrual engine for processing automatically or
  manually.
• 3rd party accrual runs a pricing simulation and
  applies all promotions eligible on indirect sales
  data, payment can be for distributor or end
  customer. It also finds a price difference to be
  accrued.

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Indirect Sales Functions (continued)

• Inventory Tracking
• Distributor inventory is tracked automatically
  based on a System Parameters option.
• Inventory In OM data
• Inventory Out TM indirect sales data
• Adjustments made in TM

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Indirect Sales Functions (continued)

• Settlement
• Payment by Check or Credit
• Using Autopay
• Option to deplete upfront accrual or create new

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In Summary
Sarbanes - Oxley
G A A P
G A A P
Sales
Customers
Marketing
Good Business Practices
Trade Management
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Q A