Zycus iSave IdeaExecuted Project Owner Negotiate w/ Suppliers Does analysis need finance review ? Update annualized savings amount Discussion with project owner SourcingFinance Optional Does Savings calculation follow the standar d? Savings Approval Process – Overview N Realized Deal Signed Ideas during planning period Create project and input planned amount Deal Signed Y Offline > Sourcing threshold? Sourcing Approved ? For P&W, the process only applicable to manual projects Approved Thresholds: Timing of Finance review – Post the upload of required documentation from sourcing Sample audit will be perform based on risk assessment Y Y N Finance Approved? Sourcing team updates annualized realized savings amount > Finance Threshold? Y N Y Validation of savings with back up documentation In Zycus Upload required documentation Approved N Allocate resources to project Planned N N Y

Approval Threshold and Business Effort Analysis Implement standard threshold once process is stable and consistent across businesses Business Sourcing Threshold Finance Threshold No. of projects above finance threshold* $ K Saving # Projects Healthcare0100**404 Aviation EM Transportation O&G Lighting Power & Water Corporate *** * Based upon 2014 data ** Project owner to update back up documentation for all projects. Finance to approve projects above 100K threshold. *** IT Project thresholds for sourcing and finance approval would be $ 500K

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

JanFebAprilAugust Input numbers in EUR (local currency) – Refer Note 1 100k EUR97k EUR98k EUR Notes: 1.Currently, iSave tool is not capable of automated FX rate conversion. Therefore, Op plan rates are being used in the interim for convenience in translation for users. 2.One project can only be designated in one currency irrespective of multiple regions/ countries. Project owner to determine base currency for the project and all regions/ countries would report savings in the same currency. 3.Reports from Spotfire would show both Local Currency and USD (at MOR rates) 4.Link to review Op plan rates is as follows. This file could also be found in iSave box folder Zycus iSave Idea Executed Project Owner Realized Deal Signed Ideas during planning period Sourcing approval Validation of savings with back up documentation Allocate resources to project Planned Savings FX – iSave Tool Example Finance approval Phase I Phase II Input numbers in EUR (local currency) – Refer Note 1 USD is not visible in iSave, need the project owner to manually translate to USD using Op plan rates (Note 1) while sending project for approval at “Executed” and “Realized stage” to compare with the thresholds. 100k EUR97k EUR98k EUR No manual intervention required. Approval process would be automated and system would automatically send projects above threshold for approval.

Sending projects for Sourcing Approval by Sourcing Lead 1

Sample Example…Price Deflation Example – IT ScenarioKey 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: 1.Military Systems – 200 units 2.Commercial Engines units YOY deflation Total Baseline Cost: € 11,00 x 300 = € 330,000 Total New Cost: € 10,00 x 300 = € 300,000 Total Savings : € 330,000 – 300,000 = € 30,000 Applicable OP Plan rate for EURO: 1.16 Total $ Savings: $ 34,800 Per unit Military Systems Commercial Engines Total Baseline Cost € 1,100 € 220,000 € 110,000 € 330,000 New cost € 1,000 € 200,000 € 100,000 € 300,000 Savings (Note 1) € 100 € 20,000 € 10,000 € 30,000 USD Savings (Note 2) $ 116 $ 23,200 $ 11,600 $ 34,800 Savings Calculation: 1.Project owners to input Baseline Spend, Current Spend and savings numbers in Local currency 2.Op plan rates to be used to manually convert project savings offline to determine whether to send project for approval Op Plan FX Rate - exchange/#tabcontent443

220, , , ,000 20,000 10,000 Send each sub-BU for Sourcing approval if the combined savings for all the Sub-Divisions (Military Systems & Commercial Engines) are greater than Sourcing threshold set for the business. Refer slide 4 for business threshold information iSave - Financial Savings Management Points of consideration:  Currently, the project owner is required to manually convert the savings from € to $ and compare with Aviation thresholds.  Executed Savings number USD 348K > Aviation threshold ( USD 250K). Need Sourcing approval  The projects below Sourcing threshold are not required to be sent for approval

Send the project for approval at the Executed stage to the Sourcing Manager by selecting/deselecting appropriate Sourcing Managers iSave - Financial Savings Management Note: Stakeholders are selected at the time of project creation

Provide comments and attachments such as Contract, PO, savings calculation etc. iSave - Financial Savings Management The project owner needs to upload the following back-up documentation for Sourcing approval: 1.Project plan (indicating the expected current year volumes for laptops to ~300 units) 2.CY contract with the laptop supplier € 1,000 3.PY contract with the laptop supplier € 1, 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 Proposed Back-Documentation to be uploaded for Sourcing Review 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

Sourcing approval of projects at Executed Stage 2

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

iSave - Financial Savings Management The Sourcing Manager has to click on “Go” to proceed Note: Back-up documentation is required to be uploaded for all sub-divisions/ BU’s. Approvals are also required for each sub-BU

iSave - Financial Savings Management The Sourcing Manager can either approve savings or send back for clarification based on the back-up documentation submitted by user 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

iSave - Financial Savings Management The status of the project gets updated based upon the Sourcing Manager’s approval/rejection

Sending projects for Finance approval by Sourcing Lead 3

iSave - Financial Savings Management Send each sub-BU for Finance approval if the combined savings for all the Sub-Divisions (Military Systems & Commercial Engines) are greater than Finance threshold set for the business. Refer slide 4 for business threshold information Points of consideration:  Timing of sending project for approval – Approved PO and 3 months of invoice data available  Currently, the project owner is required to manually convert the savings from € to $ and compare with Aviation thresholds.  Current Realized Savings number USD 348K > Aviation threshold ( USD 250K). Need Finance approval  The projects below Finance threshold are not required to be sent for approval 220, , , ,000 20,000 10,000

iSave - Financial Savings Management Note: Stakeholders are selected at the time of project creation Send the project for approval in the Realized stage to the Finance Manager by selecting/deselecting appropriate Finance Managers Note : The list of finance managers for each business could be found at the following link –

Provide comments and attachments such as Contract, PO, savings calculation etc. iSave - Financial Savings Management The project owner needs to upload the following back-up documentation for Finance approval: 1.Project plan (indicating the expected current year volumes for laptops to ~300 units) 2.CY contract with the laptop supplier € 1,000 3.PY contract with the laptop supplier € 1, Savings calculation at Local Currency and USD values Additional Documents for finance review- 1.3 months invoice for validation of actual volumes 2.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 Proposed Back-Documentation for Finance Review 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

Finance approval of projects at Realized Stage 4

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

iSave - Financial Savings Management The Finance Manager has to click on “Go” to proceed

iSave - Financial Savings Management The Finance Manager will approve savings or send back for clarification based on the back-up documentation submitted by user 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

iSave - Financial Savings Management The status of the project gets updated based upon the Finance Manager’s approval/rejection

Proposed Back-Up Documentation

Usage -MRO, Facilities, IT 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= $ MRO – Due to sourcing efforts, the machine cycle for a process is reduced by 350 hours. Per hour costs $75. Total savings = $26,250 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 ScenarioBack up Documentation Project owner to upload the following documents once savings have been executed, for Sourcing & Finance review – Previous year contract/ amendment – The previous year’s rate and volume to be validated Current year contract/ amendment - The current year’s rate and the reduction in volume compared to last year to be validated 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. 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 contract / contract

Cost Avoidance - New purchase (No budget but competitive bidding) - MRO, IT, Facilities, Purchased Services ScenarioBack up Documentation Three vendors quoted, X=$100K, Y =$120K, Z=$140K and X wins Cost avoidance = ($100K+$120K+$140K)/3 - $100K = $20K 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 OR Facilities – Business A does a new purchase of office equipment from X and the final negotiated price is $100K OR IT & Telecom – Business A does a new purchase of laptops from X and the final negotiated price is $100K Saving Calculation 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 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 contract / contract

Sr. no. Savings categoryProposed Documentation- SourcingProposed Documentation- Finance Deflation AYOY Deflation 1. Project plan (including CY volume estimate) 2. CY and PY Executed contract and subsequent amendments 3.Savings calculation 1.Project plan (including CY volume estimate) 2.CY and PY Executed contract and subsequent amendments 3.Current Year Purchase Order, if applicable 4.1st Quarter Invoices 5.Savings calculation B Substitution (Substitution of product from A to B resulting into price reduction) 1.Project plan (including CY volume estimate) 2.CY and PY Executed contract and subsequent amendments 3.Savings calculation 1.Project plan (including CY volume estimate) 2.CY and PY Executed contract and subsequent amendments 3.Current Year Purchase Order, if applicable 4.1st Quarter Invoices 5.Savings calculation C Replacement (Changing the complete technology to lower costs on expense) 1.Project plan (including CY volume estimate) 2.Savings calculation detailing savings impact due to change in technology 1.Project plan (including CY volume estimate) 2.Savings calculation detailing savings impact due to change in technology Proposed Back-up Documentation Note: The worked upon examples for each savings type could be found at

Sr. no. Savings categoryProposed Documentation- SourcingProposed Documentation- Finance Usage AUsage (Usage reduction) 1.Project plan (including CY volume estimate) 2.Savings calculation highlighting usage reduction generated by sourcing 1.Project plan (including CY volume estimate) 2.Savings calculation highlighting usage reduction generated by sourcing 3.1st Quarter Invoices Avoidance A New Purchase (Where budget exists) 1.Op Plan 2.CY Executed contract 3.Savings calculation 1.Op Plan 2.Current year PO, if applicable 3.CY Executed contract 4.Savings calculation 5.1st Quarter invoices B New Purchase (Where no budget exists and bidding process) 1.Bidding summary with average bid information 2.Request for Proposal for selected supplier 3.CY Executed contract 4.Savings calculation 1.Bidding summary with average bid information 2.Request for Proposal for selected supplier 3.CY Executed contract 4.Current year PO, if applicable 5.Savings calculation 6.1st Quarter invoices C Inflation Mitigation (Positive Cost Avoidance with price inflation) 1.Bidding summary with average bid information 2.Request for Proposal for selected supplier 3.CY and PY executed contract 4.Savings calculation 1.Bidding summary with average bid information 2.Request for Proposal for selected supplier 3.CY and PY executed contract 4.Current year PO, if applicable 5.Savings calculation 6.1st Quarter invoices Proposed Back-up Documentation

Savings FX – Reporting CurrencyActual SavingsEstimated Savings JanFebMarAprilMayJuneJulyAugSept Total (Per report)* For iSave approval standpoint (at Op plan) EUR MOR Using Op rate USD ,141 1,137 Notes: 1.Assuming op plan rate for the year is Project owners would be mandatorily required to split realized savings on monthly/ quarterly basis 3.Actual savings would be locked at the MOR rates applicable for that period. 4.Estimated savings would be converted at Op plan rates * Report run at end of March, 16