Landed Cost Management

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Agenda Oracle Landed Cost Management Orientation Product Overview Functional Overview Market Summary & Next Steps

What is Landed Cost Management? Business Context International Trade Realities: Profitability. Is my product truly profitable? Are my expenses attributed to the product that incurred them? Are my products priced appropriately? Have I budgeted correctly for a particular product group? Financial Visibility. What is my outstanding exposure including all of the extended supply chain costs? Are my financial reports accurate? Competitiveness. Is the company sourcing strategically? Do I understand all the costs associated with sourcing from a particular country? Can I negotiate better contracts with suppliers and/or customers? Compliance. How am I meeting strict regulations pertaining to item cost in countries such as Brazil and India? International Trade Promises: New revenue opportunities Reduced production costs

What is Landed Cost Management? Inbound Shipment Kansas CityUS PortVessel CarrierChina FactoryHK PortShipment to HKCustomer $100$2$4$20$5$2 =$133

Benefits of Landed Cost Management Operational Lifecycle Plan & Budget Market & Sell Payment Acquisition Sourcing Enables Organizations: Maximize Profits Increase Competitiveness Improve Financial Visibility into Supply Chain Enhance Financial Reporting Confidence and Compliance Optimized fulfillment networks Better pricing models More accurate product profitability reporting More accurate total cost comparisons Better contract negotiations More accurate record of outstanding liabilities Regulation compliance Linked invoices with supply chain event Authenticated cost declarations Better contract negotiations Additional revenue opportunities

Oracle LCM Roadmap Planned E-BUSINESS SUITE Extend Integration PO Estimation Cost Methods OPM Costing Enhanced OTM Integration Analytics Charge Management Landed Cost Engine Adjustment Management Integration with EBS Receiving, Costing, and Payables Phase1 – R12.1Future LCM for EBSLCM standalone Outbound Shipments Strategic Sourcing Analytics Theme Phase2 First Global Trade Management Application Componentised Future with GTM Suite (OTM Platform) Inbound Calculation & Automation Based on Brazil Localization Core Product - EBS

Landed Cost Management Functional Overview

Landed Cost Management New 12.1 Product Create PO Calculate Estimated Landed Cost & Receive Good Update Inventory Valuation & Accounting Capture & Prorate Trade Charges Receive Trade Document (Invoice) Calculate Actual Landed Cost Update Inventory Valuation & Accounting Budget & Plan with Visibility to Extended Costs Generate Accurate Financial Reports with Confidence Receipt – Estimated Landed Cost Invoice – Actual Landed Cost

Receiving Costing Accounting Payables Supplier Freight Carrier Insurance Provider Tax Authority Product Invoice PO Invoice Duty Fees Invoice LCM Estimated Shipment Actual LC Calculation Document Repository Mfg. Plant Landed Cost Management At-a-Glance

Receipts - Estimated Landed Cost Supplier/ Carrier Buyer Receiving ClerkTrade Compliance Clerk Enter/Edit shipments and Charges Initiate Landed Cost calculation Load Estimated charges Receive Goods Create PO User Actions Automated Actions LCM Accrue Receipts at Landed cost Item Cost update at Landed Cost Costing Calculate Estimated Landed Cost Estimated / Actual Landed Cost

Invoice - Actual Landed Cost Supplier/ Carrier Payables Clerk Receiving ClerkTrade Compliance Clerk Initiate Adjustment Process User Actions Automated Actions RCV Payables Carrier Invoice Item Invoice Enter Invoices LCM CST $ Make Payment Return Goods Create Item Freight Invoices Cost/ Accrual Adjustment Calculate Actual Landed Cost Est. / Actual Landed Cost Invoice Open Interface Import Invoice/ Debit Note Validate Invoice Accrual reversal /Accounting with Inv Price Create Debit Note

Landed Cost Management (LCM) Components Integration Layer Procurement Receiving/WMS/InventoryCostingAccounts Payable E-BUSINESS SUITE Landed Cost Calculation Estimated Cost Actual Cost Charge Application Repository Charge Management Product Cost Dashboard Real time accrual visibility Cost Component Distribution Landed Costing

Value Proposition Maximise Profits – monitor product performance Increase Competitiveness – strategic sourcing Increase Visibility – known costs reduces exposure Ensure Compliance – understand taxes & recovery Optimised fulfillment networks Better pricing models More profitable products More accurate total cost comparisons Better contract negotiations More accurate record of outstanding liabilities Better product profitability reporting Adherence to regulations Linked invoices with supply chain event Authenticated cost declarations Better contract negotiations Additional revenue opportunities Product Plan & Budget Sourcing PaymentSell Acquisition

Landed Cost Management Customers Using Brazilian Localization

Landed Cost Management Market

Landed Cost Management Solutions Types of Functionality GTM Landed Cost Calculators Estimates Total Landed Cost Based on To, From, and Item Attributes Blackbox – No integration ERP Acquisition Costing Calculate Estimated Landed Cost in Purchasing and/or Receiving Manual Entries or Simple Rules No Actual Calculations Oracle Landed Cost Management Automatic Update of Variances between Actual and Estimates Advanced Pricing Flexible Application of Charges Roadmap

Landed Cost Management Market Incomplete Solutions Acquisition Costing Packaging: Portion of Procurement application (can be a separate module) Functionality: Basic compared to Oracle LCM: Calculate ELC in PO or Receiving. User can update estimates manually with changes. Vendors: SAP, PeopleSoft, JDE, Solomon, Great Plains, SysPro GTM Calculators Packaging: Separate Service or Part of Inbound Processing application Functionality: Calculator independent of transactions: Enter To, From, Item, etc. and ELC is calculated. Vendors: SAP GTS, TradeBeam, Management Dynamics, DHL

Competition No Real Competitors EBS Customer Solutions Today Customers typically customize and/or integrate existing assets to try to capture landed costs Extend EBS Extend TMS Freight Rating Engines Calculate Using Excel and Manually Update LCM enables Oracle to better differentiate and compete in new ERP/SCM deals

Differentiators Differentiators from Other Integrated Landed Cost Solutions Advanced Pricing Rules engine used for automatically determining applicable charges to apply to a shipment/line. Flexible Application of Charges: Apply to shipment line, a group of lines within a shipment, or an entire shipment Application based on weight, volume, quantity (UOM) or the value of the items being traded Automatic Update of Variances between Actual and Estimates

LCM in Existing Oracle Assets PeopleSoft: Capability within Procurement supported in AP. JDEdwards Part of Purchasing application OTM Itemizes transportation charges for PO lines. Retail Trade Management (RGBU): Part of Retail Trade Management application

Landed Cost Management Pricing & Target Market

Current vs. Proposed Price List Under Logistics as standalone line item like Inventory Management Landed Cost Management 300 $M Cost of Goods Sold Option: Advanced Pricing 100 $M Cost of Goods Sold

Target Market Today: Large and midsize companies that source 25% or more of their goods from overseas Organizations in the Retail, CPG, Distribution, High Tech, and Industrial Manufacturing Industries Companies or divisions of companies where regulatory requirements make it mandatory to track product specific landed costs e.g. Brazil, Romania, India. Position with R12.1 Procurement, Inventory & Mfg Prospects (easy upsell) – Help to drive upgrades Later: Position with OTM and GTM (Global Trade Management) Target Process Manufacturing