1. CONFIDENTIAL AND PROPRIETARY This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other intended recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates. © 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Supply Chain Leadership Trends Steve Steutermann Managing Vice President, Gartner Research Supply Chain Forum April 1, 2016 | Lexington, KY

2. 1© 2016 Gartner, Inc. and/or its affiliates. All rights reserved. #GartnerSYM 1CONFIDENTIAL AND PROPRIETARY | © 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner and ITxpo are registered trademarks of Gartner, Inc. or it’s affiliates. Supply Chain: Both Art and Science

3. 2© 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Discussion 1. The Current State of Supply Chain 2. 2016 Supply Chain Leadership Trends – Bimodal Strategies – Customer Intimacy – Digital Business 3. The Future

4. The CEO has a Growth Agenda Q. Please tell us about your organization’s top 5 strategic business priorities for the next 2 years Gartner 2015 CEO Study

5. 4© 2016 Gartner, Inc. and/or its affiliates. All rights reserved.

6. 5© 2016 Gartner, Inc. and/or its affiliates. All rights reserved. CAPACITYRESOURCESGLOBALIZATION SUSTAINABILITYCOMPLEXITY DIMINISHING RETURNS MOUNTING TARGETS CONSUMERS Other Factors Aging Population / Future of Healthcare Water / Agriculture Energy / Environment Geopolitics / War Financial Crises

7. 6© 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Basic Building Block Capabilities are the Starting Point Increasing demand variation, Item proliferation Demand Mgmt. Excellence Improved decision making, trade-off ability S&OP Maturity Raised customer requirements, differentiated supply response Supply Chain Segmentation/CTS Enable the E2E integrated supply chain Performance Metrics Using customer data to manage inventory, cost and service Downstream Data Capability Creating joint business value Customer Collaboration CapabilityChallenge / Opportunity

8. 7© 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner's 5-Stage Transformation Framework Cost Target Service Mindset Inside-Out Outside-In Stage 1 Goals Stage 5 Value Creation Network Stage 2 Scaling Supply Chain Functions Stage 3 Integrated Supply Chain Stage 4 Demand- Driven Value Networks Industry Average

9. 8© 2016 Gartner, Inc. and/or its affiliates. All rights reserved. #GartnerSYM 8CONFIDENTIAL AND PROPRIETARY | © 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner and ITxpo are registered trademarks of Gartner, Inc. or it’s affiliates. Gartner 2015 Supply Chain Top 25 and Masters

10. 9© 2016 Gartner, Inc. and/or its affiliates. All rights reserved. #GartnerSYM 9CONFIDENTIAL AND PROPRIETARY | © 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner and ITxpo are registered trademarks of Gartner, Inc. or it’s affiliates. 2016 Supply Chain Leadership Trends Customer Intimacy Digital Business Bimodal Strategies

11. 10© 2016 Gartner, Inc. and/or its affiliates. All rights reserved. 2016 Supply Chain Leadership Trends Bi-Modal Strategies Customer Intimacy Digital Models Direct to Consumer Strategies Network Re-design Shared Networks Centralized Regional CSCs Expanded use of Customer Data Knowing Digital – Mobile Consumer Intersection of Unstructured – Structured Data Voice of the Customer Remote Monitoring Beyond Control Towers – Centralized Planning 3-D Printing Emergence – Packaging, Proto-type Development, Inventory Mgmt.

12. 11© 2016 Gartner, Inc. and/or its affiliates. All rights reserved. #GartnerSYM 11CONFIDENTIAL AND PROPRIETARY | © 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner and ITxpo are registered trademarks of Gartner, Inc. or it’s affiliates. 2016 Supply Chain Leadership Trends Customer Intimacy Digital Business Bimodal Strategies

13. 12© 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Innovation Requires a Bimodal Supply Chain Masters of Discipline Maintains Stability and Security to Conduct Business Continuous Improvement Masters of Orchestration Responds to shifts in business requirements Innovation

14. 13© 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Value Must Flow Between Modes for Sustainable Innovation 1313

15. 14© 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Direct-to-Consumer Strategic Choices Retailer Relationships? Scale? Brand Concerns?

16. 15© 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Direct to Consumer: “I want You to be…..” What This Means for Supply Chain Agile, Responsive and Short Fulfillment Cycle Time Customer and Predictive Analytics Multichannel Assortment Strategy An Integrated Supply Chain With End-to-end Visibility Flexible Fulfillment Capabilities A Circular Rather Than Linear Supply Chain, With Equal Focus on Reverse Logistics Ultra-lean Cost-efficient Supply Chain Innovative Methods of Cost Recovery

17. 16© 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Collaborative Shipping to Shared Networks Before Manufacturer 1 = 1 truck / 2 weeks Manufacturer 2 = 3 trucks / week After Combined – 3 trucks / week

18. 17© 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Shared Service Centers - Centralized / Regionalized CUSTOMER CASH REDUCED COMPLEXITY Making Order to Cash operations more efficient Delivering enhanced customer service Attacking Dollars currently locked in over dues Cost Efficiency Improved Service Increased Governance E2E Metric Alignment Planning Hubs Data Analytics Control Towers

19. 18© 2016 Gartner, Inc. and/or its affiliates. All rights reserved. #GartnerSYM 18CONFIDENTIAL AND PROPRIETARY | © 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner and ITxpo are registered trademarks of Gartner, Inc. or it’s affiliates. 2016 Supply Chain Leadership Trends Customer Intimacy Digital Business Bimodal Strategies

20. 19© 2016 Gartner, Inc. and/or its affiliates. All rights reserved. #GartnerSYM 19CONFIDENTIAL AND PROPRIETARY | © 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner and ITxpo are registered trademarks of Gartner, Inc. or it’s affiliates. Gain Deeper Understanding of Customers and Set Incentives to Improve Satisfaction Remote Monitoring Customer Satisfaction Accountability Analysis of Customer Feedback

21. 20© 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Customer Intimacy and Data Analytics…

22. 21© 2016 Gartner, Inc. and/or its affiliates. All rights reserved. New Uses of Customer Data to Know your Customers Product Allocation Based on Shelf Availability Manufacturing Retail Warehouse Retail Store Consumer (Direct Store Delivery) (Current inventory, days of sale, replenishment cycle) Questions Being Asked What is the cost of a lost Sale? What is the cost of Service? Existing Allocation Methods Based on Volume Squeaky Wheel Future Allocation Method Based on Shelf Availability Profit or Margin Objective

23. 22© 2016 Gartner, Inc. and/or its affiliates. All rights reserved. #GartnerSYM 22CONFIDENTIAL AND PROPRIETARY | © 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner and ITxpo are registered trademarks of Gartner, Inc. or it’s affiliates. 2016 Supply Chain Leadership Trends Customer Intimacy Digital Business Bimodal Strategies

24. 23© 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Companies Saying They Will Become a Digital Business Within the Next Five Years Companies Admitting Their Digital Business Strategy and Leadership for This Journey Are Unclear Build Digital Supply Chain Capability ------------------------------------------------- Prepare for Digital Business Uncertainty 86% 60%

25. 24© 2016 Gartner, Inc. and/or its affiliates. All rights reserved. #GartnerSYM 24CONFIDENTIAL AND PROPRIETARY | © 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Gartner and ITxpo are registered trademarks of Gartner, Inc. or it’s affiliates. Emerging Digital Technologies Transforming Supply Chains The Internet of Things Big Data Analytics Smart Machines 3D Printing

26. 25© 2016 Gartner, Inc. and/or its affiliates. All rights reserved. The Future: Smart Things: Just Beginning to Disrupt Industries

27. 26© 2016 Gartner, Inc. and/or its affiliates. All rights reserved. Leadership Today  Leaders are balanced  Are demand excellent  Manage inventories well  Are aligned metrically  Use customer data  Collaborate with customers Leadership Tomorrow Are creating Bi-modal capability Finding new uses of data Participating in DTC Seeking further savings Shared Networks Centralized Shared Service Seeking Digital Solutions Summary

28. CONFIDENTIAL AND PROPRIETARY This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other intended recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates. © 2015 Gartner, Inc. and/or its affiliates. All rights reserved. Thank You!