1. John Galt Solutions Turning Demand Planning Inside Out

2. Copyright 2001 John Galt Solutions, Inc. Do not duplicate. Privileged and Confidential. 2 The Forecast Xperts™ Topics Covered Introduction The Three Legged Stool Practical Examples Conclusion

3. Copyright 2001 John Galt Solutions, Inc. Do not duplicate. Privileged and Confidential. 3 Who is John Galt? For companies that who need to address inventory and demand planning quickly, Galt offers cost effective and comprehensive Supply Chain Planning Solutions. We offer superior forecasting accuracy combined with a comprehensive view of the balance between supply and demand by integrating marketing, inventory and sales plans together, to lower inventories cost, optimize production, and improve customer service. Galt offers products and methodologies with an emphasis on measuring progress before expanding the process.

4. Copyright 2001 John Galt Solutions, Inc. Do not duplicate. Privileged and Confidential. 4 Who is John Galt? Partners: Founded in 1996 HQ Chicago, Illinois Over 5,000 Customers Worldwide Focused on leading-edge demand planning and collaboration software solutions for manufacturers Dedicated to delivering solutions in 60 to 90 days

5. Walk Drive Fly Products Copyright 2002 John Galt Solutions, Inc. Do not duplicate. Privileged and Confidential. Impact Of Bad Planning ISSUES  Too much of wrong product  Right product wrong place  Lost sales  Over investment Drivers Sales Operations Marketing Finance

6. Walk Drive Fly Products Copyright 2002 John Galt Solutions, Inc. Do not duplicate. Privileged and Confidential. Integrated Plan Sales Operations Marketing Finance Level of Demand Policy Inventory levels Promos Events Inventory Investment  Prod./Dist.  Demand  Budget  Promos / Events Impact Of Good Planning

7. Walk Drive Fly Products Copyright 2002 John Galt Solutions, Inc. Do not duplicate. Privileged and Confidential. Seamless Upgrade Fully Scalable Identify Identify Manage & Measure Extend ENHANCE John Galt’s Approach

8. Walk Drive Fly Products Copyright 2002 John Galt Solutions, Inc. Do not duplicate. Privileged and Confidential. Forecast Process Procast Event Modeling Profiling Risk Assessment Multi-Level Allocation Same As Statistical Process Historical Misses Future Risk Opinion Differences Exception Management Accountability Tracking Capacity Planning VMI DRP S&OP POS Analysis Budget Comparison Sales Adjustment Inventory Shortages Excessive Booking GAP Analysis Accuracy 1 2 3 4

9. Walk Drive Fly Products Copyright 2002 John Galt Solutions, Inc. Do not duplicate. Privileged and Confidential. Forecasting using Averages Absolute Percent Error Projected Inventory Total Cost of Inventory Forecasting And Inventory - Inventory Up 8% - Potential $22,000 upside in Revenue requires a $38,000 increase in inventory

10. Walk Drive Fly Products Copyright 2002 John Galt Solutions, Inc. Do not duplicate. Privileged and Confidential. Forecasting using ForecastX Absolute Percent Error Projected Inventory Total Cost of Inventory Forecasting And Inventory - Inventory Down 5% - Give Up $13,000 in Revenue for $24,000 reduction in inventory

11. Walk Drive Fly Products Copyright 2002 John Galt Solutions, Inc. Do not duplicate. Privileged and Confidential. Flexibility And Inventory - A 33% reduction in lead time yields 33% reduction in inventory

12. Walk Drive Fly Products Copyright 2002 John Galt Solutions, Inc. Do not duplicate. Privileged and Confidential. Flexibility And Inventory - A 33% reduction in order quantity yields 17% reduction in inventory

13. Walk Drive Fly Products Copyright 2002 John Galt Solutions, Inc. Do not duplicate. Privileged and Confidential. Flexibility And Forecasting

14. Walk Drive Fly Products Copyright 2002 John Galt Solutions, Inc. Do not duplicate. Privileged and Confidential. Strategies For Success Build inventory for promotion, have disposal plan in place as Plan B. Product retirements, work with customers to manage expectations. New product introductions, make investments and don’t second guess.

15. Walk Drive Fly Products Copyright 2002 John Galt Solutions, Inc. Do not duplicate. Privileged and Confidential. Grow inventory increase working capital < 20 > 20 Deplete inventory lose future sales Outliers drive safety stock Concentrate On Exceptions

16. Walk Drive Fly Products Copyright 2002 John Galt Solutions, Inc. Do not duplicate. Privileged and Confidential. Managing Exceptions Has Big Payoffs Rolling 3-Month Sales Plan Accuracy for Nov-Dec-Jan 2003/2004

17. Walk Drive Fly Products Copyright 2002 John Galt Solutions, Inc. Do not duplicate. Privileged and Confidential. Inventory Strategy (Days Cvg vs. ROP) Concentrate On Inventory Policy

18. Walk Drive Fly Products Copyright 2002 John Galt Solutions, Inc. Do not duplicate. Privileged and Confidential. Managing Inventory Policy Has Big Payoffs - Improving Item A has the biggest immediate effect on overall initial order fill rate - Inventory on Item E is not warranted based on the value to the business

19. Walk Drive Fly Products Copyright 2002 John Galt Solutions, Inc. Do not duplicate. Privileged and Confidential. Founded in 1923 Revenue $2.8bn 7,200 Employees Worldwide Leader in Children’s and Family Leisure Time Entertainment 7,500 customers in 25 Countries Customer Profile

20. Walk Drive Fly Products Copyright 2002 John Galt Solutions, Inc. Do not duplicate. Privileged and Confidential. Challenges Constantly Changing Product Line Needed Cutting-Edge Solution But Easy to Use Used by Non-Statisticians Must Integrate with Existing Reporting Process Benefits Facilitated Collaboration between Hasbro Analysts, Sales and Retail Customers Initial Forecast Error Reduced from 50% to 20% Increase Fill Rate from 65% to 98% Resulted in $7M Gain in Sales Customer Profile

21. Walk Drive Fly Products Copyright 2002 John Galt Solutions, Inc. Do not duplicate. Privileged and Confidential. Why Measure Sales Plan Accuracy? YOU CAN ONLY IMPROVE WHAT YOU MEASURE!!! Accuracy measures demonstrate how well Marketing, Sales, and Operations observe, communicate, plan, and execute together Accuracy measures focus attention on areas where we need to improve our understanding of market conditions, our responsiveness to changes in the market, and/or our operational performance Accuracy measures allow us to identify and reward behaviors and skills we want to develop, and to identify “experts” and those who need training or coaching Over time, accuracy measures will allow us to reduce the impact of individual or group bias on our decisions

22. Walk Drive Fly Products Copyright 2002 John Galt Solutions, Inc. Do not duplicate. Privileged and Confidential. Why Bother Planning? Without A Plan You Are Lost!!! Effective planning will have a significant impact on your business by improving initial fill rates, working capital and profitability Having an effective planning process means that you can make intelligent business decisions and have the support of the organization to drive business results Concentrating on key items ensures that you provide the greatest value to your customers and receive the greatest value for your time Over time, you will be able to use your planning process as a significant competitive advantage by running a more efficient organization

23. Walk Drive Fly Products Copyright 2002 John Galt Solutions, Inc. Do not duplicate. Privileged and Confidential. Thank You Contact Information Name:Kai Trepte Email:trepte@johngalt.com Tel:312.701.9026 Address:125 S. Clark