1

Managing Supply Chainsin a Complex World

Pete SinisgalliPresident & CEOManhattan Associates

2Copyright 2010 Manhattan Associates, Incorporated. Strictly Confidential. Not for Distribution.

U.S. Logistics Costs in 2008

• Total logistics costs as a percentage of sales: more than 9%

• Total U.S. logistics costs: $1.4 trillion

Transportation 5%

Warehousing 2%

Inventory 2%

3Copyright 2010 Manhattan Associates, Incorporated. Strictly Confidential. Not for Distribution.

SCM Ecosystem

Sel

l-Sid

e C

olla

bora

tive

Pla

nnin

g

Buy-S

ide Collaborative P

lanning

TransportationPlanning

WarehouseManagement

ProductionScheduling

ProductionPlanning

Deployment /Allocation Planning

OrderPromising

InventoryPlanning /

Optimization

SupplyPlanning

Demand / EventPlanning

NetworkPlanningForecast

Error

Forecast

TransportationConstraints

Work Constraints

Production Constraints

NetRequirements

Available to Promise

Forecast

Demand Constraints

Ord

ers

Fo

reca

sts

Source: Gartner (December 2008)

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Frozen Peas . . .

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Global Market Statistics

• The global out-of-stock rate is 8.3 percent

• About a third of all products are sold at a discount

• There is about $5.5 Trillion in global inventory

• The cost of moving freight has gone up 20% in the last decade and is expected to increase by 65-70% by year 2020

6Copyright 2010 Manhattan Associates, Incorporated. Strictly Confidential. Not for Distribution.

Today’s Challenges

emerging technologies

shorter product lifecycles

regulations

globalization & outsourcing

integration rising fulfillment costs & agility

channelconvergence

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Manhattan Associates’ Vision

To be the global leader

providing technology-based

solutions that optimize supply

chain effectiveness & efficiency

for our customers.

8Copyright 2010 Manhattan Associates, Incorporated. Strictly Confidential. Not for Distribution.

9Copyright 2010 Manhattan Associates, Incorporated. Strictly Confidential. Not for Distribution.

Investment in Research & Development

Cumulative R&D (Millions)

$34$76

$123$171

$208

10Copyright 2010 Manhattan Associates, Incorporated. Strictly Confidential. Not for Distribution.

Atlanta

MishawakaIndianapolisLondon

Bangalore

Paris

Shanghai

Singapore

Tokyo

Amsterdam

Sydney

Melbourne

11Copyright 2010 Manhattan Associates, Incorporated. Strictly Confidential. Not for Distribution.

Customers in All Segments are Market Leaders

12Copyright 2010 Manhattan Associates, Incorporated. Strictly Confidential. Not for Distribution.

Grocery Retail

Retailer

%Out of Stock

$ Lossfor Every

Customer

7.4% $0.31

9.1% $0.38

14.7% $0.61

21.6% $0.89

22.8% $0.94

22.8% $0.94

The Impact of Out of Stocks

Consumer Electronics

Retailer

%Out of Stock

$ Lossfor Every

Customer

13.1% $0.84

18.1% $1.16

22.7% $1.46

25.7% $1.65

26.0% $1.67

30.6% $1.96

Source: IHL Group, Dec 2008

13Copyright 2010 Manhattan Associates, Incorporated. Strictly Confidential. Not for Distribution.

Source: Retail Out of Stock, A Worldwide Examination of Extent,Causes and Consumer Responses

Total Upstream Causes

Store ordering & Forecasting

In the Store, Not on the Shelf

Out Of Stock Causes

28%

47%

25%

Grocery Retail

14Copyright 2010 Manhattan Associates, Incorporated. Strictly Confidential. Not for Distribution.

Source: Retail Out of Stock, A Worldwide Examination of Extent,Causes and Consumer Responses

Buy Item at Another Store

Delay Purchase

Substitute - Same Brand

Substitute - Different Brand

Do Not Purchase Item

Worldwide Consumer Responses to OOS

31%

15%19%

26%

9%(Average across eight categories)

Grocery Retail

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ThePerfect Order

The Perfect Order

10-20% improvementin operating efficiency

10-20% transportation savings

15-25% lower labor costs

5-30% improvement in real estate utilization, through better use of distribution centers

5-10% lower fulfillment cost

10-20% better utilization of equipmentin the warehouse and on the road

10-15% increases in revenue

10-15% fewer markdowns

10-20% improvementin promotion effectiveness

10-20% fewer lost sales

15-20% inventory reductions

2-4% margin improvements

10-20% fill rate improvements

1-3% increase in service levels

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Supply Chain Executives Must Follow This Path

2012

2010

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Improve Efficiency Reduce Op Costs Improve Service Drive Business Growth

Improve Revenues Optimize Cash to Cash Cycle Manage Risk Reduce Headcount

Growth/Customer Focus:54%

Cost/Risk Focused:59%

Source: Gartner, 2010

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Intelligent & Interconnected Consumers

Return

• Return items where it’s convenient for me

Buy• View available inventory across channels/stores

• Buy/reserve online, pick up in store

• Choose among cost-effective shipping options

Receive• Check my order status from any touch point

• Be notified when my order is ready for pick up

• Receive items from a store if not in-stock online

• Pick up in a store near me a gift someone orders online

Browse

• Check store item availability online

• Be notified when new stock arrives in store

• Remotely schedule an in-store consultation

• Access my order history from any touch point

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Plan Execute

Adapt

Supply Chain Planning Supply Chain Execution

Global Supply Network Collaboration

Integrated Information Technology

Math & Science

Global Visibility & Business Intelligence

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CustomerEvery Every EveryEmployee Day