Mike Baiocchi

DAZ Systems, Inc.Implementation and Approach

Trade Management

mike.baiocchi@dazsi.com(714 360-0215)

DAZ Systems, Inc.www.dazsi.com

Focus on Success Through Expertise and Experience

Providing rapid, cost effective solutions:

Oracle Apps E-Business Suite (ERP, CRM, WMS)

Upgrades of E-Business Suite Trade Management Data Warehouse/Data Mart Custom Development (interfaces,

integration to disparate systems, web front ends, new software)

• Overview

• Issues to Solve

• What do we hear? / Case Studies / What we learned!

• Implementation Challenges

• Specific Functions:Budgets

Trade PlanningClaimsIndirect Sales

• Q & A

Agenda

Target Characteristics:– Co-Operative advertising driven – Iterative selling driven– In need of claim and deduction

management

These include:– CPG– High Tech– Life Sciences and Pharmaceutical– Manufacturing and Distribution– ANY Company with a Claim / Deduction

Problem

Who should be interested?

OVERVIEW

- INCREASING TFM COST CONTINUES TO BE A CONCERN

The estimated cost of trade promotions for US consumer goods manufacturers is $26 billion per year, or 13% of sales revenues– second only to COGS as leading expense

61% of a consumer product goods company’s marketing budget is spent on trade promotion funneled through retailers

Sources: Gartner Group, Cannondale Associates

Trade fund spend is increasing at a faster rate than sales!

Marginal Increase in Trade Fund Spend

Marginal Increase in Revenue

ISSUES TO SOLVE

NONPRODUCTIVE SPENDING

Distributors:

- 84% do not believe they are getting a fair ROI for their trade dollars

- There is a 50% variance between actual and planned results

Sources: Gartner Group, Cannondale Associates

Inefficiency Ineffectiveness

Non Productive Spend

ISSUES TO SOLVE

LACK OF CONTROLS

–Compliance Concerns The historical “looseness” in contract negotiations between distributors and retailers brings the Sarbanes-Oxley act into clear focus

–Increasing Deductions Retailers are increasingly deducting from vendor payments.

Inefficiency Ineffectiveness

Com

petition

Reg

ulat

ory

Compliance Requirements Profit Maximization Know What Works, How Well it Works, to Replicate Success

What do we hear?Why Marketing Expense Management?

What do we see/hear from companies?Case Study 1

Distributor of Hair Care Appliances– Revenue: $800M - $1B– Sells to: Major Retailers / Discount Chains – Operation: Global

Issues– 27 (TWENTY SEVEN!) Sets of Books – SOX

Compliance– Claims / Deductions & Tracking– Billbacks– Returns Allowances

Distributor of Hair Care Appliances – con’t

Results:– SOX Compliance– 1.2% Initial Decrease in Promo Expense– Increased Customer Satisfaction– Increased Market Share

What do we see/hear from companies?Case Study 2

Distributor of Consumer Electronics Products– Revenue: $800M - $1B– Sells to: Major Retailers / Discount Chains / Office

Supply Chains / E Commerce– Operation: Global

Issues– Lack of Central Control Point - SOX Compliance – Sell Through Feedback Loop / Verification– “Over & Above” Promotions– Price Protection - SOX Compliance

Distributor of Consumer Electronics Products – con’t

Results– Containment of Sales/Marketing “Creativity”– 98% Control of Promotion Process (Replaced

Excel) – Decreased Expense via Sell Through

Verification– SOX & GAAP Compliance

What we learned!

Regulations being seriously enforced Shareholders are more demanding Competition is fierce Days of creative marketing and no serious tracking are over!

The Current Perspective:

IMPLEMENTATION CHALLENGES

Transformation vs. Technology– Software doesn’t solve the problem! Software is a tool!

Process – lack of standardization in process and trade fund terms drives ‘ad-hoc’ approach and increases complexity to manage

Technology – fragmented technology cannot support data and system integration requirements

Organizational – individuals within your organizations are comfortable with traditional approach – no incentive to change

Cultural – belief that art, experience, and ‘gut feel’ cannot be replaced by tools

Partner expectations – increasing retailer leverage and competition drives

increasing expectation for trade fund support

Oracle Integration Points

• Trade Management publishes business events based on sales forecasts created by sales users. Such forecasts can be inputs into the Demand Planning application to impact demand plans.

Demand Planning

• Budget, offer, claim, indirect sales, product use the product definitionsInventory

• Getting Cost of Good Sold for Offer ROI CalculatorCosting

• Claim settlement by check Payables

• Deduction and overpayment claim creation• Claim settlement by credit, debit, write-off, others

Receivables

• Postings for accruals and/or expensesGeneral Ledger

• Execution of offers• Update of accruals and expenses in Budget• Claim settlement by RMA

Order Management

Supported FunctionalityOracle Product

• Offers• Price Lists (for Chargeback solution)

Advanced Pricing

Oracle Integration Points

• Estimating taxes of transactions generated by claimsTax Engine

• Customer• Buying Group

Trading Community Architecture

• POS data management Data Quality Management

• Territory Management, Task, Note, Attachment, Calendar, ResourcesCRM Foundation

• Offers can source from marketing campaigns• Marketing uses some limited functionalities of Budget and Offer• Trade Management and Marketing share basic common administrative setups

Marketing

• Special Pricing Request (Ship & Debit)• Partner Fund Management• Lead Referral Compensation

Partner Management

Supported FunctionalityOracle Product

• Indirect Sales Data ImportWebADI

• EDI 844 and 867 Inbound; EDI 849 OutboundXML Gateway

Other Integration Points

• Business eventsDemand Planning, Costing or

any other systems

• Third party sales import programOrder Management

• Accounting entry interface tableGeneral Ledger

• Claim / Deduction creation API• Claim assignment API• Configurable settlement workflow

Receivable or Payables

Support provided by Trade ManagementThird Party Systems

• Budget creation APIBudget Planning Tools

Sales Force Automation–Trade Management is a Sales Application for “iterative sales” products–Difference between Trade Management & Oracle Sales?

Lead and Opportunity Based

Iterative

Selling Model

High Tech, Financial Service, Telecommunications, Transportation

CPG, Life Science /

Pharma, High Tech

Industry Focus Examples

Business Flow Examples

“Sales” Apps

• Promotion Analysis to Execution• Deduction Creation to Settlement• Third Party Accrual• POS / Chargeback Processing

Oracle Trade

Management

• Campaign to Lead• Lead to Opportunity• Opportunity to Quote• Quote to Order

Oracle Sales

Complete Promotion SolutionTrade Management is a Complete Promotion Solution

PlanPlan ExecuteExecute MonitorMonitorAnalyzeAnalyze SettleSettle

Execute

• Create offer

• Validate eligibility

• Price sales orders

• Calculate accrualsand discounts

Plan

• Set sales quota / target

• Create budget forcustomer / product

• Set budget thresholds

• Allocate to sales hierarchy

• Create account plan

Analyze

• Analyze historical sales

• Forecast sales volume

• Calculate forecast ROI

• Review prior activities

Monitor

• Capture POS data

• Update checkbooks / General Ledger

• Calculate actual ROI

• Verify field activities

Settle

• Create check / credit

• Manage claims / deductions

Key Differentiators: Integrations – Financials, Supply Chain Comprehensive Promotion Types Accrual Management and GL Integration Flexible and Retroactive Adjustments Indirect Sales Management Deduction Management Lockbox Integration Customer 360 View Robust Customer Relationship / Buying Group

Support

Budget Functions

Creation– Fixed– Fully accrued with multiple parameters

Allocation – Top-down allocation along a territory hierarchy– Allocation based on prior year sales– Bottom-up submission

Validation – Budget-offer validation

Planning

Execution

Tracking

Budget Functions (continued)

Sourcing– Request funds– Transfer funds

Monitoring Usage– Threshold alerts– Recalculated committed

Reconciliation– Reconcile committed but not earned– Reconcile earned but not paid

Planning

Execution

Tracking

Budget Functions (continued)

Accruals Management– Integration of all ordering channels– General Ledger integration– Account Generator workflow– Manual adjustments– Retroactive offer adjustments– Spread lump sum offer postings– Scan data offer accruals and adjustments– Volume offer accruals and AP updates– Third party accrual API with AP simulations

Planning

Execution

Tracking

Trade Planning Functions• Account Manager Dashboard

• Creation of offers including lump sum, off invoice, accrual, promotional goods, order value, terms upgrade, scan data, volume and accrual

• Volume forecasting based on historical sales data

• Manufacturer’s ROI based on forecast volume and cost of goods sold, calculate forecast ROI

Analysis/

Planning

Execution

Tracking

Trade Planning Functions (continued)

Advanced Pricing Integration– All offer information passed directly to Advanced

Pricing– Uptake of Attribute Manager– Multiple currency price lists

Integration with All Ordering Channels– Offers automatically or manually applied to

orders– Both hard and soft promotional limits

Analysis/

Planning

Execution

Tracking

Trade Planning Functions (continued)

Performance Monitoring

Actual ROI– Based on actual sales data and cost of goods

sold, calculate actual ROI

Views– Budget view– Customer view

Analysis/

Planning

Execution

Tracking

Claim and Deduction Functions

Creation– Deductions and overpayments created in

Oracle Receivables– Claims and debit claims created in Trade

Management– Mass create claims– API and claims import

Assignment– Claim territories, teams, and API

Creation/

Assignment

Research

Settlement

Claim and Deduction Functions (continued)

Task Management– Tasks– Action template defaults based on reasons

Audit Trails– SourceSource– History based on rulesHistory based on rules– Attachments and notesAttachments and notes

Classification

Research

Settlement

Claim and Deduction Functions (continued)

Discoverer– Customizable– Claim business area provides information on

all customer transactions

Associate Earnings– View all customer earnings available for claims– Search for customer earnings using multiple

criteria such as transactions and products– Buying group support

Classification

Research

Settlement

Claim and Deduction Functions (continued)

Claim Aging View– Configurable aging buckets– Grouped by customer

Claim Details– Split claims– Related documents– Duplicate claims– Others

Classification

Research

Settlement

Claim and Deduction Functions (continued)

Oracle Receivables Integration – Auto resolution

– Deductions from Oracle Receivables are passed automatically to TM with owners assigned.

– Automatic settlement by credit or debit memo. Oracle Payables Integration

– Automatically create invoices for check payments Order Management Integration

– Automatic creation of RMAs

– Access to discounts and order history to validate claims.

Classification

Research

Settlement

Claim and Deduction Functions (continued)

Autopay Accruals Management

– General Ledger integration– Account generator workflow– Scan data offer accrual adjustments

Configurable Settlement Workflow– Claim settlement workflow allows companies

to customize their own, easy to maintain, functions

Classification

Research

Settlement

Indirect Sales Functions

Import– WebADI– XML Gateway (EDI 844, 867, 849)– Direct SQL load into interface

Import

Processing

Settlement

Indirect Sales Functions (continued)

Processing– Basic data completeness check– Mapping of external to internal data– DQM integration– Chargeback validations– Special pricing validations– Dispute reconciliation– Send to 3rd Party Accrual Engine for further

processing– Send to Inventory Tracking for tracking

Import

Processing

Settlement

Indirect Sales Functions (continued)

Mapping of external to internal data:– Price List– End Customer– UOM– Item

DQM integration– Party– Party Site– Party Contact

Import

Processing

Settlement

Indirect Sales Functions (continued)

Chargeback validations– Price List number– Effective dates– End Customer/Buying Group eligibility– Product/Category eligibility– Inventory– WAC– QP Attribute configuration: Seller

Import

Processing

Settlement

Indirect Sales Functions (continued)

Special Pricing validations– Special Pricing number– Effective dates– Quantity– Price– Product– Customer

Import

Processing

Settlement

Indirect Sales Functions (continued)

Dispute reconciliation– Automatic assignment of dispute

code– Ability to update dispute code on

screen– Ability to update data disputed and re-

process– Re-submission of disputed lines

Import

Processing

Settlement

Indirect Sales Functions (continued)

3rd Party Accrual:– Indirect sales data can be sent to the

3rd party accrual engine for processing automatically or manually.

– 3rd party accrual runs a pricing simulation and applies all promotions eligible on indirect sales data, payment can be for distributor or end customer. It also finds a price difference to be accrued.

Import

Processing

Settlement

Indirect Sales Functions (continued)

Inventory Tracking– Distributor inventory is tracked

automatically based on a System Parameters option.

– Inventory In = OM data– Inventory Out = TM indirect sales data– Adjustments = made in TM

Import

Processing

Settlement

Indirect Sales Functions (continued)

Settlement– Payment by Check or Credit– Using Autopay– Option to deplete upfront accrual or

create new

Import

Processing

Settlement

In Summary:

Trade Management

Sales Customers Marketing

Sarbanes - Oxley

Good Business Practices

G

A

A

P

G

A

A

P

Q & A