N O V E M B E R 1 4 TH, Digitizing the Core: Innovating from the Inside Out

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N O V E M B E R 1 4 TH, 2017 2 P M E S T

1 N O V E M B E R 1 4 TH, P M E S T Digitizing the Core: Innovating from the Inside Out

2 Meet the presenters Nidal Haddad David Carney Stephen Laaper Girija Krishnamurthy Principal Principal Principal Principal Deloitte Consulting LLP Deloitte Consulting LLP Deloitte Consulting LLP Deloitte Consulting LLP 2 Copyright 2017 Deloitte Development LLC. All rights reserved.

3 Agenda 1 2 Digital Disruptions and their impact Finance in a Digital World 3 Digital Supply Networks 4 The combined power of Digital Finance and Supply Networks 5 How to get started 3 Copyright 2017 Deloitte Development LLC. All rights reserved.

4 The digital revolution WITHIN 10 YEARS 4 th Industrial Revolution: RPA, Cognitive, and Horizontal Machine Learning Platforms (MLPs) BPM Systems Early Stage RPA Early Stage Cognitive Widespread Cognitive Augmentation and Automation Dependence on Global Horizontal Category MLPs 1 st Industrial Revolution: Water and Steam 2 nd Industrial Revolution: Electricity and the Assembly Line 3 rd Industrial Revolution: Mainframes, , Internet Capable RPA 1 Solutions Deployed 1700s 2017 L E G E N D (1) Robotic Process Automation (Source: Industry 4.0: Challenges and Solutions for the Digital Transformation of Exponential Technologies, Deloitte AG, 2015 and Deloitte proprietary research) Industrial Revolution Early Stage Technology Mature Technology Future Event 4 Copyright 2017 Deloitte Development LLC. All rights reserved.

5 Cost of Performance Digital disruption spans many industries EXPONENTIAL TECHNOLOGY CHANGE DISRUPTING BUSINESSES ACROSS MANY INDUSTRIES $1,245 per Gbps $569 per GB Amazon Warby Parker $222 per million transistors Computing <$0.06 Bandwidth <$10 Storage <$0.01 Lyft Google SpaceX 1992 Today Source: Deloitte University Press 5 Copyright 2017 Deloitte Development LLC. All rights reserved.

6 Boundaries are blurring Humans & machines Products & services Developed & emerging economies Producers & consumers Digi Paid work & passions sical Scientific & technical domains External & internal costs & benefits Industries & sectors Large & small organizations 6 Copyright 2017 Deloitte Development LLC. All rights reserved.

7 Digital disruptors are here examples CORE MODERNIZATION Here Now Cloud Visualization Process Robotics Internet of Things EXPONENTIALS Emergin g Quickly AR/VR Advanced Analytics Cognitive Computing In-Memory Computing Blockchain 7 Copyright 2017 Deloitte Development LLC. All rights reserved.

8 Polling Question Which of the following technologies are being actively used or seriously considered somewhere in your company? Cloud Visualization Process Robotics Internet of Things AR/VR Advanced Analytics Cognitive Computing In-Memory Computing Blockchain 8 Copyright 2017 Deloitte Development LLC. All rights reserved.

9 Applying disruptive digital innovations to "the business behind the business" Financial Management WEBINAR FOCUS: Customer Relationship Management CLOUD PLATFORMS & CONNECTIVITY Supply Chain Management Finance in a Digital World Digital Supply Networks Human Resource Management Manufacturing Resource Planning 9 Copyright 2017 Deloitte Development LLC. All rights reserved.

11 Imagine a world where 5:00 am A blockchain enabled value transfer solution, automatically settles open invoice with payments in digital currency An automated robot begins populating the net revenue report and output to its analytics engine 7:00 am The natural language generator adds in narratives to the dashboard 8:10 am The CFO interacts with the chatbot in natural language to drill down into splits by channel/product 6:00 am The data from the analytics engine is staged on a tableau or BI server and dashboards are refreshed 8:00 am The CFO has access to the updated reports and narratives as soon as they arrive in the office 8:15 am The CFO further drills down into cost variance analyses for products/services with dropping margins All of the technologies required to realize this vision of the future exist today 11 Copyright 2017 Deloitte Development LLC. All rights reserved.

Analytics in Action Global Consumer Products Company Accelerating Free Cash Flow (FCF) thru Discounts & Payment Terms Optimization I S S U E Highly complex commercial terms structure (discounts &

12 Analytics in Action Global Consumer Products Company Accelerating Free Cash Flow (FCF) thru Discounts & Payment Terms Optimization I S S U E Highly complex commercial terms structure (discounts & payment terms), lack of strategic alignment on execution, and an immature data & analytics environment, challenged the client s ability to derive meaningful insights from its commercial terms environment in aggregate, it translated into a sub-optimal environment for both profitability and for working capital. S O L U T I O N Deloitte analytics & visualization platform CashStream was deployed to analyze over 30 million transactional records providing visibility and insights into on-invoice payment terms and line item aggregate discount. Segregation approach was deployed, establishing 150 unique multidimensional like-to-like environments where statistical measures were applied to identify outliers and opportunities. Weighted average payment terms offered were then analyzed and segregated across the customer portfolio for comparability. I M P A C T Identified 155 bps in gross margin improvement opportunities within the Discounts environment thru a more cohesive strategic framework, supported by a more effective execution and governance model. And almost 9 days in DSO 1 opportunity to free-up working capital thru payment terms standardization and stronger terms compliance measures. 12 Copyright 2017 Deloitte Development LLC. All rights reserved. 1 Days of Sales Outstanding

13 5 Finance Predictions in Self Service Reporting Is the Norm Finance Mission Control Center Digital Exhaust Personal Automation RPA to become as common as spreadsheets Blockchain & Smart Contracts Impacting all transactions Finance Cost to Serve Reduced by 50% 13 Copyright 2017 Deloitte Development LLC. All rights reserved.

14 Polling Question Which of the five predictions for 2025 are already gaining traction in your finance function? Self Service Reporting Finance Mission Control Center Personal Automation Blockchain and Smart Contracts Finance Cost to Serve 14 Copyright 2017 Deloitte Development LLC. All rights reserved.

16 Day in the Life of a traditional Supply Chain No visibility to supplier inventory unable to fulfill order Unable to re-route driver fresh food degrades en route D E V E L O P P L A N S O U R C E M A K E D E L I V E R S U P P O R T Weather event not reflected in demand forecast stock out Inaccurate inventory data excess inventory ordered 16 Copyright 2017 Deloitte Development LLC. All rights reserved.

17 Digital Supply Network (DSN) transformation TRADITIONAL SUPPLY CHAIN DIGITAL SUPPLY NETWORKS Sychronized Planning Cognitive Planning Quality Sensing Dynamic Fulfillment Connected Customer Digital Core 3D Printing Sensor-Driven Replenishment Digital Development Smart Factory Intelligent Supply 17 Copyright 2017 Deloitte Development LLC. All rights reserved.

Development Smart Factory Rapid response allows re-routing of perishables to reclamation center tax benefit Intelligent Supply

18 Day in the Life of a Digital Supply Network Sychronized Planning Data-driven fulfillment decisions reduce cost to serve Dynamic Fulfillment Connected Customer Predict increase in demand during cold snap sales increase Digital Core Digital Development Smart Factory Rapid response allows re-routing of perishables to reclamation center tax benefit Intelligent Supply Accurate inventory data incorporated into merchandise plan optimize inventory 18 Copyright 2017 Deloitte Development LLC. All rights reserved.

19 Digital Supply Network technologies Sensors & IoT Digital Scanning ERP. PLM, & Structured Systems Edge Computing Cellular, Satellite, & Wi-Fi Comms Signal Ingestion & Cloud Blockchain & Cryptography Data Science & Algorithms Machine Learning PHYSICAL Deep Learning & AI Natural Language Processing DIGITAL Video & Spatial Analysis Machine Controls & APIs Additive Mfg & Advanced Materials Robotics & Autonomous Vehicles Augmented/ Virtual Reality Robotic and Cognitive Automation Visualization, UX, & Mobile 19 Copyright 2017 Deloitte Development LLC. All rights reserved.

20 LIVE FACTORY Illuminating a hidden factory, transforming a wealth of data and assets into laser-focused operational insights. Global Industrial Manufacturer New image I S S U E The client was facing mounting pressure from a hyper-competitive market and was looking for ways to increase market share, efficiency, product quality, and customer satisfaction. One of the biggest issues was its hidden factory, where inventory lived and moved, but couldn t be tracked and monitored in real-time. This lack of visibility resulted in excess finished goods inventory and inefficient allocation of resources for QA and rework. Region: Industry: Process: Solution Technology: Devices: S O L U T I O N Enter IoT. Our cross-functional team created a live factory by attaching sensors to machinery. This ecosystem of business equipment and sensors provided data that helped the team develop apps and dashboards, effectively bringing a hidden factory of dormant data and insights to life. These outputs allowed the client to capture a vast amount of real-time information that would inform key operational decisions and generate big business results. I M P A C T These insights and technologies enable the client to improve quality, increase productivity, and more efficiently allocate resources. By reducing unplanned movements, they also have fewer excess finished goods inventory. The sensors provide the client with a wealth of real-time information, apps, and tools that deliver crucial data on the status of its inventory and factories, with the ability to quickly and effectively triage a vast range of operational and logistical issues. 20 Copyright 2017 Deloitte Development LLC. All rights reserved.

21 Even when most companies know they face inevitable disruption... 87% anticipate disruption To what extent do you believe digital technologies will disrupt your industry? 59% 28% 9% 3% Great extent Moderate extent Small extent Not at all My organization is adequately preparing for disruptions projected to occur in my industry due to digital trends 44% are adequately preparing 11% 33% 23% 25% 6% Strongly Agree Agree Neither disagree nor disagree Disagree Strongly Disagree... less than half of respondents agree that the organization is adequately preparing for a disruption they anticipate will occur 21 Copyright 2017 Deloitte Development LLC. All rights reserved. Source: 2016 MIT SMR and Deloitte Digital business research

22 Polling Question less than half of respondents agree that the organization is adequately preparing for a disruption they anticipate will occur Do you agree with them? Digitization of which of these operations is top priority: New digital business models Digitizing core operations Digitizing customer experience Agree Disagree 22 Copyright 2017 Deloitte Development LLC. All rights reserved.

24 O P P O R T U N I T I E S Digital Enterprises drive shareholder value E N T E R P R I S E V A L U E Revenue Margins Asset Efficiency Stakeholder Expectations Protect Market Share Supports omnichannel execution Improve Working Capital Performance Reduces inventory levels across network Improve Return on Assets Enables Supply Chain integration across divisions and BUs Availability Enables use of big data insights (e.g. right inventory in the right place) Increase Sales Improves e-commerce performance Improve Workforce Efficiency Prioritizes the right task at the right time Enhance Asset Visibility Enables visibility of asset efficiency Delivery Enables faster, lowercost delivery 24 Copyright 2017 Deloitte Development LLC. All rights reserved.

25 Right Speed Transformation Digital technologies can be leveraged to simultaneously deliver quick-wins on legacy platforms while defining a digital technology foundation for the future Real-time Analytics & Decision Making Process Automation Improved Compliance QUICK WINS ON LEGACY On-The Go Finance Operations Enablement of New Business Models DIGITAL FOUNDATION OF THE FUTURE Robotic Process Automation Visualization Advanced Analytics Natural Language Generation Synchronized Planning D I G I T A L C O R E Better Collaboration Using Social Concepts Digital Finance Strategy Digital Supply Network Strategy ERP Cloud enabled Digital Core Transformation Dynamic Fulfillment Connected Customer 25 Copyright 2017 Deloitte Development LLC. All rights reserved. Intelligent Supply Digital Development Smart Factory

26 Digital transformation at Computer Storage Company O R A C L E C L O U D E N A B L E D D I G I T A L T R A N S F O R M A T I O N CLOSE AND CONSOLIDATION STATISTICS 19 Counties, 82 legal entities 3 ERP stacks 30K employees FINANCE Business Partnering Enabling process standardization DIGITAL CORE Actionable Insight Accelerated financial close & management reporting dashboards 10K Vendors 8K Customers PROCUREMENT Cost Effeciency Reducing cost to serve C H A N G E M A N A G E M E N T 26 Copyright 2017 Deloitte Development LLC. All rights reserved.

27 Value realization at Global Logistics Provider O R A C L E C L O U D E N A B L E D D I G I T A L T R A N S F O R M A T I O N STATISTICS ~ 95+ Countries ~ 500+ Legal Entities BLOCKCHAIN FINANCE RPA Business Partnering Enabling better decisions DIGITAL CORE On-to Go Finance Operations Real-time information access through mobile / tablet SUPPLY NETWORK Cost Effeciency Reducing cost to serve C H A N G E M A N A G E M E N T 27 Copyright 2017 Deloitte Development LLC. All rights reserved.

30 Thank you. Nidal Haddad Principal, Deloitte Consulting LLP Contact: Stephen Laaper Principal, Deloitte Consulting LLP Contact: David Carney Principal, Deloitte Consulting LLP Contact: Girija Krishnamurthy Principal, Deloitte Consulting LLP Contact: This publication contains general information only, and none of the member firms of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collective, the Deloitte Network ) is, by means of this publication, rendering professional advice or services. Before making any decision or taking any action that may affect your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this publication. As used in this document, Deloitte means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see for a detailed description of the legal structure of Deloitte USA LLP, Deloitte LLP and their respective subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. Copyright 2017 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited