Turn Service Supply Chain into Profits with Value Chain Planning

1. Turn Service Supply Chain into Profits with Value Chain Planning Moshin Lee, Sr. Director, Oracle Value Chain Planning Product Management Graham Reid, Oracle Global Process Owner, Spares Planning

2. The following is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functionality described for Oracle’s products remains at the sole discretion of Oracle.

3. Program Agenda • Evolving to best in class service parts and MRO planning with Oracle VCP • Development Roadmap • Case Study: Oracle’s use of VCP for service parts planning

4. Oracle Value Chain Planning Solution Customers Retail Stores COLLABORATION SERVICES Suppliers Distribution Centers Contract Manufacturers Carriers Demand Sensing Value Chain Networks • Common foundation • Single source of truth • Centralized services • Start anywhere, redo nothing Planners Analysts INTEGRATION SERVICES Planning Data Management Scenario Planning & Analytics Engineered Systems & Solutions Planning and Optimization Asset Intensive and Parts Planning Strategic Planning and Postponement Hyperion Legacy Systems Supply and Distribution Planning Siebel Demand and Trade Management Sales and Operations Planning E-Business Suite PeopleSoft JD Edwards

5. Maintain, repair, and overhaul complex equipment and installations Repair work order hierarchies Rotables and serialization Long range and operational planning – Balance material, resources and budgets Plan new buys, internal and external contractor repairs; plan maintenance repair schedules CMRO and EAM based execution ASCP/DM/IO/PS/GOP – CMRO/EAM integration: Korean Air Service and Maintenance Planning solutionThe Oracle difference: The right solution for the right problem DISTRIBUTION CENTRIC REPAIR CENTRIC ASSET INTENSIVE • Multi-echelon distribution with rebalancing and fair share allocation • Standard catalog driven parts, no part condition; standard bills • Standard work orders for assembly, new buy orders • Forecasting and replenishment, with optionally inventory optimization • ASCP/IO/DM: CARQUEST, Orbotech • Use part condition (“usable”, “defective”) • Internal and external repair • Part criticality matrix linked to forecasting rules • Optimize redistribution and replenishment • Account for supersession (repair to) in forecasting and replenishment • Unified forecasting and replenishment UI • Release recommendations to Depot Repair and Spares Management • SPP/DM/IO: Oracle, Virgin Media, Virgin Mobile, Huawei, Teradata

6. Improve spare parts planning • Support intermittent demand patterns • Leverage highly accurate Bayesian engine • Population and failure rate based forecasting • Forecasting based on supersession • Analyze and fix exceptions • Supersession-based planning • Plan reallocation and transfer of parts • Plan internal and external repair before new buy • Release planning recommendations to Execution • Single UI for forecasting and replenishment • Part and supersession chain centric analysis • Zone and enterprise views • Planner work lists • Personal and public queries • Auto-release rules • Parts Forecasting • Replenishment • Analysis

7. Integrated planning and execution Reduce cost via pre-built integration • Execute to plan • Global parts inventory visibility across all service organizations • Out-of-the-box integration with Oracle Spares Management and Oracle Depot Repair • Release depot repair orders, reschedules, and transfers • Release spares management new buy purchase orders, repair orders, and transfers • Improve planner productivity through automation of release • Execute internal and external repairs

8. Service planner workbench Work list driven actions Supersession Integrated demand and supply planning Pegging view

9. Evolve to best in class spare parts planning • Forecast new service level agreements at customer and customer site level • Forecast new parts based on part characteristics • Centralized demand management for service and manufacturing • Enable simultaneous forecasting of end items and spare parts • Consider causal factors • Analyze impact of new service level agreements on safety stock policies • Simulate the impact of inventory budget reductions • Simulate trade offs between service levels and cost • Manage postponement decisions across all service facilities • Monitor service level agreement adherence • Monitor repair versus new buy trend patterns • Review service parts inventory performance • Compare plans and trends over time • Involve key managers • Advanced Forecasting • Multi-echelon postponement • Plan analytics

10. Evolve – optimize spares stocking • Account for detailed service level and fulfillment lead time targets • Deploy inventory to meet entire SLA portfolio • Account for repair, lead time, space, budget constraints • Simulate SLA scenarios • Minimize SLA portfolio cost 99%, 2 hours 97%, 4hours 92%, 24hours

11. Evolve – Monitor parts planning performance • 360 degree visibility • Monitor service level agreement adherence • Monitor effective use of repairable parts before buying new • Compare changes between plans and analyze trends • Analyze spare parts inventory performance

12. Asset Intensive Planning with VCP Prebuilt integration with EBS CMRO and EAM • Integrated maintenance scenario to support total cost of fleet operation – CMRO Unit Maintenance Plan, EAM Budget Forecast, Demantra non-Maintenance Forecast, ASCP Planned Repair Orders • Projection of resource utilization – Global, organization, department • Projection of total material requirements – Calculate retention levels and justify disposal actions • Projection of maintenance cost • Calculate planning factors • Scenario planning: select specific CMRO product classification (simulations) and EAM budget forecasts as basis for planning • Match defective demands with defective supplies • Plan repairs of complex subassemblies and components • Plan purchases, internal maintenance, and contractor maintenance • Consider repair capacity and material availability • Consider CMRO and EAM repair BOMs and routings • Consider resource (equipment) downtime due to preventive maintenance • Maintenance scenario planning and S&OP • Balance supply and determine repair

13. Asset Intensive Planning with VCP Prebuilt integration with EBS CMRO and EAM • What is the non-routine material and resources associated with a Maintenance Requirement (MR)? • What is the total material and resources associated with a components item’s repair? • What is the difference between Engineering failure rates and actual failure rates? • What are the material and resources associated with flight operations? • Calculate planning factors based on non-routine resource and material requirements and incorporate into CMRO MR definition • Supports routine historical analysis contrasted to CMRO Engineering definition • Forecast non-UMP visit forecast and leverage to build flight schedules in CMRO (pre-flight, post-flight and transit visits are not contained in Unit Maintenance Plan) • Planning Factors – Business needs • Solution

14. Asset Intensive Planning with VCP Prebuilt integration with EBS CMRO and EAM • Which visits are early, on-time or late and why? • What tasks are on the critical path? • What is the total machine, crew, and tool utilization across visits, or for a specific visit? • How much of the utilization is associated with routine versus non-routine work? • What is the impact of taking down production equipment for maintenance? What is impact of rescheduling the EAM maintenance? • What is the average visit duration by visit type (PDM, Engine Overhaul)? • How can Visit throughput be maximized? • Schedule CMRO Visits taking into account visit dates, milestones, task hierarchies, and prec. constraints • View CMRO work breakdown structure and critical path • Schedule Visits while considering EAM preventative maintenance • Override EAM preventative maintenance • Model key constraints on the shop floor (crew, machine, tool – capacity and calendars) • Manually re-sequence visits • Respect inventory reservations • Constrain dates based on outside processing schedule • Create multiple simulations and compare (on time, now late, KPIs) • Maintenance Scheduling – Business needs • Solution

15. Asset Intensive Planning with VCPProcess flow Resource utilization Total cost Non-UMP visit forecast Detailed maintenance schedule Planning factors VCP Demand Management and S&OP Complex Maintenance Repair andOverhaul Historical and projected fleet size Historical and projected fleet utilization Historical visits and usage History for non-maintenance products Visits and Visit WBS Enterprise Asset Management Order Management Historical EAM usage Adjusted WO dates Forecast for non-maintenance products Planned maintenance requirements & Planned UMP and Production Visit Work Orders Rebuildable activities, WOs, and Forecasted WOs Total material requirements Demand variability Work Orders ASCP plan results (material and resource requirements) VCP Advanced Supply Chain Planning VCP Inventory Optimization VCP Production Scheduling Service levels Budgets Target SS Planned repair orders Time phased SS Planned orders

16. Maintenance scheduler workbench Schedule around preventative maintenance Analyze key performance indicators Analyze maintenance schedule exceptions Analyze critical path

17. Development Roadmap

18. Recent Updates and Future PlansService and Maintenance Planning VCP 12.2.2.3.1 12.1.3.7 and Demantra 7.3.1.3 12.1.3.9 and Demantra 7.3.1.5 • Asset Intensive Planning • Material planning for complex maintenance • Asset material planning for equip maintenance • Maintenance detailed scheduling (critical path) • Long term maint forecasting tied to fleet fcst • Inventory Optimization • Warehouse capacity • Service Parts Planning • Sourcing priorities for inventory rebalancing • Service Planning Analytics (APCC) • Performance enh (archive plan) • Inventory Optimization • Category level service level targets • Unified planning and analytics • Extreme intermittency enh • In-Memory applications R2 • Front port of 12.1.3.9 • Front port of Dem 7.3.1.5 • Technology upgrades 2014 2012 2013 • Asset Intensive Planning • Aggregate work order support • Service Parts Planning • Reserve safety stock • Service Parts Planning (candidates) • Maximize repair vs. demand lateness tradeoff • Replenish before rebalancing • … and more 12.1.3.8 and Demantra 7.3.1.4 VCP 12.2.4

19. Case Study

20. Oracle Internal Implementation Deploying Value Chain Planning for Hardware Spares • Oracle Hardware Support Overview • Implementation footprint • Service Supply Planning Process • Benefits Achieved • Lessons Learned • Looking Forward

21. Oracle Systems Support Overview • 167 product lines • 17K unique spares • 376 spares Inventory Organizations • 2.6M item-org combinations • 285 physical warehouses • 4600 employees in Systems Support • $2.4B systems Support Revenue

22. Oracle Spares Warehouse Distribution T2 - 7 T3 - 76 Leipzig T1 Lockbourne T1 T2 - 83 T3 - 58 T2 - 17 T3 - 54 Miami T1 T2 - 11 T3 - 15 Singapore T1

23. Inventory Organization Structure

24. Oracle Spares Planning with VCP Right Part, Right Place, Right Time at the Right Cost • Disparate, local planning, procurement, stocking and repair processes • Disjointed view of inventory levels, purchasing activity and delivered level of service • Focus on Service as a profit center • Implement a single, global VCP solution • Single source of truth • Utilize intelligent forecasting, optimized stocking strategies to drive lowest cost of operations while increasing level of service • Business Challenges • Solution

25. Oracle Hardware Spares Supply ChainVCP Footprint Value Chain Planning Collections Items/BOMsSourcing Rules Purchase Orders Repair Orders Shipments Suppliers Customers Order Types Demand Class Organizations Inventory Locations Contracts Supersessions DemantraDemand Management Service Parts Planning Orders Buy Repair Transfer Inventory Optimization Advanced Planning Command Center E-Business Suite - Global Single Instance

26. Planning Calendar

27. Key Success Factors • Shared vision and cross-functional executive sponsorship • Invest in process governance • Define global, standard process • Align business process with application technology • Data validation & migration • Change management

28. Reverse Supply Chain Transformation Results • Spare parts inventory $800 million to $400 million • MAPE improved by 20% , BIAS down to single digits • Backorders reduced by 50% , Service level @ 90+% • Risk pooling used in Inventory Optimization • $20M reduction in spare parts safety stock • Improved collaboration across Support organization • Better decisions based on a single source of truth

29. Looking Forward • Differentiated Stocking Strategies • Rationalize placement of non-critical spares to maximize risk pooling • Focus on high value, critical spares close to point of use

31. Oracle Value Chain Summit Empowering the Modern Value Chain Explore How New Solutions Within Social, Mobile, Analytics & the Cloud are Helping Companies Transform Supply Chains into Modern Value Chains • February 3-5, 2014 – San Jose McEnery Convention Center • Hands-on workshops, solutions demonstrations & more than 200 sessions on topics in 6 complementary solution areas: Product Value Chain, Manufacturing, Enterprise Asset Management, Logistics, Planning & Procurement • Early bird registration opens soon – www.oracle.com/goto/VCS14