MULTI-ECHELON INVENTORY OPTIMIZATION AND PLANNINGCRITICAL BUSINESS CHALLENGESOrganizations managing complex global supply chains struggleto maintain and improve business performance. This is trueacross automotive, manufacturing, aerospace, governmentsectors, retail, CPG, food service, healthcare, pharmaceutical,and high-tech industries. It’s hard enough to execute to a plan– let alone optimize it.Key challenges are holding back organizations as they takeon digital initiatives. Current legacy systems cannot keepup with the ‘Now’ paradigm: Just-in-time, eCommerce, andreal-time responsiveness and collaboration. In a complex anddecentralized supply chain with a large number of productsand raw and intermediate materials, carrying incorrectinventory levels at the wrong place and at the wrong timewithin your four walls and across a multi-echelon network ofpartners can cause serious performance problems.In this hyper-competitive environment, the inability to meettarget service levels can have serious impacts. This can occurbecause of out-of-stocks, fill-rate problems, and inventoryshortages throughout the supply chain, and damaging effectscan include: Loss of revenue and even market-shareLower customer satisfaction and loyaltyDelays in productionHigher labor and logistics expediting costs to preventproduction line downtimeBecause of shorter and shorter product shelf life, inventorysurplus will increase waste, risk of obsolescence, and costs,while decreasing product quality and profitability. Forexample: Risk of obsolescence can turn into significant loss inmanufacturing and aerospace Freshness in grocery retail and food service is key towinning higher margin transactionsSolving these problems is possible and requires a scalablesolution that can: Identify and maintain desired service levels with optimalinventory levels and investments Continuously balance supply and demand across theentire supply chain network in order to respond tocustomer needsKEY OPERATIONAL BENEFITS: Inventory optimization for multi-item, multi-echelonacross the entire real-time business network Clear visibility of network-wide and site inventorycosts and fill rates per item What-if scenarios and simulations to help form thebest decisions Recommendations for optimal stocking levels giventarget service levels and a broad set of constraints Intelligent agent NEO to manage autonomousdemand propagation and replenishment to fulfill theoptimized plans Synchronized execution across the end-to-end supplychain networkKEY FINANCIAL BENEFITS Reduce network-wide inventory by 20% to 40% Improve service levels to over 95% with otherservices such as autonomous replenishment andintegrated order and transportation execution. Increase revenue due to reduced stockouts Reduce waste by 20% to 40% with better inventorymobilization Reduce expedited cost by 30% to 50% Reduced overall planning cycle time and effort by50% Propagate demand in real-time across the many tiersof suppliers, in both the internal and external supplynetwork (including logistics service providers) Resolve exceptions as they occur, and in more difficultcases, enable effective decisions with recommendationsand relevant informationThe underlying cause of these problems is the inability toperform inventory planning and scenario analysis acrossthe entire supply chain. Where current ERP solutions fallshort, the One Network solution excels: It can performMulti-Echelon Inventory Optimization (MEIO) and Planningwith single version of the truth (SVOT) for the entire valuenetwork. This method of aligning inventory in near realtime across multiple tiers offers enormous benefits to manyindustries.MULTI-ECHELON INVENTORY OPTIMIZATION AND PLANNING ONE NETWORK ENTERPRISES WWW.ONENETWORK.COM2

MULTI-ECHELON INVENTORY OPTIMIZATION AND PLANNINGMULTI-ECHELON INVENTORYOPTIMIZATION (MEIO) AND PLANNING IN AREAL-TIME NETWORK ENVIRONMENTMulti Echelon Inventory Optimization and Planningoptimizes the inventory costs, subject to configured targetfill rates (desired service levels), enterprise-wide constraints(budgets), site constraints (capacity), and item constraints(critical items). The highly scalable solution runs for multiplesites and multiple items concurrently in order to balance theneeds across the entire network.There are several key elements of the platform thatmaximize the utility and benefits of Multi-Echelon InventoryOptimization and Planning: The One Network platform enables the ability to modelthe end-to-end value chain (i.e. from retail outlets,dealerships, restaurants, hospitals, or military locations toDCs all the way to n-tier suppliers) as a single ecosystem.This provides the real-time, single version of the truth forall network participants. One Network’s extensive supplychain network modules simultaneously and continuouslyplan and execute demand, supply, and logistics relatedoperations. One Network’s Intelligent Autonomous Agents, calledNEO, are continuously monitoring the network for anychanges. Once changes are detected, NEO autonomouslypropagates applicable changes both upstream anddownstream to balance the demand-supply equation. One Network Enterprises. All rights reserved. One Network’s Multi-Enterprise Master DataManagement (MDM) enables partners in the supplychain network to reconcile master data efficientlyand accurately in order to manage information aboutcustomers, products, raw and intermediate materials,suppliers, locations, and other entities. Network-widepartners need to connect once only to the sharednetwork solution.In this real-time multi-party network, the solutionautonomously determines the optimal inventory settings fordifferent order policies: Stocking level and reorder quantity for dynamic policies Reorder point, reorder quantity, and order up to limit forthe static policies such as min/max, Kanban, and static ROPThe solution builds a network of all items and all sites. Thescope of the network can best be illustrated in an example. Inthe diagram above, there are three tiers of locations that areinternal to the user. In addition, there is a Lower External Tierand an Upper External Tier. The Lower External Tier is definedas the locations that are external to the user but generatedemand on locations in an Internal Tier. The Upper ExternalTier is made up of locations that are external to the user, butfulfill demand from (send supply to) locations in an InternalTier.3

MULTI-ECHELON INVENTORY OPTIMIZATION AND PLANNINGHOW THE ONE NETWORK SOLUTIONOPTIMIZES INVENTORYThe solution optimizes inventory across the network by: Choosing a dynamic or static inventory policy for eachinventory location reflecting the actual inventory policy Calculating optimal inventory managementparameters (service levels and replenishment settings)simultaneously across multiple tiers in a supply networksuch that the total inventory cost of supply chain isminimized. NEO considers all appropriate and availabledata, including: Lead times and variabilityDemand historySupply historyForecast historyEnterprise-wide constraints (budgets), site constraints(capacity), and item constraints (critical items, shelflife, parts substitution)The solution supports multiple supply and demandsources per location. The solution optimizes inventoryparameters for particular inventory location withoutchanging settings across the whole supply chain. Eachinventory location could be configured to be enabledor disabled for this process. The lead times take intoaccount information from both direct and indirectupstream suppliers.The output is a set of recommended settings for everyinventory location according to required order policy: The desired fill rate for the network as well as theminimum, desired, and maximum fill rate for each nodein the network Units and cost of stock levels for internal and for theentire network Min, Max, reorder point, reorder quantity settingsIn addition, the solution provides detailed information aboutdata statistics and search iterations and enables users toapply recommended settings to the inventory policy. Acrossindustries, companies are seeing the benefits and achievingdramatic results for supply chain optimization at enormousscale.Automotive and ManufacturingThe One Network platform boosts supply chain performancewith the sharing of applications and data on one commonnetwork. The “Network Effect” allows the entire supply chainto be viewed, managed and optimized as one unified systemas opposed to many small systems. The effect is particularlyacute in the automotive and manufacturing industriesbecause of the massive numbers of parties involved in thecollective group of OEMs, Tier-1s to Tier-N suppliers, logisticsproviders, and contract providers.A critical element is inventory and the factors that form thedecisions on the stocking levels. Without a good way tooptimize inventory and service levels, organizations risk losingcontrol of their inventory. These operational challengesexacerbate the situation: Many markets are cyclical in nature and experiencevolatility in demand Cyclical fluctuation in supply base capacity Frequent demand changes Frequent part revisions Supply variability Master data, item mapping, and transaction cleannessand availability Limited forecasting accuracy together with extendedforecasting cycle time along the chain Many siloed ERP systems and the resulting limits invisibility and information access across businessesTo counter the “bull whip” effects that get amplified alongtheir complex supply networks, manufacturers are leveragingOne Network and its inventory optimization and planning tohelp overcome these chronic challenges. For the aftermarketparts business for a tier-1 manufacturer, for example, thesolution first explodes the bill-of-materials (BOM) in ademand translation process, then it optimizes across fourtiers to: Enhance integrated materials planning withnetwork-wide inventory planning, in addition toimproved forecasting, demand translation, advancedreplenishment, and last-minute allocation (LMA) Resolve small problems with continuous inventoryplanning before they become large problems elsewhere Satisfy the intraday delivery paradigm for many JITprocesses with high (95% ) service levelsMULTI-ECHELON INVENTORY OPTIMIZATION AND PLANNING ONE NETWORK ENTERPRISES WWW.ONENETWORK.COM4

MULTI-ECHELON INVENTORY OPTIMIZATION AND PLANNINGCPG and RetailConsumer durables and non-durables manufacturers areembarking upon advanced vendor-managed inventory(VMI) initiatives to serve customers and retailers better. Forexample, a toy manufacturer is leveraging the solutions tofine-tune the optimal quantities of toys at the stores, balancefactors such as customer service levels, and better control theamount of toys offered at bargain prices (which could erodebrand value).Another example comes from a consumer electronicsmanufacturer of very short product lifecycle products,targeting young adults and their fast-changing tastes.With product lives measured in months and weeks, themanufacturer is leveraging the multi-party network to go asdeep into the tiers of suppliers as possible (up to 4th tier) inorder to plan and collaborate on forecast, order, capacity, andmulti-echelon inventory.In the past, such organizations had to hand-pick productsand perform analysis based on their consumption velocityand margins, in order to assign a Product Class (i.e. A, B, C).They then went through an exercise of classifying productsinto these buckets for stocking and order policies. Now,in determining the inventory carrying strategies, they can One Network Enterprises. All rights reserved.carry out such optimization simultaneously for all productswith consideration of costs, margins, budgets and spaceconstraints. The optimization of the much-constrained supplygives organizations new opportunities to further reducesupply costs and improve revenue and cash flow.PROVEN SOLUTIONS AND RECOGNIZEDLEADERSHIP FROM ONE NETWORKENTERPRISESTo enhance the customer-driven business network, OneNetwork’s Multi-Echelon Inventory Optimization andPlanning is a critical element in improving supply chainnetwork performance, responsiveness, resiliency, andfinancial health.Industry analysts have praised One Network’s innovativevision for supply chain visibility, collaboration, andautomation. In 2018, Gartner recognized One NetworkEnterprises as a Leader in its “Magic Quadrant forMultienterprise Supply Chain Business Networks” report. Thecompany was also ranked highest for the fourth consecutiveyear as a Leader in Nucleus Research’s “Control TowerTechnology Value Matrix for 2019.”5

MULTI-ECHELON INVENTORY OPTIMIZATION AND PLANNINGABOUT ONE NETWORKOne Network is the intelligent business platform for autonomous supply chain management. Powered by NEO, One Network’smachine learning and intelligent agent technology, this multi-party digital platform delivers rapid results at a fraction ofthe cost of legacy solutions. The platform includes modular, adaptable industry solutions for multi-party business thathelp companies lower costs, improve service levels and run more efficiently, with less waste. This SaaS and aPaaS platformenables leading global organizations to achieve dramatic supply chain network benefits and efficiencies across theirecosystem of business partners. One Network offers developer tools that allow organizations to design, build and runmulti-party applications. Leading global organizations have joined One Network, helping to transform industries like Retail,Food Service, Consumer Goods, Automotive, Healthcare, Public Sector, Defense and Logistics. To date, more than 75,000companies have joined One Network’s Real Time Value Network (RTVN ). Headquartered in Dallas, One Network also hasoffices in Japan, Europe, and India. For more information, please visit Network EuropeOne Network India Pvt LtdUS Corporate HeadquartersPO Box 59383London NW8 1HH, UK4055 Valley View Ln, Suite 1000Dallas, TX 75244 44 (0) 203 28 66 901 [email protected] Centre III, Survey No. 169/1,Second Floor, South Wing, Sector 2Aundh, Pune 411007, Maharashtra, India 1 866 302 1936 (toll free) 1 972 385 8630 [email protected] www.onenetwork.comOne Network Australia/Asia-Pacific 61 401 990 435 [email protected] 91 20 49111800 [email protected] Network Japan [email protected] INVENTORY OPTIMIZATION AND PLANNING ONE NETWORK ENTERPRISES WWW.ONENETWORK.COM6

MULTI-ECHELON INVENTORY OPTIMIZATION (MEIO) AND PLANNING IN A REAL-TIME NETWORK ENVIRONMENT Multi Echelon Inventory Optimization and Planning optimizes the inventory costs, subject to configured target fill rates (desired service levels), enterprise-wide constraints (budgets), site constraints (capacity), and item constraints (critical items).