The presentation given by Philippe Lambotte, Senior Vice President of Global Supply Chain Operations at Mattel, at the Supply Chain Insights Global Summit in Scottsdale, AZ on September 10, 2014 Managing the Iron Triangle The supply chain leader manages the intersection of customer service, cost and inventory. Philippe Lambotte terms this the Iron Triangle. Listen to Philippe as he discusses the performance of Kraft, Merck, and now Mattel on the Supply Chain Index and shares his insights.

1. Philippe Lambotte
Mattel
9/15/2014 Supply Chain Insights Global Summit #ImagineSC September 2014, p.1

2. Agenda
 Our message
 Triangle Definition
 Consumer Goods example – Kraft
 Pharmaceuticals example - Merck
 Fashion/Toy example – Mattel
 Putting it all together
9/15/2014 Supply Chain Insights Global Summit #ImagineSC September 2014, p.2

3. Supply Chain excellence – it is all about customers
9/15/2014 Supply Chain Insights Global Summit #ImagineSC September 2014, p.3

4. Iron Triangle
Revenue
Service
On Time In Full
Ensure products get to
store at lowest landed
cost
Cost Cash
Leverage supply chain
capabilities to drive
margin and top line
revenue
Optimize required
investments in working
capital
9/15/2014 Supply Chain Insights Global Summit #ImagineSC September 2014, p.4

5. Example Consumer Goods industry
Service
Prod_All
POS WM
Cs_Shipmts WM
Cs_Shipmts All
• Short cycle time
2
• High promotional ratio
• Regional/local supply chain
• Focus on shelf execution
250,000
200,000
150,000
100,000
50,000
-
210000187100 7.25Z MAC & CHS 35
200740
200741
200742
200743
200744
200745
200746
200747
200748
200749
200750
200751
200752
200801
200802
200803
200804
200805
200806
200807
200808
200809
200810
200811
200812
200813
200814
200815
200816
200817
200818
200819
200820
200821
200822
200823
200824
200825
200826
200827
200828
200829
200830
200831
200832
200833
200834
200835
3 week+ reaction
time
9/15/2014 Supply Chain Insights Global Summit #ImagineSC September 2014, p.5

6. Example Pharmaceutical industry
Revenue
• Patent cycle/peak and cliff
• High compliance management
• High and complex technologies
• 6 months - 3 year long supply
chains
Finished Goods
Inventory coverage
73.0
30.0
Days
Drugs Food
-58%
Service level %
97.5 98.0
Drugs Food
9/15/2014 Supply Chain Insights Global Summit #ImagineSC September 2014, p.6
Source: Industry Census of Manufacturers, 2001

7. Example Fashion/Toy industry
2500
2000
1500
1000
500
0
Manufacturing production phasing
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Inventory
• Huge Seasonality (Big 6)
• Placing bets
• Immediate write off after season
• 1-3 month long supply chains
9/15/2014 Supply Chain Insights Global Summit #ImagineSC September 2014, p.7

8. Putting it all together
 Need to understand which corner of the iron
triangle is most critical for your business
 Educate your organization to understand trade
offs and be deliberate about them
 Keep two corners stable while driving the third
one
 Don’t wait for crisis to happen
9/15/2014 Supply Chain Insights Global Summit #ImagineSC September 2014, p.8