When you understand how and why global supply chain and commodity prices are changing you can take advantage of market turns. You can save on your spends by using market analysis, accurate forecast prices, and discussions with our category experts.

1. Information | Analytics | Expertise
© 2014 IHS / ALL RIGHTS RESERVED
IHS COST FORECASTING
Pricing and Purchasing Service Enables Excellence in Cost Estimation
APRIL 2017
Paul Wildes, Senior Account Executive
(415) 387-1310
San Francisco
paul.wildes@ihsmarkit.com

2. © 2014 IHS
IHS Industries
2
AEROSPACE & DEFENSE
100+ years’ experience
delivering unrivaled news,
insight and intelligence on
defense and security
equipment, markets,
industries and risk
CHEMICAL
Over 200 leading industry
authorities creating integrated
views and analysis across
more than 300 chemical
markets and 2,000 processes
for 95 industries
FINANCE
Research on 200+
countries and territories
with harmonized indicators
from IHS analysts and
economists
TECHNOLOGY
World’s largest
electronics component
database with more than
350 million parts
AUTOMOTIVE
The world’s largest team
of automotive analysts with
hundreds of experts located
in 15 key markets around
the world covering the entire
automotive value chain
ENERGY
Extensive Oil & Gas well
information on 5.5+ million
wells worldwide dating
back as far as 1860
MARITIME
World’s largest maritime
database with an information
gathering heritage of 250+
years with comprehensive
information on all vessels 100
GT and over

3. © 2014 IHS
WHO WE EMPLOY (CONT.)
© 2015 IHS 03
ABOUTIHS
1,200world-class experts
and researchers
1,400industry analysts
800software developers
140+
global offices
*Please note that these numbers do not include Polk

4. © 2014 IHS
Pricing & Purchasing Value Proposition
Value Proposition
• Estimate global project costs based on price and cost forecasts.
• Provide senior leadership actionable insights to quantify the impact on their business
Customer Pains Addressed
• Quantifying sources of cost change at commodity, assembly, and segment levels
• Understand how costs will change over the life of a project
• Understanding market drivers
Job Functions Supported
• Cost Estimation – widest range of cost benchmark forecasts available
• Cost Engineering – material inputs and wage costs quantified
• Market Intelligence – broad level of support for a range of needs
4

5. © 2014 IHS
IHS Value to Individuals and Teams
More time for analysis and decision making
Data Gathering, Aggregation
& Transformation
Analyze
Data Management
Response
ResourcesUsed
100%
0%
Window of Opportunity
Without IHS
With IHS
Data
Gathering
Comprehensive
Analysis &
Strategic Insight
Thoughtful
& Informed
Management
Decisions
ResourcesUsed
100%
0%
The
“right decision”
the first time
Time
Time

6. © 2014 IHS
Return on
Investment
 Drive Consistency
 Enable consistent, easy access
across your team
 Leverage consistent assumptions
 Gain Insight
 Future price changes
 Impact of raw material prices
 Maximize Resources
 Reduce time spent gathering data,
and increase value add
6

7. © 2014 IHS
Drive Consistency
“In the first year alone, we achieved
$60 million in cost savings in
materials procurement.”
~F500 Global Electronics Manufacturer

8. © 2014 IHS
8
Maximizing Value Across the Organization
From Tactical to Strategic Applications
Is our purchasing department
out-performing the industry?
How do we gauge our
performance?
Assess supplier quotes
and get the best price
Negotiation
Use the best fit index to
avoid under/over payment
on a contract
Contracting
Understand where long-term
costs are going to expand
operations strategically
Cost Estimation Benchmarking

9. © 2014 IHS
Extensive Coverage Across Industry and Geography
9
North America Europe Asia-Pacific Rest of World Total
Agricultural Modules: Grains, Sugar, Dairy, Oils, Livestock, Biofuels are available to add on to any of the P&P packages
Labor (250+ Wages) Labor (300+ Wages) Labor (200+ Wages) Labor (150+ Wages) TOTAL WAGES: 750+
Energy (150+ Prices) Energy (100 Prices) Energy (10+ Prices) Energy (30+ Prices) TOTAL ENERGY PRICES: 400+
Metals (300+ Prices) Metals ( 200+ Prices) Metals (200+ Prices) Metals (30+ Prices) TOTAL METAL PRICES: 800+
Chemicals (225+
Prices)
Chemicals (150+ Prices) Chemicals (115+
Prices)
Chemicals (5 Prices) TOTAL CHEMICAL PRICES:
500+
Building Materials
Capital Eq
Paper/Packaging
Logistics
Indirect Spend
Building Materials
Capital Eq
Paper/Packaging
Logistics
Indirect Spend
Building Materials
Capital Eq
Paper/Packaging
Logistics
Indirect Spend
Building Materials
Capital Eq
Paper/Packaging
Logistics
Indirect Spend
TOTAL OTHER PRICES: 1000+
GLOBAL COVERAGE: 3900+
Prices and Wages

10. © 2014 IHS
Gain Insight: Quantifying the Sources of Price Change
“We saved well over $80 million last year with the service. The
price escalation of input costs is now a key component of each of our
major supplier negotiations.”
~Major North American Retailer

11. © 2014 IHS
Maximize Resources
• Optimize talent, technology, and
spend
• Do more with existing talent
base
• Gain actionable market insight
• Transform supplier negotiations
• Optimize profit and minimize risk
• Turn market swings to your
advantage
• Achieve competitive advantage
“Because of your support we
were able to avoid a cost of
$520.6 million.”
~US Department of Defense

12. Why IHS?
12
PRESENTATION NAME / MONTH 2014

13. © 2014 IHS
Petrochemicals: Ethylene
13
0
10
20
30
40
50
60
70
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Actual Forecast
US Market Price for Ethylene
(cents/lb)
One-Year Forecast - from 2003 to 2013
Average Error (cents/lb) -0.34
Average Absolute Error (cents/lb) 3.59
Accuracy Rating 92%

14. © 2014 IHS
Steel: U.S. Coiled Steel Plate
14
0
200
400
600
800
1000
1200
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
Actual Forecast
Spot Price for Coiled Plate
($/ton)
One-Year Forecast - from 1995 to 2013
Average Error ($/ton) 16.56
Average Absolute Error ($/ton) 55.94
Accuracy Rating 91%

15. © 2014 IHS
Building Materials: U.S. Hydraulic Cement
15
100
120
140
160
180
200
220
1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
Actual Forecast
PPI - Hydraulic Cement
(June 1982=100)
One-Year Forecast - from 1995 to 2013
Average Error (Index Level) -0.06
Average Error (Percent Change) 0.02
Accuracy Rating 98%

16. © 2014 IHS
Wages: U.S. Professional Services
16
0
20
40
60
80
100
120
140
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Professional & Related Wages and Salaries
Actual Forecast
(2005Q4=100)
One-Year Forecast - from 2000 to 2013
Average Error (Index Level) -0.21
Average Error (Percent change) -0.2
Accuracy Rating 100%

17. © 2014 IHS
Non-Ferrous Metal: LME Aluminum
17
0
500
1,000
1,500
2,000
2,500
3,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Actual Forecast
Aluminum, LME Spot AM Close, Cash Price
($/metric ton)
One-Year Forecast - from 2002 to 2013
Average Error ($/metric ton) -35.93
Average Absolute Error ($/metric ton)133.73
Accuracy Rating 93%

18. © 2014 IHS
Price Forecasting Model Structure
Model highlights flows from the bottom up:
natural gas/oil → propylene → polypropylene;
scrap → hot rolled bars
Explains price movements by examining:
production costs — labor, materials,
equipment, energy — along with
supply/demand & market activity
Advantages: Model resembles production
process; framework to analyze price changes
Macroeconomic
Models
Components for
Construction
Components for
Durable
Manufacturing
Raw
Materials
Energy Models
Wages
Nonferrous
Metals
Ferrous
Metals
Machinery
and
Equipment
Consumer
Goods
Facility
Costs
Exogenous
Forecasts

19. © 2014 IHS
Forecast Methodology
Strong Markets
Weak Markets
Base Cost Path
Actual Price
Over time prices follow costs
Markets explain deviations

20. © 2014 IHS
Recognized by World-Class Leaders

21. © 2014 IHS
A Supplier to World-Class Procurement Organizations
• Clients to achieve well
over $1B in cost savings.
• Over 12,000+ active users
worldwide.
• 40+ years of proven pricing
experience and expertise.
• Objective 3rd party standard
for cost/price benchmarking.
• Pricing analysis and insight for
effective supply management.
• Access to 500,000+ historic prices,
4,000+ forecasts, costs, and wages.
• Powerful analytical tools embed IHS
insight into key processes.

22. © 2014 IHS
A Strategic Supplier for World-Class Procurement Organizations
22
• Enabling clients to achieve well over
$1B in cost savings.
• Over 12,000+ active users across 500+
worldwide clients.
• Over 40 years of proven pricing
experience and expertise.
• Objective 3rd party standard for
cost/price benchmarking.
• Pricing analysis and insight for effective
supply management.
• Providing 100,000+ historic prices and
4,000+ forecast prices, costs, and
wages.
• Powerful analytical tools embed IHS
insight into key processes.

23. © 2014 IHS
A Supplier to World-Class Procurement Organizations
• Clients to achieve well
over $1B in cost savings.
• Over 12,000+ active users
worldwide.
• 40+ years of proven pricing
experience and expertise.
• Objective 3rd party standard
for cost/price benchmarking.
• Pricing analysis and insight for
effective supply management.
• Access to 500,000+ historic prices,
4,000+ forecasts, costs, and wages.
• Powerful analytical tools embed IHS
insight into key processes.

24. “We saved over
$10 million in one
buy by heeding IHS
recommendations and
delaying a steel
purchase.”
~Global Oil and Gas Company
IHS Enables Clients to Make Better Decisions
IHS has enabled clients to reduce spend, optimize talent, minimize risk, and
achieve well over $1B in cost savings
“In the first year alone, we
achieved $60 million
in cost savings in materials
procurement.”
~F500 Global Electronics
Manufacturer
“We saved well over $80 million
last year with the service. The price
escalation of input costs is now a key
component of each of our major
supplier negotiations.”
~Major North American Retailer
“[b]ecause of your support, we were able to
calculate price adjustments on the multiyear
contracts that were significantly less than
those based on the improperly inflated aircraft
manufacturing index and we were able to
avoid a cost of $520.6 million.”
~US Department of Defense

25. © 2014 IHS
Case Study:
Timing When to Buy
Major Oil & Gas Company Saves $10
Million on Steel Buy
Challenge
A major oil and gas company was concerned about rapidly
rising steel prices and was considering locking in prices for
the following year given supplier suggestions that future
price hikes were imminent.
Solution
We advised the client not to enter into a contract with
locked-in prices based on our estimates that steel prices
would spike temporarily, then return to previous levels in
the near future.
Results
The client saved over US$10 million by heeding our
recommendations and delaying its purchase.
25
Cost Savings of $10 Million

26. © 2014 IHS
Case Study:
Contract Negotiations
Truck Manufacturer Saves over $2 Million
with Lower Escalator Rate
Challenge
A truck manufacturer needed help negotiating a long-term
supply contract valued at US$2.5 million.
Solution
We used the IHS Cost Analyzer to derive a 1.4%
escalation rate compared to the supplier’s 2.5% index.
When confronted with this more appropriate index, the
supplier conceded the lower rate.
Results
The client saved over US$2 million by identifying the right
series for its escalator clause.
26
Achieved $2M in cost savings

27. © 2014 IHS
Case Study:
Cost Benchmarking
Presentation Name / Month 2014
Major North American Retailer Relies on
IHS to Obtain Lower Prices from all
Suppliers
Challenge
In order to maintain their low-cost competitive advantage in the
market, a major consumer goods company demanded lower prices
from their suppliers. In order to do this, they needed a framework to
quantify prices, and track key input costs
Solution
IHS worked with the procurement team to construct forecasting “cost
recipes” for the production of every item purchased. This allowed the
company to build a weighted average of prices and wages according
to the “recipes” that they receive from their suppliers.
Results
Their entire procurement team relies on IHS to deliver near-term
forecasts for prices and their cost drivers. The price escalation of
input costs is now a key component of each of their major supplier
negotiation.
27
Achieve low-cost competitive advantage

28. [b]ecause of your support, we were able to
calculate price adjustments on the multiyear
contracts that were significantly less than those
based on the improperly inflated aircraft
manufacturing index and we were able to avoid a
cost of $520.6 million for DoD and taxpayers".
~Claude Kicklighter, Inspector General’s Office,
US Department of Defense
“
”

29. © 2014 IHS
Overhead & Maintenance
Utilities
Services
Fuels
Equipment
Spare Parts
Electronic Systems &
Equipment
Communications Equipment
Computer and Peripheral Equipment
Current Carrying Wiring Devices
Electrical Instrument Mechanisms
Electronic Wire
Plastic Resins
Printed Circuit Boards & Assemblies
Semiconductors
Capacitors
Resistors
Seats and Internal
Furnishings
Aluminium
Polyester
Cotton
Fibers
Raw Material Inputs
Labor Rates
Aluminum
Titanium
Precious Metals
Ferrous Metals
Rare Earths
Composite Materials
Pitch
ABS
Ethylene
Polycarbonate
Propylene
Rubber
Nylon
29
Aerospace & Defense
Intelligence across diverse spend categories
Engines and Engine
Equipment
Aircraft Engines and Engine Parts
Bolts, Nuts, Rivets and Washers
Fabricated Metal Products
Fluid Power Equipment
Forging and Stamping
Iron Foundries
Nonferrous Metal Foundries
Carbon and Graphite Products
Supplies
Tires
Rubber
Carbon Black
Nylon
Steel

30. © 2014 IHS
Labor & Overhead
Manufacturing wages & benefits
Professional wages & benefits
Productivity
Building Materials
Capital Equipment
MRO Parts & Services
Electricity
Diesel
Professional services
Trucking
Rail Transport
Air Transport
Shipping
Exchange Rates
Packaging
Corrugated shipping containers
Linerboard
Recycled folding boxboard
Unbleached kraft grocery sack
Bleached kraft board
Printing
Pallets and box pallets
Cartons
Plastic bottles
Metals
Aluminum
Copper
Rare Earths
Platinum
Palladium
Gold
Silver
Wire & Cable
Chemicals & Plastics
ABS
Adipic Acid
Benzene
BPA
Butadiene
Caprolactam
Caustic Soda
Chlorine
Paraxylene
Phenol
Polyacetal (Acetal Resin)
Polybutylene Terephthalate
Polycarbonate
Polyethylene
Polypropylene
Polystyrene
PVC
Terephthalic Acid
Toluene
*IHS adds new commodity coverage daily. Speak with an IHS representative if you there is a specific category you are interested, which is not on this list.
Electronics Manufacturer
Intelligence across Diverse Spend Categories

31. © 2014 IHS
Other
Labor, wages, benefits, productivity
Building materials
Electricity
Diesel
Professional services
Overhead
Transportation rates
Exchange Rates
Packaging
Corrugated shipping containers
Linerboard
Recycled folding boxboard
Unbleached kraft grocery sack
Bleached kraft board
Printing
Pallets and box pallets
Cartons
Plastic bottles
Metals
Aluminum
Copper
Cold-rolled sheet
Zinc
Chemicals & Plastics
Polyethylene
Polypropylene
Polystyrene
PET
Nylon 6, 66
Polyester fibers
Rubber – natural and synthetic
Agriculture
Sugar
Milk
Butter
Wheat
Corn
Soybean
Rice
Barley
Canola
Oil – corn, olive, palm, soybean,
Beef
Poultry
Pork
Coffee
Cocoa
*IHS adds new commodity coverage daily. Speak with an IHS representative if you there is a specific category you are interested, which is not on this list.
Consumer/Retail
Across Diverse Spend Categories