This document summarizes SP Richards' presentation on category rationalization best practices and recommendations for a customer. It discusses analyzing customer data and segmenting products to minimize cannibalization. SP Richards' recommendations would consolidate some SKUs while adding others, aiming to increase sales 5.4% through upselling and new items. This is projected to improve margins through a better list price to cost spread and demand migration to higher price points with similar specs. An impact calculator is provided to quantify the overall financial benefits.

1. SP Richards SP Richards 2012 Category Rationalization Review Presented To: David Tapia Kimberly DuMont

3. Current Market Dynamics

4. Category Rationalization “Best Practices”

5. HSM’s Approach to “Best Practices” Methodology & Approach

6. The Process

7. Customer Analytics

8. Category Segmentation Product Class & Sub Class

9. Quantifying The Impact

10. Customer Analytics Review

11. Product Class & Sub Class Review & Recommendations

12. Overall Impact Summary

13. Marketing & Catalog Management

15. SP Richards Current Market Dynamics Higher Quality Higher Capacity Recycling Solutions HSM can provide solutions that will unlock the entire market potential

17. Meet Consumer Demand- Solution must be able to continue to meet consumer demand accross all segements of product.

18. Minimize Canabilization – Rationalization should be constructed in such a way as to avoid canbilization.

19. On Going Product Availability- Chosen suppliers should be able to have a demostrated ability to provide on going availabity to all products.

20. Inventory Reduction- Process should incorporate a demonstrated way through which inventory savings can be realized through both sku reduction & migration of certain slow moving items to a virual drop ship enviroment.

21. Market Share & Profitability Gains- Program should be constructed in such a ways to provide demonstrated uplift to both market share and net profitabilty.Source Data: “Best Practices in Sku Rationalization” Aldata Corporation

23. Meet Consumer Demand- A comprehensive product offering covering all product catergory segements.

24. Minimize Canabilization – Provenrationalization methodology inclusive of product calssifications and sub classes designed to segement product in a meanigful way to avoid caniablization.

25. On Going Product Availability- Signficant manufacturing depth and expertise with fully verticaly intergrated manfacturing within 3 owned plants in Germany and 2 JV manufacting plants in China.

26. Inventory Reduction- Comprehesive Virtual Warehouse drop ship program through which additional market share gains can be realized with zero inventory investment.

28. SP Richards Category Rationalization Quantifying Impact Up Sell Opportunities “Migrating Demand” New Item Adds “Incremental Sales” Inventory Impact The Formula Measure used: Total category increase or decrease Calculation: Starting number of sku’s - Ending number of sku’s____ Net Impact in % Overall impact can be calculated by the customer using the supplied calculator. The Formula Measure used: list price compare Calculation: List price of up sell item - List price of deleted item Net Impact in % to sales Sales & margin can be calculated by the customer using the supplied calculator. The Formula Measure used: % of item to total HSM Sales Calculation: % to total sales X customers total sales =___ Net Impact to sales in % Sales & margin be calculated by the customer using the supplied calculator.

29. SP Richards Category Rationalization Customer Analytics – Performance by Sku Vs Market = Key area of opportunity

30. SP Richards Category Rationalization Customer Analytics – Performance of Recommended Items

31. SP Richards Category Rationalization Product Class & Sub Class Creation (to be replaced with buying guide page)

32. SP Richards Category Rationalization Recommendations Personal Desk side Product Class

46. SP Richards Thank you!