The IBM ILOG Strategic Network Planning Solution provides several key advantages over other solutions: - It is the only software solution that can optimize multiple objectives simultaneously. - It provides an all-in-one inventory planning and integration solution with continuous improvements through rapid ERP integration and automated workflows. - IBM has over 10 years of experience in routing optimization, providing better routes than other routing tools through its solution.

1. What Differentiates The IBM ILOG Strategic
Network Planning Solution
© 2011 IBM Corporation

2. IBM ILOG Supply Chain Solutions
Network
Only software solution with the unique ability
Optimization with to optimize multiple objectives simultaneously
Multiple Objectives
All-in-one Continuous improvements through rapid
inventory planning ERP integration and automated workflows
and integration
Better Route and 10+ years of routing optimization experience:
Backhaul Planning 5% better routes than other routing tools
Link to IBM’s complete suite includes TMS,
Supply Chain Visibility, WMS,
Execution Distributed Order Management, SPSS,
2 and Cognos © 2011 IBM Corporation

3. IBM Has a Complete Strategic Supply Chain Planning Suite
 IBM ILOG LogicNet Plus XE for
Network and sourcing optimization:
location of facilities, assignment of
stores, managing seasonality, and
carbon foot printing.
Value: 5-15% reduction in supply
chain costs, better service to stores
and for on-going multi-plant production
sourcing and capital investment
decisions; Enhanced S&OP
capability; 2-5% reduction in
ongoing manufacturing costs
 IBM ILOG Inventory and
 IBM ILOG Transportation
Product Flow Analyst for
Enterprise multi-echelon inventory Analyst for Transportation
optimization and strategic analysis: optimization: routing analysis,
integrated inventory planning within backhaul, mode selection, and fleet
your ERP system. sizing.
Value : 10-30% reduction in inventory Value: 10-30% decrease in trans costs
costs, better fill rates. And fo analysis
to determine strategic shifts in your
inventory policies and practices.
3 © 2011 IBM Corporation

4. How Leading Firms Get Value from Network Design
 Pepsi
– $6M reduction in inventory; 2% reduction in growth of transportation miles; increase in the return on invested capital
from 7.6% to 7.8%; and less out-of-stock leading to 12.8m cases available to be sold
 3M
– Speaking with IBM at SCOPE East (2011) about how they are organized to deploy network modeling capability
 MillerCoors
– Mention $750m in synergies from merger; spoke at CSCMP (2010) and about ½ synergies come from supply chain;
using modeling to make seasonal sourcing decisions
 The Home Depot
– Annual report (released in early 2010) mentioned progress towards significant supply chain transformation
 Fonterra (one of the world’s largest Dairies)
– Reduction in transportation costs (removing 4,000 trucks annually), removed 12 warehouses from network, analysis of
supply chain risk
 Whirlpool
– Used LogicNet Plus to help quickly manage the merger with Maytag; $40M savings per year from the logistics and
supply chain
 Walgreens
– Discussed importance of correctly locating highly automated warehouses
 Mars/Wrigley
– Spoke at CSCMP (2009), mentioned $10M savings in initial modeling alone, ability to test for results for impact on
carbon emissions and oil price risks
 Dow
– Spoke at LogicTools symposium (2008) and mentioned rapid modeling approach and connecting to capital expense
justification
– Recently won an award for reducing $5M in costs with the support of LogicNet Plus XE
4 © 2011 IBM Corporation

5. Complimentary Tools Have Complete Functionality Ensuring Credibility of
Your Results to Experts in these Areas
 IBM ILOG Inventory and Product Flow Analyst  IBM ILOG Transportation Analyst
 All-in-one strategic as well as tactical. You can  Routing problems are not trivial to solve well.
implement the inventory results ILOG has an optimization advantage that allows
– Web based interface to give access to us to solve these problems better
multiple inventory planners and provide true – Better routes and fleet sizing
integration – Backhauls and Continuous moves
– Built-in work flows, data maintenance, auto – Sophisticated mode selection
review – Multiple pick-ups and deliveries
– Different views for different users– Planners
 Allows for full range of features
have a home page and a 1-page view of the
– Detailed time windows and availability
results
calendars, Rest requirements, multiple
 Full set of inventory features and multiple capacity measures, etc.
optimization
 Links to Sterling TMS and uses the same
– Multi-echelon, buffer location, mix
optimization engine
5 optimization, and flow path © 2011 IBM Corporation

6. IBM Has a Full Offering of Analytics Solutions
ILOG ODME and CPLEX
6 6 © 2011 IBM Corporation

7. More Firms are taking Optimization Deeper into their Organizations
 A recent book discusses the value of optimization:
– “"One of [the book’s] most interesting arguments is that a great deal of
the effort spent on information gathering and analysis is wasted — or, at
least, used sub-optimally — when it’s used to feed business intelligence
systems that produce reports that ultimately wind up with being fed into
spreadsheets and PowerPoint slides. Managers then sit around in a
conference room listening to presentations and debating what the data
means and what decisions should be made about it — when, in many
cases, good software could make the decision itself."
– David F. Carr, Forbes
 The value of optimization is proven
– A U.S. Bank reduced its outstanding cash balance by $2B by optimizing
the replenishment of ATMs
– Netherlands Railway reduced cost by $30M USD and captured $57M
USD by using optimization to improve efficiency and improve customer
service
– Indeval, Mexico's Central Security Depository, clears $250B a day with
optimization, saving $240M in interest payments
– MillerCoors used optimization to help with their $750M in savings from
the merger of the two organizations
– Mars and Wrigley talked about the value of optimization and supply chain
modeling, savings $10M just in the initial modeling, and much more with
detailed modeling
7 © 2011 IBM Corporation

8. LogicNet Plus: Built to be Easy for Business Users to Get Results
 Clean Design
– Menu’s organized to facilitate understanding of the model
– Easy to build simple models and add complexity
– Easy to move scenarios between models
 Tight Integration with Excel and Access
– Import wizards that pull data from Excel or Access files
– Edit in Excel within the application
– Edit multiple scenarios at one time
– Easy to compare and merge forms from different scenarios
– Easy to get data back out to Excel and Access for analysis
 Robust Product with Helpful Feedback
– Backend SQL Server database
– Ability to run in multiple scenarios in parallel; Ability to run a single scenario on
multiple threads
– Robust Referential Integrity
– Advanced error messages with strong partial solution analysis
 Good Visualization
– Detailed mapping with the ability to add views
– Site sizing, site coloring, ability to shade map
– Quickly change between a number of graphical displays
 Links to Other Systems
– CZAR LITE, UPS
– PC*Miler
8 © 2011 IBM Corporation

9. Interface and Usability
Ribbon Control with Navigation Tree Expanded Access
Parent form Icons are now displayed within
Category Ribbons along the top of the
application. An Associated Navigation Tree
then shows in the bottom left hand corner
for quick access to all other related data
forms within.
NOTE: These can be moved around the
interface or hidden from view by users.
9 © 2011 IBM Corporation

10. Interface and Usability
Data Forms now in Tab Format
Data forms are now in tab format and align
themselves directly below the Ribbons.
Each form maybe be dragged to the right or
the left according to user preference.
NOTE: Forms maybe enlarged to a single
full screen view by clicking on the ‘Maximize
Button’ in the upper right hand corner.
10 © 2011 IBM Corporation

11. Interface and Usability
Data Forms now in Tab Format
Tabs may then be dragged and dropped
around the interface using the crossbar in
the middle to dock them according to user
preference.
NOTE: Users may also edit forms from
within other scenarios in this format while
the optimization runs for a previous
scenario.
11 © 2011 IBM Corporation

12. Interface and Usability
Lane Visualization
Lane Visualization now allows users to
create all allowable flows visually by
dragging and dropping icons representing
Site and Product Groupings around the
visualization screen and then connecting as
appropriate.
Note: Users may also edit these lanes below
in the heritage Lanes form in Table Format
below the visualization.
12 © 2011 IBM Corporation

13. In-depth functionality with Innovative Features
 Multi-time period for multi-year or seasonal
planning
 Unlimited network echelons with detailed
transportation modeling including min/max
volumes on lanes for groups of sites
 Unlimited BOM, including multiple recipes and
by-products  integrated Tableau® configurable reporting:
– Configure customized reports with simple drag
 Detailed sourcing rules for customers and and drop functionality
warehouse (single source, dual source, – Create and Save report setup for instant updated
grouped single sourcing, etc) display after each new ‘what if’ analysis
 Detailed process modeling including lot sizes,
overtime, yield, tooling, tanks, and production
moves
 Tax modeling and currency exchange rates
 Economies-of-scale modeling
 Carbon footprint modeling:
– Report on supply chain carbon emissions
– Set carbon emission constraints
– Set costs/credits for carbon trading
13 © 2011 IBM Corporation

14. What’s New in LNP XE 7.2?
Multi-Objective Optimization - Breakthrough in Network Modeling
Traditional Approach LogicNet Plus XE 7.2
• Solve only one objective at a time • Solve multiple objectives at once
• Approach better solutions only by • Examine entire trade-off curve and
trial and error see all possible solutions
14 © 2011 IBM Corporation

15. What’s New in LNP XE 7.2?
Multi-Objective Optimization - Breakthrough in Network Modeling
User-Defined Primary
Objective
Automatically create
trade-off curves and
explore the solutions
User-Defined
Secondary Objective
15
15 © 2011 IBM Corporation

16. What’s New in LNP XE 7.2?
Gain more insight and develop better business plans by
directly balancing critical objectives
Trade-off Examples:
– Total Cost vs. Service Level
– Service to Top Customers vs. Overall Service
– Variable Cost vs. Capital Investment
– Paid Freight Cost vs. Customer Pick-up Cost
– Internal Manufacturing Cost vs. 3rd Party spend
– Manufacturing Cost vs. Transportation Cost
– Parent Company Cost vs. Acquired Company Cost
16 © 2011 IBM Corporation

17. Output Data
 Output data can be analyzed and displayed in many different formats after
solutions are created….
Scenario Set 1 – Best 1, 2 and Regional DCs
Optimal 1 DC Optimal 2 DCs Regional DCs
Indianapolis, IN Rockford, MI (Current) Indianapolis,IN
Salt Lake City, UT Charlotte, NC
Salt Lake City, UT
Additional
5% Cost
Decrease
18 © 2010 IBM Corporation
17 © 2011 IBM Corporation

18. Output Data
 High level Summary Reports
18 © 2011 IBM Corporation

19. Output Data also provides unique features like the landed cost
visualization
Scenario Warehouse
Charlotte
Indianapolis
Salt Lake City
Wolverine Warehouse
Best 1 DC
Best 2 DCs
Regional DCs
19 © 2011 IBM Corporation

20. How does optimization work?
Targets
Limits Choices
Data
20 20
© 2011 IBM Corporation

21. Importance of a world-class optimization engine
 Strategic Supply Chain planning has huge implications for the organization.
 Decisions based on the optimization will impact profits, costs, customer service and more
 The business needs to trust the optimization engine produces results that are:
– Accurate
– Consistent
– Robust
– Scalable
– Optimal
 IBM ILOG CPLEX is the gold standard in optimization
– Used by over 50% of the world’s largest companies
– 1000s of Universities
– 1000s of application providers
21 © 2011 IBM Corporation

22. Modeling and Optimization
Upgrade to CPLEX 12.3 at the core of Optimization
CPLEX’s History of Performance Enhancement  Drivers:
– Improved
 CPLEX 7 (2000): 60% on “hard mixed integer problems” heuristics
– Improved cuts
 CPLEX 8 (2002): 40% overall, 70% on “difficult problems” – Reduced parallel
overhead
 CPLEX 9 (2003): 50% on “difficult customer models”
– General software
engineering
 CPLEX 10 (2006): 35% overall, 70% on “particularly difficult models”
 CPLEX 11 (2007): 15% under one minute, 3X on 1-60 minutes, 10X on one hour and up
 IBM ILOG CPLEX 12.0 (2009): 30% overall, 2X on 1000 seconds and up
 IBM ILOG CPLEX 12.2 (2010): 50% overall, 2.7X on 1000 seconds and up
 IBM ILOG CPLEX 12.3 (2011): 20% overall, 2X on 1000 seconds and up
IBM’s continuing commitment to performance leadership
22 © 2011 IBM Corporation

23. IBM ILOG is the only software vendor that provides a network optimization
solution and creates the industry leading mathematical engine
 Why is this an advantage to you?
– Direct development coordination: LogicNet Plus XE development team and ILOG
CPLEX development team work side-by-side within IBM
• LogicNet Plus XE always benefits from the latest & greatest version of CPLEX
• Work directly with CPLEX team to “tune” the engine to address supply chain network
problems
• Work directly with CPLEX team to increase scalability & performance
• Directly report any problems and ensure quick resolution
– Single vendor responsibility
• Any issues with optimization can be addressed directly by IBM and fall under IBM
service agreements
• Best and brightest minds in optimization directly available to you
• No finger pointing between application provider and mathematical engine provider
– Access to greater ILOG Optimization Solutions as needs may arise
• ILOG’s experience and depth in optimization is without peer in the industry
• As your organization faces additional business problems that optimization can
address, you have a trusted partner to work with
–
23 © 2011 IBM Corporation

24. IBM Continues to Invest in LogicNet Plus:
Plays a Critical Role in Smarter Commerce Initiative
 Major IBM Releases of LogicNet Plus XE
– LogicNet Plus XE 7.0 Released in June 2009
– LogicNet Plus XE 7.1 Released in June 2010
– LogicNet Plus XE 7.2 will ship on Dec 9, 2011
 The LogicNet Plus XE development philosophy remains the same
– Continue to improve the speed and increase model size
– Add additional modeling capabilities
– Continue to invest and leverage new technology to make the too easier to use
• Ensure that people can build simple models without having to touch advanced modeling
capabilities
 LNP XE works on either 32 or 64 bit machines
 LNP XE continues to leverage CPLEX engine
 LNP XE allows parallel optimization runs and multiple threads
 R&D continues to improve memory consumption for model footprint and reporting
 LNP XE 5.0 to 6.0
– Significant jump in the run times--- 3 hour models down to 45 minutes
– Significant improvement in memory footprint– allowing you to solve models not solved before
 LNP XE 7.0 and 7.1
– Another increase in run time– 30 minute models in 5 minutes, 2 hours models in 1 hours, etc
24 © 2011 IBM Corporation

25. We also provide services within our team. Our Services expertise is a key
component of our overall supply chain solutions offering
Supply Chain Planning & Optimization Solutions
Technology Services
 Expertise
– Leader in supply chain strategic planning with a focus on how to maximize leverage from client’s
assets (both capital and inventory)
– Unparalleled experience across various industries – CPG, Chemical, Retail, Hi-Tech, Pharma,
Government, Automotive
– Over 100 large projects in last 3 years – all around the world
 Experienced Consultant base
– 100% of our consultants have a Master’s degree or above
– Strong industry / logistics background
– In-depth knowledge of ILOG technology suite, with core focus on supply chain planning problems
– Provide subject-matter expertise to other consulting firms on their engagements
 Time to Value
– Our consultants’ experience and knowledge enables us to deliver quick time-to-value
– Enable client teams on software and help build modeling expertise
25 © 2011 IBM Corporation

26. Value of IBM to Your Business
 Ability to address business problems
– Used by hundreds of companies in every industry
– Provide solutions that can be validated by experts in different areas
– Provides all-in-one strategic and tactical inventory solution for implementation
 Ability to achieve return on investment
– Well documented high ROI’s for numerous customers
 User acceptance
– Highly satisfied customer base
– Monthly user group events regularly attended by 75-100 users
 Low risk
– Quality
• IBM employs the highest standards of support for all software products.
• IBM has high standards for preventing un-authorized code (reducing your risks)
– Support
• 24 hour local support throughout the world. Experienced professionals to answer your questions
with defined service agreements and performance tracking.
– Company stability
• Publicly traded company celebrating 100 th anniversary
 Vendor long-term relationship
– IBM can support your business in numerous ways in addition to network design. Within our group we
offer additional supply chain planning applications as well as optimization solutions tailored
specifically to your business. In addition, IBM is a world leader in commerce solutions, analytics
solutions, and solutions for IT. Finally, IBM’s deep, diverse, and experienced professional services
resources can support your team to drive business results.
26 © 2011 IBM Corporation