PLANNING FORECASTING & PROCESS OPTIMISATION. Caleb Nicolson General Manager Group Supply Chain

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1 PLANNING FORECASTING & PROCESS OPTIMISATION Planning for Future Growth: Scaling the Growth Mountain at Kathmandu Caleb Nicolson General Manager Group Supply Chain

2 Agenda Kathmandu introduction The challenge of growth for our Supply Chain Our Microsoft AX Decision and Project What does it mean for our Supply Chain capability? Online and our approach to omni-channel

3 Kathmandu Travel and Adventure Brand Kathmandu is a leading specialist in quality clothing and equipment for travel and adventure. Our aim to inspire adventure in everyone We are serious about our product design and quality Head Office is in Christchurch, with a sister office in Melbourne.

4 Kathmandu has a strong history of growth SALES (NZ$m) FY10 FY11 FY12 FY13 FY14

5 Agenda Kathmandu introduction The challenge of growth for our Supply Chain Our Microsoft AX Decision and Project What does it mean for our Supply Chain capability? Online and our approach to omni-channel

6 The supply chain challenge - ~ 75% growth in 5 years 69 new stores Store Assortments and Traiting New channels - online and market places Increased range, throughput and stock holdings Distribution Centre capacity and capability Increased services levels Talent

7 Developing our supply network to match demands Network Model: National Distribution Centre supported by 3PL Designed and built new Distribution Centre in Christchurch, New Zealand Expanded Australia National DC by 60% Implemented 3PL s in NZ, AU and UK Increased supply chain activity at origin Designed and building our new Distribution Centre in Melbourne, Australia

8 Managing Inventory across our retail network was an increasingly difficult challenge

9 What did our Supply Chain need to deliver? Business Strategy Growth Strategies New Store Rollout Optimise Existing Network Online & Digital Enhance Product Offering Summit Club Loyalty ANZ promotional model Vertical operating model UK / International Expansion Supply Chain Strategic Response Build a responsive supply chain with high service levels Balance Lean vs Agile principals. Optimise our retail network Build our systems, process and people capability to deliver best in class in an omni-channel environment Regionally, our capabilities need to match the business position and maturity stage. Build capability to support an expanding global business Develop our people Reduce total cost of supply chain Source to Shelf, in particular deliver value to our retail network

10 Agenda Kathmandu introduction The challenge of growth for our Supply Chain Our Microsoft AX Decision and Project What does it mean for our Supply Chain capability? Online and our approach to omni-channel

11 The business challenge Increasing requirements for real time information, improved customer information and experiences, Social media, loyalty, in-store technology and.. Was: Kathmandu Systems and Interfaces 2013 Team / functional siloes by technology Limited stability and scalability Current partners were not big enough or vertical retail capable Platform will not support achieving Kathmandu s business strategy of growth, entering new markets and improving customer experience

12 The decision - Microsoft AX An end to end solution A commitment to the retail vertical A roadmap for the future The ability to work with leading partners Scalability Fit our business Affordability

13 Our approach to this programme of work Our AX project was delivered in 3 phases over 2 years; 1. CRM, PIM, Just Enough (Assortment and Purchase Planning) 2. Point of Sale 3. Financials, Inventory, Warehousing, Just Enough (allocations and replenishment) Large programme of work; Lead by internal Project Management Office in IT All functions with largely dedicated SME s High quality partners critical; Sable, Blue Horseshoe, Just Enough Final phase Live in Oct interfaces to 9 interfaces

14 Kathmandu won an award at Microsoft s Annual conference in the USA 2015 Visionary Award. Designed to recognize customers who have achieved new levels of excellence with their Microsoft technology Great acknowledgement of our achievement for the team

15 Agenda Kathmandu introduction The challenge of growth for our Supply Chain Our Microsoft AX Decision and Project What does it mean for our Supply Chain capability? Online and our approach to omni-channel

16 Our investment in the AX programme has delivered a Supply Chain System Transformation Core Supply Chain Systems DC PLANNER Assortment & Item Planning AP / IT Range Planning Stock / Financial Planning Purchase Planning LIMA Supplier Portal PO mgmt with vendors Shipment mgmt with freight forwarders Demand Planning Allocations Replenishment DC PLANNER IN AX Releases orders to the DC Warehousing Receipt Store Despatch POS Sell Price CRM / Summit Purchase orders Purchase orders Sales & Stock / Replen demand Push Demand Total Demands / Todays work Demand / ASN Receipt Demand ASN Receipt

17 Just Enough in Kathmandu Merchandise Financial Planning Assortment & Space Planning Allocation Demand Forecasting Inventory Planning Replenishment Profiling Price & Markdown Planning Promotion Management

18 Managing Inventory across our retail network with Just Enough Just Enough has transformed the way we manage inventory by store WAS "Top 100" 25% of GM$ (Approx 400 SKU) "80/20 - Excl Top 100" ~50% of GM$ (Approx 1,800 SKU, Excludes Top 100) "Non 80/20" ~25% of GM$ (Remainder of CURRENT range approx 2,900 SKU) NOW "Top "Top "Top "Top 100" "Top 100" 100" 25% of GM$ "Top 100" 25% of GM$ 100" 25% of (Approx GM$ 400 SKU) 100" 25% of (Approx GM$ 400 SKU) 25% of (Approx GM$ 400 "80/20 SKU) 25% of(approx GM$ 400 "80/20 SKU) (Approx 400 SKU) 400 "80/20 SKU) "80/20 - Excl Top 100" "80/20- Excl Top 100" - Excl Top ~50% 100" of GM$ "80/20 - Excl Top ~50% 100" of GM$ - Excl Top ~50% 100" (Approx of GM$ 1,800 SKU, Excludes ~50% (Approx of GM$ 1,800 Top SKU, 100) Excludes - Excl ~50% Top (Approx 100" of GM$ 1,800 Top SKU, 100) Excludes (Approx 1,800 Top SKU, 100) Excludes (Approx ~50% 1,800 of GM$ SKU, Top 100) Excludes "Non 80/20" (Approx 1,800 SKU, Top Excludes 100) "Non Top 100) 80/20" "Non 80/20" ~25% of GM$ "Non 80/20" ~25% of GM$ "Non(Remainder 80/20" ~25% of CURRENT GM$ range approx 2,900 (Remainder ~25% of CURRENT GM$ SKU) range approx 2,900 "Non (Remainder ~25% 80/20" of of GM$ CURRENT SKU) range approx 2,900 (Remainder of CURRENT SKU) range approx 2,900 (Remainder ~25% of CURRENT of GM$ range SKU) approx 2,900 (Remainder of CURRENT range SKU) approx 2,900 SKU) - Country centric management - Product performance managed across market - Excel Decision Support Tool - Demand generated by ERP engine overnight - One view of demand across business - Presentation stock planned and executed consistently - Classifications and policies drive our system outputs - Product and Store performance managed daily - Best in Class Allocations & Replenishment System

19 Agenda Kathmandu introduction The challenge of growth for our Supply Chain Our Microsoft AX Decision and Project What does it mean for our Supply Chain capability? Online and our approach to omni-channel

20 Our view of Omni channel - a seamless experience for the customer across multiple channels key elements include; Multiple shopping avenues, i.e.. mobile, web, store, customer service centre Convenience of product availability, and delivery to store or home Consistency of service level whether in store or online Generally consistent pricing, with some capability for online only/store specials A consistent Brand experience, i.e.. tone and manner, look and feel of the Brand

21 What does this mean for our Supply Chain?

22 Closing Comments Kathmandu has completed a significant IT investment programme Positioned to support growth strategies Positioned to deliver efficiencies Exciting place to be!

23 Thank you Questions Section Divider

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