HMM Opportunities at CM & JL

Jun 2018
 Agenda

1. Summary & Recommendations (Freight / Price Tiers)

2. Price Tier Opportunities
3. Freight Opportunities
o LTL Reduction
o Load Optimization
o Intermodal Conversion/Compliance
4. Questions
Summary & Recommendation
Chanhassen(CM) Joplin(JL)
Price Tier Opportunity Price Tier Opportunity

$ 42,795 $ 41,154

Freight Opportunity Freight Opportunity

LTL Reduction $10,879 LTL Reduction $30,879
Truck Load Optimization $101,649 Truck Load Optimization $23,124
Intermodal Conversion/Compliance $7,230 Intermodal Conversion/Compliance $174,056

$ 119,758 $ 228,059
 Price Tier Opportunity
Chanhassen(CM) Joplin(JL)
2022800000 (SOUR CREAM DRY - 50#) 2808140000(CHEDDAR CHEESE FLAVOR #50 50 LB BAG)
Annual Usage : 17,473 lbs
Annual Usage : #### lbs
Current Tier : 1 (5000 lbs) Recommended Tier : 2 (10,000 lbs) Current Tier : 1 (500 lbs) Recommended Tier : 3 (3500 lbs)
Approx. Dollar Savings: $ 9760
Approx. Dollar Savings: $ 4607

2887550000(NATURAL TWO COLOR BLEND 2 50 LB BG) 2264710000(BUTTER FLAVOR #112 NAT ART 35 LB PAIL)
Annual Usage : #### lbs Annual Usage : #### lbs
Current Tier : 1 (10,000 lbs) Recommended Tier : 2 (20,000 lbs) Current Tier : 1 (175 lbs) Recommended Tier : 2 (525 lbs)
Approx. Dollar Savings: $ 11,585 Approx. Dollar Savings: $ 36,507

3761161102 (FS PB ZT BKD SS BISC 2 OZ PS LABEL)

Annual Usage : 1,044,294 EA

Current Tier : 1 (102,000 EA) Recommended Tier : 2 (306,000 EA)

Approx. Dollar Savings: $ 21,449

 Freight Opportunity- LTL Reduction
Chanhassen(CM) Joplin(JL)
• Opportunity on 7 lanes with 7 materials on those lanes • Opportunity on 3 lane with 4 materials on those lanes
• Potential reduction of 3 % in LTL shipments • Potential reduction of 20 % in LTL Shipments
• Approx. $ Savings: $ 10,879 • Approx. $ Saving : $ 30,879

Material Material Description Current Settings Recommended Settings Material Material Description Current Settings Recommended Settings
2120160000 Planning Calendar : T-H Planning Calendar : THU Planning Calendar : M-F Planning Calendar : THU
WHOLE EGG DRIED FREE FLOWING 50 LB CASE 2159050000 VITAL WHEAT GLUTEN 50 LB BAG/Noni Cheese
Lot Size: Z3 Lot Size: Z4 Lot Size: ZK Lot Size: Z4
2028170000
Planning Calendar : M-F Planning Calendar : WED Planning Calendar : WED
EMULSIFIER PREMIX - 50 # BAG 2755170000 SALT PRETZEL #1 50 LB BAG Lot Size: EX
Lot Size: Z4 Lot Size: Z4 Lot Size: Z4
2191160000 HOOVER 2B SHORTENING SOY/PALM COLOR Planning Calendar : THU
Planning Calendar : M-F Planning Calendar : MON 2559610000 Lot Size: EX
STARCH MOD CORN 50 LB BG 50LB Lot Size: Z4
Lot Size: Z4 Lot Size: Z4
Planning Calendar : M-H Planning Calendar : WED
2393540000 Planning Calendar : M-F Planning Calendar : MON
2115090010 POTASSIUM SORBATE GRAN 55 LB BAG ALGN
OG CINNAMON 50 LB Lot Size: ZK Lot Size: Z4
Lot Size: Z4 Lot Size: Z4
2662210000 Planning Calendar : M-F Planning Calendar : WED
SEA SALT REFINED 50 LB BAG
Lot Size: Z4 Lot Size: Z4
2033020000 Planning Calendar : - Planning Calendar : WED
SODIUM BICARBONATE #2 50 LB BAG
Lot Size: ZV Lot Size: Z4
2040120030 Planning Calendar : M-F Planning Calendar : MON
OG SUNFL OIL HIGH OLEIC 2019 LB TOTE
Lot Size: Z4 Lot Size: Z4
 Freight Opportunity- Truck Load Optimization
Chanhassen(CM) Joplin(JL)
• Opportunity on 5 lanes with 11 materials on those lanes • Opportunity on 3 lanes with 3 materials on those lanes
• Potential reduction of 90 shipments through truckload • Potential reduction of 16 shipments through truckload
optimization optimization
• Recommendation: Open up the horizon to club approx. 8 • Recommendation: Open up the horizon to club approx. 7
weeks of usage weeks of usage
• Approx. $ Savings: $ 101,649 • Approx. $ Savings: $ 101,649

Current Utilization Future Utilization Improvement in Truck Current Utilization of Future Utilization of Improvement in Truck
Material Material Description Savings Material Material Description Savings
of Truck of Truck load Optimization Truck Truck load Optimization
2120010000 ALBUMEN 50 LB CASE EGG WHITES 29% 57% 29% $ 29,214 DATEM/PANODAN 50 LB
2037900000 51% 87% 36% $ 1,509
2120020000 EGG WHT DRD WITH WHIPPING AID 50 LB CASE 31% 63% 31% $ 24,612 CASE
2887530000 FLVR BITS BLUEBERRY SUGAR BLND 2 50LB BG 60% 90% 30% $ 5,874 BUTTER FLAVOR NATURAL
2144440010 63% 81% 19% $ 12,015
2887550000 NATURAL TWO COLOR BLEND 2 50 LB BG 28% 56% 28% $ 675 TYPE 2500 LB TOTE
2218910000 CINNAMON DROPS #2 50 LB CASE 42% 83% 42% $ 6,770 SHORTENING FLAKE
2248950000 SEMISWEET CHOCOLATE CHUNKS 8X5X5MM 45LB 64% 95% 32% $ 5,416 2605660000 50% 77% 27% $ 9,600
SOY/BETA CARO 50LB CASE
2256620000 NATURAL SEMISWEET CHOCOLATE CHIPS 50LB 27% 55% 27% $ 4,723
2782680000 WHITE CONFECTIONERY CHUNK #9 45LB CASE 26% 52% 26% $ 4,723
2241730000 PALM OIL FLAKES #2 50 LB CONTAINER 23% 45% 23% $ 3,760
2505520000 SHORTENING PALM HIGH OLEIC CANOLA 50LB 68% 96% 27% $ 7,048
2240960000 SHORTENING PALM CANOLA WITH TBHQ 50 LB 47% 93% 47% $ 8,834
 Freight Opportunity- Intermodal Conversion/
Compliance
Chanhassen(CM) Joplin(JL)

• Opportunity on 2 lanes for mode conversion • Opportunity on 4 lanes for mode conversion
• Recommendation: Change the transportation mode from • Recommendation: Change the transportation mode from
40 (FTL) to 60 (Intermodal) 40 (FTL) to 60 (Intermodal)
• Approx. $ Savings: $ 7,230 • Approx. $ Savings: $ 174,056

Vendor Code Vendor Name GS Miles Current Mode Recommended Mode Savings Vendor Vendor Name Goods supplier Miles Current Mode Recommended Mode $Saving
44625 BUNGE FOODS OILS 513646 1236 40 60 $ 468 192623 CW ZUMBIEL CO 509777 640 40 60 1061.9
44780 WILBUR CHOCOLATE CO INC 508947 1105 40 60 $ 6,762
43580 LODERS CROKLAAN 501879 540 40 60 792.64
43580 LODERS CROKLAAN 514920 545 40 60 76787.55
44625 BUNGE FOODS OILS 503275 544 40 60 95414.7
Opportunity on order run size at CM :
Maple Butter Flavor(2887510000)
Opportunity
• $90M opportunity in moving Maple butter flavor to MTS
• McCormick to increase order run from 2500lbs to 5000lbs
• Savings through price tiers approx. $4.4/lb
• Reduction in the lead time from current 32 days to 7 days

Potential Risk
• 4-5 months of inventory (Approx. 6500 lbs)in the inbound network for Maple Butter Flavor
• Risk of formula change at new pricing tier : $55M

Progress till date

• McCormick aligned to move this material on MTS once the agreement is signed

Further Steps

• Category lead will be meeting with the buyer early next week to get an alignment on the MTS agreement
Thank you