Gain insight into the drivers of profitability across your enterprise. Understand how Acorn's profitability and cost management software easily allocates costs to specific products and customers. This software is compatible with all mobile browsers. This slide deck is part of a recorded Senturus webinar, "Business Solutions: Profitability Analysis.” To view the free recording of this entire presentation and download the slide deck, visit www.senturus.com Senturus, a business analytics consulting firm, has a resource library with hundreds of free recorded webinars, trainings, demos and unbiased product reviews. Take a look and share them with your colleagues and friends: http://www.senturus.com/resources/.

1. Senturus Business Intelligence Demystified Series
BUSINESS SOLUTIONS:
Profitability Analysis
20 – 40% of your products and customers are losing you money.
Do you know which ones?
Acorn Systems, Inc.

2. This slide deck is part of a recorded webinar.
To view the FREE recording of this entire
presentation and download the slide deck, go to
www.senturus.com/recorded-webinars.php
You will find this—and many other recorded webinars-- under the “IBM Cognos Office
of Finance Solutions: TM1, EP, Controller, FSR”
Acorn Systems, Inc.

3. Agenda
 Introductions and Senturus Overview
 Net Profitability -- Driven by Cost to Serve (CTS)
 Acorn’s Transactional CTS Analysis and Solution Functionality
 Converting CTS Insight into Value
 Delivering Insight to Users
 Modeling Performance
 Client Success
 Acorn Overview
 Q&A
Acorn Systems, Inc. 3

4. Steven Rasch Greg Herrera
VP PROFESSIONAL SERVICES CHIEF EXECUTIVE OFFICER
ACORN SYSTEMS SENTURUS
Acorn Systems, Inc.

5. Who is Senturus?
 Consulting firm specializing in Corporate Performance Management
− Business Intelligence
− Office of Finance
• Enterprise planning & budgeting
• Consolidate, close, report and file (CCRF)
− San Francisco Business Times Hall of Fame -- Four consecutive years in
Fast 100 list of fastest-growing private companies in the Bay Area
 Experience
− 12-year focus on performance management
− More than 1,200 projects for 500+ clients
 People
− Business depth combined with technical expertise. Former CFOs, CIOs,
Controllers, Directors...
− DBAs with MBAs
Acorn Systems, Inc. 5

6. A few of Senturus’ 500+ Clients
Acorn Systems, Inc.

7. Net Profitability
Driven by Cost to Serve
Acorn Systems, Inc.

8. 20-40% of your Customers or Products Lose you Money
20% of your business generates 20% of your business loses most
200% of your profits of the extra 100% of potential
profits
OPERATING PROFIT PROFILE
UNREALIZED PROFIT POTENTIAL
Source: “Time-Driven Activity-Based Costing:
A Simpler and More Powerful Path to Higher Profits”
Kaplan & Anderson and Acorn Systems clients
Acorn Systems, Inc. 8

9. Actionable P&Ls ––Quick Analysis & Resolution
Actionable P&Ls Quick Analysis & Resolution
Acorn Systems, Inc. 9

10. Category Profitability
GROSS MARGIN VS. NET PROFIT BY MAJOR PRODUCT LINES
60%
50%
40%
PERCENT
30% Gross Margin
20% Net Profit
10%
0%
-10%
Acorn Systems, Inc. 10

11. Importance of Accurate Net Profitability Driven by Cost to Serve
 Net profit is the metric that defines success for an organization
 Provides support for business decisions in line with a company’s
strategic initiatives
 Takes into account all services that companies are providing to
customers or incurring because of relationships with customers,
vendors and products
 Provides insight into services that different customers value and are
willing to pay for
 Supports detailed analyses of decisions previously made and their
impact on the business
Acorn Systems, Inc. 11

12. This slide deck is part of a recorded webinar.
To view the FREE recording of this entire
presentation and download the slide deck, go to
www.senturus.com/recorded-webinars.php
You will find this—and many other recorded webinars-- under the “IBM Cognos Office
of Finance Solutions: TM1, EP, Controller, FSR”
Acorn Systems, Inc. 12

13. Objectives of Cost to Serve Engagements
 Provide visibility of profitability and cost to an organization’s approach with customers.
 Give more quantitative and robust support to negotiation, supply chain efficiencies, pricing, rebate
bracket discussions and broader strategic and operational initiatives.
Selling ORGANIZATIONAL ALIGNMENT
Costs
AND ACCOUNTABILITY
ACCOUNT, CHANNEL, Understand
Discounts
CONSUMER DIMENSION Profit
Understand
COGS
Sales Cost
COST TO SERVE
C3- Understanding
Value
CTS
Added
C2 - C1 –
Warehouse Supply
& Transport Chain
PRODUCT, BRAND, CATEGORY DIMENSION
GEOGRAPHIC DIMENSION
Acorn Systems, Inc. 13

14. Price Waterfall with Cost to Serve
A. SELLING COSTS AND DISCOUNTS
SELLING COSTS
COST-TO-SERVE
DISCOUNTS (REBATES) ELEMENTS
B. COST OF GOODS SOLD
VARIABLE
COSTS
C. COST-TO-SERVE
FIXED
COSTS COST-TO-SERVE
W&T
COST-TO-SERVE
ORDERS & CASH COLLECTION
‘VALUE-ADDED’
COST-TO-SERVE
BASE PRICE NET SALES GROSS MARGIN OPERATING PROFIT
Acorn Systems, Inc. 14

15. Acorn’s Transactional
Cost-to-Serve Analysis
Acorn Systems, Inc.

16. Transaction Level Cost Assignment
Sales
Warehouse Sales DIMENSIONAL HIERARCHY
Customer Supply Fee
Sales Reductions
Total Sales
COGS Marketing
COGS Manager
Market G/L – Other
Market G/L – Slotting
Market G/L – PA/FB
Market G/L – Private Label
Market G/L – Post Audit
Market G/L – Volume Incentive Customer
LIFO Expense Vendor Product Line
Total COGS Bill To
Gross Profit
Indirect Expense
Account Managers
Customer Service Customer
Finance DC SKU
Ship To
IT
Marketing
Merchandising – Expense
Merchandising – Income
Safety/Security
Transportation – Expense
Transportation – Income Invoice DC SKU
WACC
Warehouse – Inbound
Warehouse – Other
Warehouse – Outbound
Warehouse – Storage
Total Indirect Expense
Net Profit Line Item
Non-Transportation Services (net)
Direct (Net)
Total Net Profit
Acorn Systems, Inc. 16

17. Solution Functionality
BUSINESS
RESOURCE POOLS PROCESSES DIMENSIONS OPERATIONAL P&LS
• Customer Services • Picking • Customers
• Customers
• Sales • Packaging • Orders
• Product
• Warehouse • Receiving • Products
• Vendors
• Stocking • Vendors
GL Accounts
DECISION MAKERS
TRANSACTIONS
• Customer Service
OR PROCESS
DRIVERS • Finance
• Information Tech
• Sales & Marketing
• Transportation
Dynamic Assignment of Costs
If((caseWgt < 35,.25* NumCases, 1 * NumCases) +
(Location == ‘Lawn&Garden’, 5, 0))
EPS ENGINE
Acorn Systems, Inc. 17

18. Assigning Cost Based on Utilization of Resources
Business Process Name: Picking: West
PROCESS MAP
RESOURCE DEPARTMENT PROCESS COST BUSINESS
POOLS DRIVERS DRIVERS DIMENSIONS
Salaries, Bonuses, Headcount PICKING WEST Drive based on Qty, Cube_ Line Item
Benefits, Forklift & Volume, Weight,
Equipment, Utilities, Storage_Location and
Rent, Insurance, Pick_Type
Security, Storage
ACTIVITY DETAIL:
DESCRIPTION: Each pallet on the order takes 5 minutes to pick, 5 minutes are added for “bulky” products (over 15 cube volume)
and for heavy products (over 60lbs). 10 minutes are added for products stored on the second tier of warehouse
storage. 10 minutes are added for orders which require individual case picks instead of full pallet picks.
EQUATION: 5 * Qty/Pallet_Qty + if(Cube_Volumne > 15, 5, 0) + if(Weight > 60, 5, 0) + if(Right(Storage_Location,1) == “2”,10, 0)
+ if(Pick_Type == “Case”, 10, 0)
COST DRIVER
Qty, Pallet_Qty, Cube_Volume, Weight, Storage_Location, Pick_Type Picking: West
1 2 3 4 5
NO NO NO NO NO
Case Pallet Heavy Bulk 2nd Stop
Pick? Pick? Product? Product? Tier?
YES YES YES YES YES
1 min 5 min
per pallet 5 min 5 min 10 min
per case
Acorn Performance Group, Inc.
Systems, Inc. 18

19. Cost to Serve Analysis Across All Business Dimensions
CORPORATE STATEMENT CUSTOMER CATEGORY
Scenario: January 03 CUSTOMER
CUSTOMER ORDER
ORDER LINE ITEM
VENDOR
VENDOR PRODUCT
PRODUCT CATEGORY
PRODUCT
SALES REPRESENTATIVE
Acorn Systems, Inc. 19

20. Converting CTS Insight into Value
for the Business
Acorn Systems, Inc.

21. 20-40% of your Customers or Products Lose you Money
20% of your business generates 20% of your business loses most
200% of your profits of the extra 100% of potential
profits
OPERATING PROFIT PROFILE
UNREALIZED PROFIT POTENTIAL
Source: “Time-Driven Activity-Based Costing:
A Simpler and More Powerful Path to Higher Profits”
Kaplan & Anderson and Acorn Systems clients
Acorn Systems, Inc. 21

22. This slide deck is part of a recorded webinar.
To view the FREE recording of this entire
presentation and download the slide deck, go to
www.senturus.com/recorded-webinars.php
You will find this—and many other recorded webinars-- under the “IBM Cognos Office
of Finance Solutions: TM1, EP, Controller, FSR”
Acorn Systems, Inc. 22

23. Value Opportunities Informed by Cost to Serve
• Optimize Selling Prices
PRICING &
• Rationalize Discounting
DISCOUNTING
• Align Net Prices To Volume SAMPLE BUSINESS CASE
COMMODITY PRODUCT
• Rationalize SKUs MANUFACTURER
PRODUCT
• De-cost Low Margin Products
PORTFOLIO
• Refocus Sales Force
• Optimize Distribution Points Sales 1,000.0 1,030.0 3%
SUPPLY
• Increase Utilization Rates Cost of Goods 900.0 880.0 (2%)
NETWORK
• Outsource Non-Strategic Functions
Gross Margin 100.0 150.0 50%
Operating Expense 80.0 60.0 (25%)
• Streamline Service
SERVICE Operating Income 20.0 90.0 350%
• Simplify Organization Structure
MODEL
• Eliminate Low-value Activities
CUSTOMER • Reduce Complexity
SEGMENTS • Align Costs to Segment Value
Net Price Optimization Complexity Reduction Expense Rationalization Resource Utilization
Acorn Systems, Inc. 23

24. Identifying Poor Performers
5,000,000
ACME PRODUCTS
4,000,000
3,000,000
645 Customers
$20M Revenue
Revenue
$4.7M Operating
REVENUE
Loss FAVORITE BRANDS
2,000,000
1,000,000
LAGGARD INDUSTRIES
-
(700,000) (500,000) (300,000) (100,000) 100,000 300,000 500,000
(1,000,000)
NET PROFIT
Net Profit
Acorn Systems, Inc.

25. Identifying Market Basket Opportunities
Product BZH
Product AXY
REVENUE
Product DEF
OPERATING INCOME
25
Acorn Systems, Inc.

26. Identifying Pricing Opportunities
Product XYZ
REVENUE
Product ABC
OPERATING INCOME
Acorn Systems, Inc. 26

27. Internal Process Benchmarking
TOTAL COST PER UNIT BY DC TOTAL COST PER UNIT BY DC
Acorn Systems, Inc. 27

28. Vendor Negotiations
ITEM PROFITABILITY BY VENDOR - ITEMS WITH WAREHOUSE SALES > $3,000
VENDOR 1
REVENUE
PRIVATE LABEL
VENDOR 2
VENDOR 3
VENDOR 4
SAMPLE DATA
-20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0%
Net Profit
Acorn Systems, Inc. 28

29. SKU Optimization
CATEGORY 4
ITEM B PREMDLX KIT
AG-10G $1,800,000
$1,600,000
$1,400,000
ITEM A
A BOW RO T I
$1,200,000
REVENUE
$1,000,000
$800,000
HGN-PURP BETTA PALS MARINA
ITEM D
$600,000
ITEM C
$400,000
Item C
AGA-48"x18"D OK CAB STND
$200,000
$0
(500,000) (400,000) (300,000) (200,000) (100,000) 0 100,000 200,000
NET PROFIT
Acorn Systems, Inc. 29

30. Delivering Insight to Users
Acorn Systems, Inc.

31. Integration With Salesforce ®
“Salesforce has created democracy
around the flow of information
throughout the organization”
Chief Information Officer
Results from Acorn can be directly integrated
with CRM tools to present Net Profit and Cost to
Serve results to the sales team
Real change happens at the operational level
Acorn Systems, Inc. 31

32. Client Success Leveraging Salesforce ®
 Leveraging Salesforce to provide Acorn results to sales, operations,
and management
− Dynamically identifies customers and products for analysis and review
each month
− Benchmarking facilities against one another to identify differences in
product handling using results of cost to serve model
− Used to aid sales reps to identify areas to negotiate price, adjust market
basket by client to provide more profitability, drive sales volume increases
− Provides a resource to assign tasks to sales reps and tracking progress
 Migrating quoting process to Salesforce and aligning cost elements
from cost to serve model to provide backbone to pricing and quoting
Acorn Systems, Inc. 32

33. Modeling Performance
Acorn Systems, Inc.

34. This slide deck is part of a recorded webinar.
To view the FREE recording of this entire
presentation and download the slide deck, go to
www.senturus.com/recorded-webinars.php
You will find this—and many other recorded webinars-- under the “IBM Cognos Office
of Finance Solutions: TM1, EP, Controller, FSR”
Acorn Systems, Inc. 34

35. Example Data for Cost-to-Serve Analysis
SAMPLE DISTRIBUTOR GENERAL LEDGER PRODUCT MASTER
Account Number Product ID
Account Description Product Name
Amount Product Category
Type Vendor ID
Category Units Per Box
Boxes Per Case
Cases Per Pallet
Special Handling Codes
Stock Location
PURCHASE ORDER
VENDOR MASTER DISTRIBUTION CENTER ORDER HEADER CUSTOMER MASTER Inventory Turns
HEADER
Period Beginning
Vendor ID PO ID DC ID Order ID Customer ID Inventory
Vendor Name PO Name DC Name Order Name Customer Name Period Ending Balance
Payment Terms PO Amount DC Type Order Amount Customer Category Length
Vendor Type PO Date PO Date Width
Number EDI POs Ship To Ship To Height
Number Fax POs Vendor ID Store ID Weight
PO Errors Freight Charge DC ID
Complexity Factor Freight Charge
EDI Capable Pick Zone
PURCHASE ORDER
DETAIL ORDER DETAIL
Product ID Product ID
Product Name Product Name
Quantity Shipped Quantity Shipped
Cost Cost
Unit of Measure Unit of Measure
PO ID PO ID
Quantity Ordered Quantity Ordered
Acorn Systems, Inc.

36. Actual Client Performance Statistics
Business GL Process Model Calc Time
Client Industry Resource Pools Processes BD Instances DB Size Servers
Dimensions Accounts Drivers Time Periods
Financial Services 6 100 250-500 8 M customer accounts 4 hours 36 6 TB
50 K Contracts, 10 K
Utility 8 4,620 225 235 140 10 minutes 95 2 servers
Customers
Manufacturing 9 2458 259 218 4.5 hours 3 servers
160 M transactions, 80 M 1-3 hours for 2 servers, 8
Logistics 12 280,000 20,607 1208 600 25 7.2 TB
packages all 5 models total cores
9 M transactions, 2 M 2 servers, 8
Logistics 16 80,000 7,373 75 300 5 hours 25 2 TB
shipments total cores
3.5 M Line Items; 2.5 M
Distribution 13 1500+ 200+ Customer SKU; 150,000 < 12 hours 24
SKU's; 75,000 customers
100 per store * 64 per store - 158 M 'aggregates' based on
16 servers, 64
Retail 8 1,500 stores = 1,500 stores = 300 200+M transactions; 250,000 < 24 hours 24 65 TB
total cores
150,000 96,000 SKU's; 1,500 stores
Retail 10 115 26 21 85 2.5 M DC Level Transactions 1.5 Hours 24 2 servers
1.5 M Store Level
Retail 14 405 138 47 105 1 Hour 24 2 servers
Transactions
1.4 M Customer Level
Retail 6 173,489 43,905 1386 619 2 hours 36 2 Servers
Transactions
6000 Suppliers, 600,000
Distribution 7 9000 150 200+ 200-300 2 hours 36 1 TB 2 Servers
Products, 350,000 Customers
7.0 M Line Items, 3.4 M
2 servers, 3
Distribution 12 12,220 2,436 175 544 Orders, 90 K SKUs, 50K 4 hours 27
total cores
Customers Ship-To
1 m Line Items, 7 M work
Manufacturing 13 2495 259 220 247 4 Hours 48 3 Servers
orders
Acorn Systems, Inc. 36

37. Customer Success
Acorn Systems, Inc.

38. Industry Success in Profit Improvement
Distribution Industry Solutions
 Global 2000 Distributor • Activity-Based Costing
 Product Profitability: Pinpoint Unprofitable SKUs • Branch or Organizational Profitability
 Profit Improvement: $10M annually • Channel Profitability
• COGS Standard vs. Actual Product Cost
Manufacturing • Cost-to-Serve Analysis
• Customer Profitability
 Chemical Manufacturer
• Customer Segment Profitability
 Operational Improvement: Optimize Logistics Process
• Fact-based Contract Negotiations
 Profit Improvement: $15M annually
• IT/Shared Services Costing and Chargeback
• Line of Business Profitability
Financial Services • Market Basket Analysis
 Fortune 500 Financial Services Company • Menu Based / Product and Service Pricing
 Customer Profitability: Identify True Cost • Operational Efficiency (process changes,
 Profit Improvement: Over $600M annually benchmarking, and capacity utilization)
• Pricing
• Product/Service/Channel Operational Decisions
Retail • Product Profitability
 Major Retail Grocer • Product Unit Costing
 Supply Chain Profitability: Simulate Operational Scenarios • SKU Rationalization
 Profit Improvement: $10M annually • Sourcing/ Merchandising Decisions (import/export,
category management)
• Supplier Profitability
Consumer Products
• Supply Chain Costing and Profitability
 Multinational Consumer Products Company
 Product Profitability: Analyze Net SKU Profitability
 Profit Improvement: Over $1M annually
Acorn Systems, Inc. 38

39. About Acorn
Acorn Systems, Inc.

40. Profitability. Cost Management. Optimization. It’s All We Do.
Acorn provides the complete solution to maximize business profitability.
Methodology Advanced Consulting Targeted
Technology Services Solutions
We develop pragmatic We then instantiate Acorn’s professional Our targeted
methodologies for the theory and services teams applications focus
dealing with very methodologies into ensure that your on a specific industry
complex, data intensity advanced, implementation will be and/or business
issues, and bring comprehensive successful. Acorn initiative, and include
clarity and focus to the technology. provides services that enhanced analytic,
management decision- fit your defined simulation, and/or user
making process. requirements through- interface capabilities.
out the project
lifecycle and beyond.
Acorn Systems, Inc. 40

41. Focus on Value
We strive to deliver value to our clients through cost and
profitability performance measurement and improvement.
Maximize Increase Decrease
Profit Operational Costs
How We Accomplish Our Goals: Efficiency
 Unique Approach Leverage a unique approach to cost and profitability performance
measurement that combines a unique methodology with a packaged software solution
 Accurate Information Provide our clients with accurate cost and profitability data that validates to
their financial and business transaction systems at the lowest levels of detail
 Efficient Engagements Save our clients time and money by delivering information faster and with
fewer resources than traditional approaches require
 Sustainable Solution Establishing a solution that the client can leverage on an on-going basis to
generate detailed cost and profitability information to measure success and
drive continuous improvement efforts
 Value Identification Work with our clients to analyze the information generated to identify the value
and quantify the benefits that can be realized
 Value Capture Work with our clients to devise the strategy and execution plan for capturing the
value that has been identified
Acorn Systems, Inc.

42. Acorn Systems’ Clients
FINANCIAL SERVICES
RETAIL &
CONSUMER PRODUCTS
WHOLESALE,
DISTRIBUTION & LOGISTICS
MANUFACTURING &
OTHER INDUSTRIES
Acorn Systems, Inc.

43. Key Takeaways
 Net profit provides more value and insight to business performance
than gross profit
 Cost to Serve analysis delivers comprehensive, accurate, and
actionable net profit details
 Acorn’s capabilities provide a flexible, scalable, and automated solution
to generate granular cost to serve based net profit results across all
relevant business dimensions
 Putting Acorn results in the hands of decision makers allows them to
make decisions that can be transformative for a business and to
measure success over time
Acorn Systems, Inc. 43

44. This slide deck is part of a recorded webinar.
To view the FREE recording of this entire
presentation and download the slide deck, go to
www.senturus.com/recorded-webinars.php
You will find this—and many other recorded webinars-- under the “IBM Cognos Office
of Finance Solutions: TM1, EP, Controller, FSR”
Acorn Systems, Inc. 44

45. Next Steps: Contact Us
STEVEN RASCH
VP PROFESSIONAL SERVICES
ACORN SYSTEMS
800.982.2676
srasch@acornsys.com
For more information: www.acornsys.com
www.senturus.com
GREG HERRERA
CHIEF EXECUTIVE OFFICER
SENTURUS
888.601.6010
gherrera@senturus.com
Acorn Systems, Inc.

46. Contact Senturus
Senturus, Inc
www.senturus.com
sales@senturus.com
888-601-6010
Acorn Systems, Inc.

47. Acorn Systems, Inc.
47 47