Jerry Holbus 0:00:13.4: 

Well, it's late in the afternoon, so this will be a cozy group today, but nonetheless we've got a lot of good information to share. Today we're going to be talking about the, essentially, trade policy and tariffs, and the impact that we're seeing today. Probably nobody would disagree with me when I say something like that trade policy has shifted rather dramatically over the past year, and tariffs, and by extension, extended or broad-based supply shocks have resulted in being key drivers of increased costs, most certainly increased complexity. One more thing that's important, they've resulted in increased opportunity for - basically, increased opportunity. So with that, we'd like to start today's session with a survey. If we can put that up. We don't need to shine the QR code in this particular one, but I just wanted to get a show of hands as to what strategy are you implementing to mitigate tariffs today? Maybe you could just… There it is.  

 

Jerry Holbus 0:01:35.3: 

Are you addressing it with a wait-and-see perspective? Passing the costs on to customers? Do you have a tariff strategy already in place? If we could have a show of hands for the first one. Wait and see, do nothing? Okay. Passing costs to customers? You have a tariff strategy in place? Okay, one, so somebody responded with the QR code. Okay, thanks for that. The second question, if you can put that up. What tools are you using to keep abreast of tariffs? Spreadsheets? Manual analysis? Anaplan? You're not using any tools today? Who's using spreadsheets? Anybody using Anaplan for this? You are. Okay, excellent. Do you mind saying what company you're with? 

 

Audience 0:02:33.4: 

Nokia. 

 

Jerry Holbus 0:02:34.1: 

Nokia. Okay, got it. Of course, do nothing would be one representative. Right? Today's session focuses on how to understand the impact, and more importantly, how to model and mitigate tariffs in Anaplan. The idea is pretty simple, how to take something that's incredibly complex because we know the tariff codes themselves, it's a 1000-page document. Just reading through it is incredibly complex. Also if you look at your bill of materials structure, that's really where the hidden cost of tariffs is. That's also very complex. The core idea is really simple. What we want to do is transform something that is incredibly complex into a competitive advantage. Thinking about tariffs as something special, as a basis for competition. We'll explain what we mean by that in just a few slides. We're going to walk through a smarter approach to navigating tariffs, and a smarter approach doesn't necessarily mean that we're doing more things, it's more effort, or we're adding more people to solving or attempting to minimize tariff spend. What we're doing is really applying a practical, dependable, and repeatable approach to tariff mitigation.  

 

Jerry Holbus 0:03:52.0: 

If we think about minimizing cost, that's one thing and that's really the benchmark for doing other things. We think there's a real opportunity lying in capturing market share using that increased flexibility that will be applied to our margins, and ultimately drive a stronger customer value. The thinking that we would like to change and the questions that should be in your mind after this presentation isn't just how do we deal with this complexity and how do we survive tariffs, but how do we outperform, considering that we're dealing with tariffs? Our speakers today, our experts in tariff impact modeling - go back to the speakers' slide - Kearney's Global Connected Planning Lead, David Wheeler. Also from Kearney is going to be Will Shore, Consultant, and expert in tariff impact modeling. Peter Upapong, from Anaplan's Business Value Services, will speak today to discuss the financial impact and what you can do with that increased margin flexibility in tariffs.  

 

Jerry Holbus 0:04:58.0: 

I'm Jerry Holbus, I'm part of Anaplan's global product and technology organization. Prior to joining Anaplan about a year ago, I spent 35 years in implementing, marketing, selling, and designing supply chain solutions, and for the past 10 years in product management. While I was Chief Product Officer, VP of Product Management, I would easily spend a third of my time thinking about what's around the corner? What is that single solution or product or even product category that would yield the terrific value proposition to customers and prospects? The product that you're going to see today fits that description perfectly. Our speakers today, David Wheeler is going to kick us off. Let's go probably to the agenda slide. If we could go to that slide - David's going to kick us off by talking about tariffs in general and the hidden complexities that I mentioned just in terms of tariff policy. We're going to see a demo of the tariff impact modeling solution. Thirdly, we're going to be talking, Peter and I are going to be talking about the strategic value of tariff modeling. What you can do besides and well beyond just minimizing tariff spend. We'll then open up the floor for any questions that you might have as part of this. Okay, so without further ado, David, do you want to take it away? 

 

David Wheeler 0:06:20.8: 

Thanks, Jerry. I can advance the slides myself, right? Awesome, thank you. Maybe? 

 

Unknown Speaker: 0:06:38.3: 

You got it.  

 

David Wheeler 0:06:39.8: 

Excellent, thanks. Almost a year ago to the day, we presented at San Jose Connect last year on the topic of tariffs. At that time, the Trump administration was about three or four months into its current service. More importantly, we were about a few weeks beyond Liberation Day. If you remember, Liberation Day was when many of the sweeping tariffs were announced. Do you remember how you felt on that day? Some laughs. Yes, I remember seeing a lot of confusion. A lot of people running around, trying to figure out what this means for me, my company, my product, my supply chain, my network. A lot of people were grappling with some major decisions to be made. Do we pass this cost on? Do we absorb it? Can we absorb it? Do we wait and see how this plays out? Do we need to change our suppliers, our manufacturing locations, our products even? A lot of questions. Not many answers. So a year has gone by. How's everyone feeling now? Do we have it all under control?! Do you have a handle on this new normal? Has your company made all the necessary decisions?  

 

David Wheeler 0:08:07.4: 

A lot has happened over the course of this year, and one major decision was made by the Supreme Court, to strike down the use of IEEPA to establish tariffs. At first glance, people may have breathed a sigh of relief. It's less complicated now. Right? No, it's not. The answer is that it's more complicated and it will continue to be more complicated. Therefore, the need for data visibility and insights is greater than ever before. Let's look at a few examples of how that complexity has grown. Earlier this month, the former 232 tariff, that had been long expected, was actually published. A hundred per cent tariff on patented drugs, that's effective in a few months. There are nuances to this. First of all, those countries or regions that have established trade deals have lower tariff rates, by country, for prescription drugs. Zero per cent tariff for companies that have committed to both reshoring manufacturing and production and agreeing to price changes. If you've agreed to reshore, but haven't yet agreed price changes, your tariff's 20 per cent. Zero per cent for generics. So a lot of nuances even in the pharma 232.  

 

David Wheeler 0:09:31.5: 

The metals 232 that was restructured looks like a scope expansion at first glance, but it's actually much more significant. Let's take an example to illustrate this fact. Before today, an appliance that was imported, say for $500 of value, that contains $50 of steel, paid 50 per cent tariff on the $50 of steel, the value of the steel. That would relate to a $25 duty. Today that same product falls into the 25 per cent rate tier, but that rate is assessed on the total value of the product, or in this case $500, which relates to a duty that's $125. On paper the rate went down, but the effective duty went up by five times. This is true virtually for every downstream derivative where metal is between 15 per cent and 40 per cent of the product weight. Within that 232, some of the code's removed, so signaling a shift away from consumer products that are shipped in metal canisters to a move towards industrial products. In particular 15 per cent on [?RAM 0:10:49.3] tier for things like machining centers, injection molding equipment, metal rolling mill equipment, etc., that grows to be 25 per cent over the course of the next year and a half. In some cases, there's an automatic exemption to the tariff if the metal content in your product is less than 15 per cent of the product's total weight. So again, a lot of complication and nuances to the definition in this tariff. 

 

David Wheeler 0:11:19.6: 

Another example, memory prices are surging in the Section 232 on semiconductors is imminent. It's expected soon. The rules are going to change as part of it. We don't know exactly yet how it's going play out, but this tariff could be enforced on the performance of the chip, the cost of the chip, or remain with the country of fabrication. Either way, you're going to need to know what that is and potentially model that out. For companies with chips anywhere in their supply chain, which is probably most of you, know your chip is a core mandate at the board level now. By the way, the refund portal opened the other day, which is exciting, I'm sure. The implication though is that companies need to have their data in order to be able to file for those refunds and receive those refunds. Past information about tariffs is going to be very important.  

 

David Wheeler 0:12:25.8: 

In summary, as we expected, the administration is expanding the use of 232s to replace the IEEPA tariffs that were struck down. They're also using other parts of the trade policy, Sections 122, 301, 338 - you might have heard those - different sections of the trade policy that they can leverage. We expect them to continue to leverage those throughout the year, to continue to fill the gap between what was in the IEEPA tariffs and what's not. The catalysts that are broadening in this environment are changing though. It's not just the Trump administration anymore. Europe just raised tariffs on metals. Mexico just raised tariffs as well. Canada is cutting import quotas. We expect this likely to continue and expand. All of this demands that companies have their data and their planning capabilities on solid footing. If they don't, they're just throwing dice at a craps table. Companies will need to continue to react quickly to new tariff declarations, and clearly understand how it impacts your total tariffs for the year, any in-flight mitigations you've started as a company or have launched, the decisions you've made or are about to make.  

 

David Wheeler 0:13:42.3: 

Without this visibility and scenario-planning, you're flying blind. If you have better data, better insights and better planning, this leads to more confident and faster reaction speed. You can ultimately position yourselves to outbox or outspring industry peers who are just waiting and watching. In order to do this, we believe companies need to build a tariff response muscle, so to speak. A geopolitical response center of excellence, that can handle the constantly changing landscape and drive repeatable value. I was talking to someone the other day and they mentioned the fact that organizations are feeling fatigue around the continued analysis and reporting around tariffs and the redoing of all that. Having a tool and a response center in place will help facilitate, mitigate that. The components of this CoE are listed on this page. First of all, gathering intelligence to understand what might happen, when that might happen, and what's the impact across your supply chain and your product set? Leveraging this intelligence to engage with the appropriate government agencies to potentially lobby for a more favorable decision. Planning and execution of response actions to mitigate the exposure.  

 

David Wheeler 0:15:13.0: 

Let me just go back to the example of the metals 232 for a second. If you remember, there was a threshold of 15 per cent where the tariff started kicking in. If your product has 18 per cent steel, this would lead us to making potentially some product decisions or some supplier decisions to reduce that content below the threshold. Some of the decisions that come out of this insight go beyond or go into the big decisions within a company around products and suppliers and networks and facilities. Obviously, we need to track the value of this leverage that you start to pull and incorporate lessons learnt across time. All of this needs to be based on a single source of truth. We've built, with Anaplan, a tariff impact management app. Can you advance the slide for me? Thank you. It has six core capabilities within it, that we've built into it. On the left-hand side you see establishing the baseline. As I've talked about, understanding your tariff exposure in detail, by product, by component, by supplier, by country. Understanding that exposure at the various levels of your supply chain as well. Potentially showcasing tariff exposure for some competitors.  

 

David Wheeler 0:16:44.7: 

Then on the right-hand side it's all around scenario-modeling, scenario-planning for the future. Dynamic scenario-planning across several dimensions. Modeling potential supplier and country of origin volume shifts. Optimization around those volume shifts across both supplier and production locations to minimize total landed cost. Behind the scenes, this solution is built by utilizing AI agents to gather the latest tariff changes and information from public sources, create harmonized tariff schedules in conjunction with your bill of materials. This tariff information is then pulled into the Anaplan model to provide that visibility, scenario-planning, and optimization capability. We're also working on creating a custom AI agent within the app, to power insight analysis and recommendations, and of course, that will be built on Anaplan's Agent Studio platform. With that, I'll hand it over to Will, to walk you through a live demo of the application.  

 

Will Shore 0:18:10.1:  

First, I've got to log in! Awesome. Thank you, Dave, for the warm introduction. My name is Will Shore, everybody. It's my first Anaplan Connect, so thank you for being in this room and making it such a special moment. Thank you guy in the back! My role today is to showcase the tariff impact model we made as a part of Kearney, with that being broken down mainly into three parts. The first being showing you the visual impact of what tariffs are currently having on your components. Second being what are the actual tariff calculations going into the model, and how can we leverage that for our scenario-planning? Third being the summation of all that and how we can leverage into optimizations for your supply chain. Seeing what other alternative sourcing options exist in this world of crazy tariffs and new environments every day. Without further ado, makes sense to start on the first page here, which is going to be showing you the most impact components in the current state.  

 

Will Shore 0:19:11.6: 

On this model, I can select this SKU category and demand region, as well as set some parameters, like the time range I want to review, the scenarios I want to be comparing, as well as the components I want to display. We have a little summary here at the top, but the real important bits come here in the middle of the page, where I get to see these two very important charts. The chart on the left is going to be showcasing for each component what are the actual tariffs I'm being charged? We can see for component 5056, I'm being charged $444 million alone in Section 232 tariffs, and following that, I'm being charged $222 million in Section 301. I can show that for other components as well if I switch to show a different product. We can see how that's going to update to reflect different tariff charges. For example, 5854 has no 301s, no 232s, was being driven exclusively by new Section 122 tariffs. That tells us one part of the story, what are the actual tariffs I'm being charged? The second part I want to know is what countries are driving those charges. That's what the right side of this page will show, where I get to see for, say component 5056, all $666 million are being driven exclusively by China.  

 

Will Shore 0:20:26.4: 

So these two charts tell a story of what tariffs I'm being charged and who's driving it. That's the summation over these two time periods. If I scroll down to the chart below, we'll be able to see that broken down by the time range I chose above. So I'm able to get that more detailed breakdown of what tariff charges are being applied to me and my components. There's also a little breakdown below in table, so you can quickly get the recap of what your base cost is going to be for these components, as well as the tariff impact in total. This is just the highlight of showing you what my tariff charges are. What if I want to be a little bit more nitty-gritty and get into the actual granularity of what the tariff policies are affecting me? We have another page for that I can show you, with our tariff policy summary. Here, on this page I can get a quick glance of what tariffs are stored in the model. Some of these might look familiar to you already, like most favored nation, the Section 232s and 301s. This is more of the configuration. If I continue scrolling, I actually get to these two tables down below that are going to represent two sides of the model. 

W 

ill Shore 0:21:27.6: 

The one on the left here is going to be our base case or our policy for the current status. Like Dave mentioned earlier, we're using web-scraping technology to grab the latest tariff breakdowns from the International Trade Commission website. We're using that to map these different charges to their exact policy, to their HTS code, and their country of origin. That chart on the left is our source of truth. If you look to the table on the right, you can see that we have the ability to choose a scenario. Any changes we want to be playing with in future tariff environments will be showing in this table. It's how we can do a direct comparison between what's our current state versus what your future state could be. You can play around with that and make that your best-case scenario, your worst-case scenario, or something in between. We can't edit that here, we'll go to a separate page to showcase that functionality. I can do that in a few ways. If I scroll to the middle of the page, I can edit tariffs at a global level, like we saw with the global tariffs, like 122. We can edit it at the country level, like individual tariff types, like the 301 or the reciprocals, or we can get extra granular and go down to the HTS level. 

 

Will Shore 0:22:33.8: 

For the sake of this demo, I'll go down to the extra granular here in HTS. I'll have some options for configuration, like choosing what scenario I want to edit, as well as what tariff policy. Here I can choose between 232, or most favored nation. I can choose to activate or deactivate a tariff by scenario. You never know with the administration who's going to challenge, so being able to have a big turn-off is going to be very important. Also we want to get down to a little bit more of the nitty-gritty of how we actually configure each of these individual tariffs. Up at the top we can set some basic inputs, like the start dates and end dates for the effective tariff, and like on the other page below, we see these two tables, they can showcase what the base is and our scenario adjustments can showcase. On the left, we see for this 232, we're specifically targeting chips at this HTS code. As of right now, it's got a tariff per cent of 50. 

 

Will Shore 0:23:24.8: 

Let's say we expect in the next few weeks the administration will be meeting with China and we don't think the result of that meeting will be very positive. I can go in here and adjust this tariff rate in scenario two to be 200 per cent and follow some similar start and end dates for the percentage. Let the model plug that for a few seconds. Now it's going to propagate throughout the entirety of our pages and our reporting to now reflect that new charge. If I were to come back into our impact page, we're going to see that the top has remained unchanged. We're still seeing the same charges for say component 5056, but if I continue scrolling and now I'm in my comparison analysis page, we can see that that new 232 charge has taken effect, has drastically increased our pricing and the impact for these components being brought in. That's also reflected as well in the country charges still being driven exclusively by China. Like before, we can see that broken down over time as well. So same great information, apples-to-apples comparison between the scenarios that you've configured.  

 

Will Shore 0:24:27.9: 

One theme you might notice as well are these two badges on the top right of my screen. On top of letting you edit and do adjustments to the current tariff environment, we want to empower you to take that one step further and create custom Section 301 and Section 232 tariffs. In this case here, we see we have a Section 301 active, particularly for SKUs under the group one, where you can see it take effect for these three components below. So if I want to go in and edit these new tariffs that we've created, very similar to before, I'll open up their custom tariffs page and I get a similar situation. Well, we see we're in Japan 301, that's definitely not China, so if I swap it over to the proper country, we can see where the tariff has been taking effect. We're applying a flat ten per cent rate over the start date. You notice this doesn't exist on the left-hand side because it's a totally custom tariff we're impacting exclusively for this scenario. That's the visual impact of how tariffs are defining your costs currently and how important these calculations are in allowing you to scenario-plan multiple different environments. Now that we have these tools at our disposal, how can we leverage it to do some more optimizations or to explore alternative sourcing options? 

 

Will Shore 0:25:40.3: 

We have that as well built into our model. We're able to do our individual volume shifts. Just like on previous pages, I can select a specific component. In this case I'll choose 5056. I can select a time period and scenario and a demand region. If I continue scrolling, I can see what my current allocation is for this component. I'm currently sourcing nearly six million units of this component from China and a specific vendor. Given what we now know about China, that has a massive tariff on our scenario, I want to change what the ARPU would be, I can come into the table and say shift 50 per cent of that volume away from China. The model knows what vendors can actually produce this good. I'll say 2855 could be mine, and from those two, the component and the vendor, I can choose an updated country. In this case, I'll choose Vietnam. I'll then show you what the shifted volume away from China is, what the new tariff rate is going to be, as well as what the shift savings are. 

 

Will Shore 0:26:41.1: 

Now savings are essentially the total landed cost differences between your two sourcing options. That's a combination of one, what the new tariff impact is. So that massive China tariff versus this new, smaller, Vietnamese tariff. Second is going to be any changes in base cost. Are there any improvements to the unit cost we're paying by going to this new supplier or vendor? Third is going to be any changes to the logistics cost. The difference between those two is going to be giving us our shift savings. Now you might notice I can shift up to eight times, but in this case, just starting with three for now, I can do this for all these different components on a page. That could be very tedious very quickly. In order to make this a little bit faster, we introduced everyone's favorite thing in the world, which is a big, green button that does it all for you. Now I'll simply press this, and within a few seconds the entire model is going to be looking through all your different possible vendors and country of origin intersections that can produce this component and fill out the table for us.  

 

Will Shore 0:27:41.1: 

If we scroll up, we can see that it's now given us a new visual that showcases what shifts have been taking place. A shift in volume away from China, instead into a mix of South Korea, Taiwan, and the United States, showcasing us what the vendors we will be using are for this particular component. The best part about this is that it doesn't just do it for one component, but does it for every single component now in the model. That way you don't have to spend too much time doing any of these manual shifts. We can let our optimizer handle it for us. The optimizer isn't just focused purely on cost or savings, we can change the weightings to focus on other important things for your business, such as lead time or supplier capacity. All of which can be fed back into the model, which is smart enough to know we're not going to be able to shift away from a supplier, depending on the contract you've set up, if we're able to shift a certain percentage away or if we already have a great deal, you have no need to do a separate shift.  

 

Will Shore 0:28:35.1: 

So we have all these great shifts now stored in the model and in these tables. Even then this is a lot to review. How do you take these insights and provide them to your planning team? What's the first takeaway from all this abundance of information, all this optimization? Well, we made that a little bit easier as well by developing this top potential savings page, aka a tariff scorecard. We can select for a specific SKU type what are the actual most impactful shifts that we can make? If I were to go to my team, I'm going to make five recommendations on which components we want to prioritize for the coming few months. I'm going to say, 'Hey, let's do 5056 down to 5064. We're going to maximize our savings or that difference in total landed cost, and here are the exact shifts that we want to consider making.' As a bonus, we get some KPIs up there at the top telling us what our scenario optimizer has pointed out to us, which is going to be savings of $303 million and the total shifted volume we've moved away.  

 

Will Shore 0:29:32.5: 

That summary is showing you, one, what the visual impact is of how your tariffs are being charged against you and your components. Two, what your scenario-modeling capabilities are for making these new tariff environments. Three, allowing you to edit in those environments where your source path will be, which delivers to you optimal savings you can take to your planning team. Without further ado, I'm going to pass it back up to Jerry to cover the next part of the presentation. Thank you very much for your time.  

 

Jerry Holbus 0:29:57.8: 

Thanks for that presentation. Really quite an impressive presentation. Could you get back to the PowerPoint slides, please? Peter and I are going to talk about the strategic value, real operational value, real numbers, based on some analysis that we've been doing over the past probably six months. Right?  

 

Peter Upapong 0:30:17.3: 

Yes. By way of quick introduction, Peter Upapong, I'm Leader of Business Value team here at Anaplan. We focus on things like benchmarking, value assessments, value realization studies. I like to say it's the best part of consulting because we take you on that full journey. It's just amazing to see, over the last six years that I've been here at Anaplan, the number of realization stories we've been able to capture. Prior to this, I was working as [?PMA 0:30:43.1] Director, as well as I led practices at Accenture and the Hackett Group. Guys, don't hold it against me. We want to get into the punchline of all this. You saw the amazing work in terms of what can be done from a modeling standpoint. How you can visualize all those things. If we want to go to the next slide - yes. This summarizes some of the live data that we're actually working with organizations today. Again, we can talk about different industries. These are the three that I've spent the majority of my time with in terms of high-tech manufacturing and telecom. I think the resounding theme in terms of our work with all these organizations across these three industries is the realization in terms of the impact that really ranges between about 10 per cent and 35 per cent.  

 

Peter Upapong 0:31:33.1: 

I think what you'll see in practicality is in terms of how are they approaching and thinking about tariffs? If you look more high-tech manufacturing, you're saying, hey, I'm looking at the bomb. I'm looking at the component level. I'm trying to figure out, okay, this component set have exposure that don't, and that's the complexity that they're trying to manage and deal with. I think from a telco standpoint, it's all capex. Right? There's all these huge investments that are being made across 5G and fiber. So the question is, as they're doing these build-outs that they've committed to, how are they optimizing in terms of all the things? Whether it's the underlying components for those build-outs.  

 

Jerry Holbus 0:32:12.6: 

Also the product lifecycles in high-tech are going to be much shorter, seven months, compared to maybe seven years in telecommunications. 

 

Peter Upapong 0:32:18.9: 

That's right. Yes. Again, I think the other interesting thing, Jerry, that we've seen in working with manufacturing is, obviously, the exposure to raw materials. Right? The expectation in terms of the total cogs, the scale of cogs that you have to deal with from a manufacturing standpoint versus high-tech or telco just magnifies the impact, I would say. I think other things to probably note here in terms of the opportunity in target-savings. Right? So this is real-time working with them, not only to assess, but seeing what they're able to do as they start mapping and planning this. Saying, hey, can we really achieve, if we just look at those areas that are impacted by tariffs and just their cog spend, what is the potential savings we can have by having that improved view? Is it really three per cent to eight per cent? Are we being conservative and aggressive to be able to go after it? I think the other side of the coin is obviously the revenue protection and margin protection that we're seeing, and saying, hey, of course you can look towards those things, but we're also going to look towards pricing. Right? I think that's the reality. As we'll go to the next slide, that's really around the maturity and how some of the decisions that they're taking in terms of whether to address it or not or just pass on the buck. 

 

Jerry Holbus 0:33:36.0: 

Yes. If you're saving money and allowing your operating margins to be that much more flexible, you can play some games with pricing, as Peter was alluding to. You could lower your prices to capture more market share. The amount that you're spending - and maybe you can comment on this - on tariffs is substantial for a large, high-tech manufacturer. It's going to be hundreds of millions of dollars a year. So there are some games that can be played in both rising prices for greater profitability or even lowering prices to capture market share.  

 

Peter Upapong 0:34:05.8: 

If we go to the next slide - and this is a precursor to my next session at 4:00 pm if you guys want to join that as well. Hey, that's a little plug for it. We do quite a bit of work around maturity assessments. I think, obviously, people always want to say, okay, look at it real quick, where do I rank in terms of maturity? Am I level 1 or am I leading the way at level 5? I think the most important thing here is actually the indicators to track and how do you move up the chain? I think maybe a quick show of hands, we could say too for the most part it seems like there's some pretty advanced folks in here. From what I've seen in practice, it's pretty much folks are still sitting within level 1 and level 2, where they're either not modeling it. They're doing some basic, like hey, we have an idea of our exposure. That's pretty much it. Right? I think the real takeaway of how can I do something actionable? In terms of what we've been working with organizations, so either working with Kearney or figuring out yourself, just assessing your exposure. Take it down to the component level, figure out what that exposure really looks like.  

 

Peter Upapong 0:35:10.3: 

I think to the point of that tariff CoE and thinking about the response, it's like how do you, who's responsible for response day? If you say, hey, I think it's a little bit of finance, it's a little bit of supply chain, then you already know your maturity. Right? So you have to really think about what that response team looks like. I think the final component that rounds this off is basically saying, okay, what is the scenario that I've had maybe in the last 90 days or six months that I haven't been able to do? How long did that scenario take? What benefit would that have in terms of having an application like the one that Kearney showed, to maybe move us up from a level 1 to a level 4? Jerry, I don't know if you were going to say something.  

 

Jerry Holbus 0:35:56.3: 

Yes, I was going to say if you're doing nothing and you're passing on costs to customers, you're going to be at the lower level of this continuum, probably in the reactive and maybe aware. If you're in structuring, you're building on a very labor-intensive operation, probably hiring in some folks to mitigate the tariff spend. If you're on level 4, you're not hiring more people to mitigate tariff spend. You're using the engine that we sell today. This is all auto-optimization and can be done with a very small staff.  

 

Peter Upapong 0:36:24.2: 

Now, here's the kicker. Everyone's like, hey, do I want to be level 5? Do it, right, immediately. Based on our actual analysis and working with teams, the real benefit really comes between level 2 and level 4. How can you go from that - hey, we've had these primary value drivers. We're looking at component level modeling. We're thinking about structuring scenarios - to really automating the optimization and some of the things that you saw in terms of connecting pricing? That's where you're going to see the benefit and that's where we're seeing it happen today live with a number of customers. Anything else to add? I think you had one more question after this one. Right? One more survey question.  

 

Jerry Holbus 0:37:04.6: 

No, I don't think so. We've got a few minutes for questions from the audience. Any questions? 

 

Audience 0:37:14.6: 

When you're having these value-added conversations around maturity of where the customer is at, who do you speak with? Is it the office of the finance or is it supply chain or is it…? If it's Amazon, I have a friend I know who work with [?ECON 0:37:33.3] Group. Who are we actually talking to? 

 

Peter Upapong 0:37:39.7: 

I'll say I think it directly correlates to my line earlier of the maturity of the organization and where that governance model is happening. Right? I think the reality is, the first evaluation is from a data perspective, where are those governance decisions happening? It lends itself to typically being that office of the CFO if they're trying to say, hey, I need to be modeling a lot of this from a financial standpoint. I think supply chain should be driving the way on this.  

 

Jerry Holbus 0:38:09.9: 

Ideally, they would start in the office of the CFO. The CIO will be in charge because they typically own the budget for the acquisition of any software. It does have some touchpoints with procurement and supply chain. So, it's really quite a composite of people that need to be involved in this. It's CFO that's going to be a driver. David, do you have a comment? 

 

David Wheeler 0:38:29.6: 

No, I was going to say exactly what you just said! Finance, supply chain, and procurement are the three main stakeholders usually.  

 

Peter Upapong 0:38:38.2: 

Then it's just really a question of who's in the driver's seat there. Right? Then have they established it as a function where they're really thinking of it as tariff for spots or are they all just worried about their own piece? 

 

Unknown Speaker 0:38:52.7: 

Yes. Great question.  

 

Jerry Holbus 0:38:53.3: 

Common question that we get - there's a question from the audience, please, [?Zarianna 0:38:56.0]. 

 

Unknown Speaker 0:38:57.3: 

I'll go. 

 

Audience 0:39:01.5: 

I love the demo. I love big, green buttons and scorecards and that's was great. The country map I think was really cool, especially as you all were saying they could maybe move some of that. I noticed something about some competitive analysis or seeing maybe what some of your competition is doing. Could you say a couple more things about that? 

 

Jerry Holbus 0:39:21.9: 

David, if you could comment on that, I think that was in your presentation, if you wouldn't mind. Seeing what the competition, how the competition might be exposed?  

 

David Wheeler 0:39:29.7: 

Yes, I think we're including some data from external sources to pull in where competitors might be pulling mitigation strategies and some of the effects they might have. Within Kearney, we also have some supplier data that we carry around, who produces what components, what the metal content of those components are, etc., that we can tell a little bit about some of the competitors make-up on the tariff side. Raw material, I mean the rarer of materials is another piece of that as well that is sometimes hard for clients to get a good handle on.  

 

Jerry Holbus 0:40:20.8: 

Any other questions from the audience? Okay. Maybe if you could comment on getting started with the tariff impact modeling solution and just how long it takes or how often do you have to calibrate it? 

 

David Wheeler 0:40:37.5: 

Yes, so obviously, we have a pretty complete solution already in place. We are working with Anaplan to make this an actual Anaplan app, which you could essentially work with your Anaplan reps on. It's built out significantly, so the time to value is pretty quick. We need to get data in. It's always, can be a challenge, but getting the data in quickly in terms of build materials and other supplier information from the client themselves, then setting up the rest of this is pretty quick. We anticipate four-week implementation to get up and running, assuming that we can get data in quickly. I always make that caveat.  

 

Jerry Holbus 0:41:29.4: 

The way you go to market is proof of concept. Right? Maybe if you could comment on that methodology.  

 

David Wheeler 0:41:34.0: 

Yes, sure. Yes, we can certainly do a proof of concept. We've done this with a number of clients where they provide a subset of their data, cleansed usually, and we'll put it into the model in our own environment and return that back to you, and showcase how it would look with your data structure and such. That's pretty quick as well, a week-and-a-half I think we did with one of the major semiconductor players out there.  

 

Jerry Holbus 0:42:09.1: 

I think probably the longest lead-time element of that process was just having the provider give you the data. Right? You guys are really quite fast with the analysis and conclusions. 

 

David Wheeler 0:42:18.4: 

It took a little while to get sanitized data! 

 

Jerry Holbus 0:42:23.6: 

Any other questions? Okay, I think we're at time, so that concludes today's presentation. Thanks a lot.