# Copy of Customer provided info 30/04/21

PoolCorp Project

- PoolCorp (NASDAQ: POOL) is the world’s leading distributor of swimming pool supplies, equipment, and related outdoor products—Sales 2020 at $3.9B

- PoolCorp distribute products across USA through local warehouses–each local warehouse operates independently with global guidance—There are few global coordination.

- Fluidra (IBEX: FRD) is the global leader in the pool and wellness industry – Sales 2020 €1.5B

- PoolCorp and Fluidra are partners since a long time, Fluidra supply PoolCorp with innovative products.

- The scope of the project is PoolCorp USA and Fluidra USA

- PoolCorp and Fluidra operate using a very classic approach—PoolCorp issue Purchase Orders and Fluidra deliver the products to PoolCorp directly at their local warehouses–Purchase Orders Lead Time—between 5 days and 3 months expected delivery lead time.

- PoolCorp local warehouses directly manage their level of inventory, their Purchase Orders, they operate mainly based on coverage/safety inventory. Inventory levels for PoolCorp is not a real issue for two reasons: first it is an asset and every price increase mechanically increase the value of the company, second as a distributor they need to be able to fulfill immediately all orders from any customer everywhere in the US, service level is critical. They need to have high availability.

- Swimming Pool market is very seasonal, on the Snowbelt (North East USA) the season start in March and end in August, on the Sunbelt (South East, South Center, Florida, California) there is no real season, swimming pools are running during all the year.

- PoolCorp supply mainly small builders and aftermarket.

Size of the scope

- Fluidra ship product to 370 different locations in 41 states

- Fluidra shipped around 3,000 different SKU to PoolCorp.

- Per state the SKU could be different according to the local market condition

- PoolCorp is the biggest customer of Fluidra (40% of the sales)

- Fluidra is the second supplier of PoolCorp.

- Swimming pool market is growing at 8% since 2016, but since 2020 the market is booming (+20%) so sales between Fluidra and PoolCorp increase at the same rate.

Data/Flow of Data

- Lines of Orders—94,000 per year

- QT—1.930.000 units per year

- PoolCorp provide every month (mid-month) their real sales (sell out) per location and their level of inventory per location — We expect to have daily to be more accurate.

- Fluidra manages all the PoolCorp Purchase Order as so Fluidra has a full visibility except for the Intransit (Fluidra to PoolCorp)

By combining all the data, we could have a full, time phased view.

- Fluidra did also some test to calculate a statistical forecast using the PoolCorp data to have a better visibility on the market trend.

Figure 3-Statistical Forecast based on PoolCorp Sell Out

- Fluidra objective is to have a better visibility to be able to anticipate providing a better service level.

- Fluidra manage demand at a global level, per Item, per month, the demand is reviewed and updated every month (S&OP cycle)—Fluidra does not manage the demand at customer level, neither at location level.

- Fluidra operates under a very animated market with sales incentives (Terms, Promotion) to create the demand. Twice per year Fluidra operate early buy, but also as Fluidra increase prices it creates artificial demand to avoid price increase impact.

- Fluidra operates under a strict S&OP tool (intern) and have a full visibility on Demand, Supply, Inventory.

Constraints/Issues/Opportunity

- Despite a massive improvement in Fluidra demand management process (before Covid 50% WMAPE), forecast remain a challenge.

- Order Time fence also remains a challenge, PoolCorp expect to be delivered in 5 days, for some almost all our product our cumulative longest lead time is 4–6 months—There is no one single product with at least one component coming from Asia.

- Safety inventory and safety buffer are widely used and monitored.

- With intensive usage of planning BOM and RCCP almost all our critical components are under controlled and their level of inventory is correlated with the market demand (Demand Driven MPR like)

- Fluidra were able to cross the COVID crisis with an exceptional year +20% growth vs. LY which validated their capabilities.

- With the post Covid Fluidra anticipated a stronger level of demand.

- Fluidra face some new challenge: New World Post COVID exposes more and more global shortages (vessels availability, carriers’ availability, resins global shortage, electronic components, … 12 months lead time is more and more frequent)

All that reinforce Fluidra willingness to anticipate more and to invest in advance planning capability.

What do we want to achieve?

- Fluidra first goal is to dramatically reinforce the link between PoolCorp and Fluidra and doing that create a customer stickiness.

- Fluidra wants to provide an easy tool/process for their customers to manage their “demand” based on their historical sales, the tool should be able to adjust the projected level of inventory and to recalculate the optimal replenishment plan at least every week. And doing that the tool will be able to provide a better visibility to Fluidra to improve the service level. We could imagine the process like an advance VMI (VMI 2.0), instead of replenishing inventory based on a min max, Fluidra will calculate the optimal inventory (based on historical data) and recalculate the optimal supply plan, the optimal supply plan will be compared with the current purchasing plan, the customer will have the ability to confirm it or to adjust.

Mechanism

- For every Item (SKU) at every Location at PoolCorp, based on the historical sales, we could calculate a forecast.

- Based on the forecast, using current On Hand Inventory, considering the current Purchase Orders, we could calculate a proposed replenishment based on an optimal stock target (Objective).

- The PoolCorp buyer should be able to validate the proposal (and doing that create a Purchase Order)

- Then at Fluidra side, Fluidra will be able to see the dependent demand coming from PoolCorp and doing that Fluidra will be able to anticipate the future needs.

- By aggregating the 370 location on the network Fluidra will have an almost real time at what is happening on the field, also as Fluidra will have access to all the data, Fluidra will be able to prioritize the most critical needs to cover the location in shortages first.