Liquor Agency Town HallOctober-November 2016

Town Hall Meeting Agenda

❑ DOLC Leadership Team

❑ State of Business- 2016 and FY2017

❑ JobsOhio Beverage System (JOBS)

❑ LMP Status, Next Steps, and Milestones

❑ Communications and Customer Service Initiative

❑ Warehouse Inventory Reduction

❑ Warehouse/Distribution Center Update

❑ Retail and Wholesale Terminal Solution

❑ Shelf Price Update

❑ Q&A

DOLC Leadership Team

Harry Knight Gerry O’Neil Amanda Boros Jennifer Richardson

Chief Operating

Officer

Director, Agency

Operations

Lead Project

Manager, LMP

Merchandising

Manager, Agency

Operations

JobsOhio Beverage System (JOBS)

JobsOhio is a private, non-profit corporation committed to driving job creation

and new capital investment in Ohio through business attraction, retention and

expansion efforts (learn more at jobs-ohio.com)

JOBSJOBS purchased an exclusive 25-year franchise for the sale of spirituous liquor

in the state of Ohio. Profits earned from that business are used by JobsOhio for

its mission.

Economic Development Success

23,602NEW JOBS

54,233 RETAINED JOBS

$6.7 BILLION CAPITAL INVESTMENT

Source: JobsOhio 2015 Annual Report

State of Business Liquor Enterprise 2016 and YTD 2017

Net Sales and Category Growth

Total Bottle

Sales

Total Dollars

Sales

Total Sales

FY2017

59,366,960(+4.7% vs 2015)

$1,051,647,379(+7.06% vs 2015)

$181,467,243(+4.29% vs 2016)

• Tequila in Ohio is outpacing the national average

• Patron and other HE brands show double digit growth

• Small batch whiskey continues to show double digit growth

• Tito’s vodka is outpacing other vodka in Ohio and is experiencing double digit growth

• Cognac (Hennessy and other HE brands) show double digit growth

• Jameson shows double digit growth and is now offering new HE items

LMP Current Status, Next Steps and Milestones

LMP Phase 2 Objectives

• Microsoft Dynamics AX “Out of the Box” - Minimum

customization

• Standardized platform supports continuing Enterprise growth

• Near-Real Time Transaction Reporting

• Near-Real Time Inventory Visibility

• Integrated System View

Project Milestones

AnalysisQ1 2016

DevelopmentLate Q2, early Q3

• Design• Q2 2016

1 2 3

4 5 6

TestingBegan October 2016

TrainingQ1 2017

ImplementationTarget to begin April 1, 2017

Agency Readiness

Activities will be tracked to ensure each Agency is prepared for

the deployment of LMP Phase 2.

• Future webinar sessions

• Attendance/feedback from Town Hall and Roadshow events

• Submission of retail sales integration decision

• Completion of Wi-Fi assessment and installation

• Installation of wholesale and retail sales terminal hardware

• Completion of all stakeholder training activities

Upcoming Key LMP Dates and Events

Projected Dates Events

October 20, 2016 Communication to Agencies (Webinar)

October 24, 2016 Technical document published to Agencies

October 25 – November 3, 2016 Town Hall meetings across all four districts

December 1, 2016 Deadline to submit retail sales solution decision to Enterprise

December 2016 Engagement with Agencies. Procurement of Clover devices.

February – March 2017 Installation of Clover retail sales devices in select Agencies &

Training sessions begin

April 1, 2017 Ready date for Agencies integrating via Web API solution &

Warehouse/Bailment Center consolidation complete

April – May 2017 Cutover of Agencies to LMP Phase 2 platform

Communications &

Customer Service

Strategies

Liaison Update

Toledo - Ron Kohler

Cleveland – Jenn Tait

Columbus – Luke Paglianete

Cincinnati – Kevin Myers

Agency Visit Updates

• Thank you!

• Completed first round of

Agency visits week of Oct. 10

• Next round of Agency visits

will begin early November

Agency Representative Committee• Committee Purpose

o Operations focus driven

o Product sales and selection insight

o Development and execution of responsible growth initiatives

o DOLC / Agency relationship building

• Benefits

o Increase open dialogue opportunities

o Sharing of best practices between agencies

o Outreach Programs execution

o Product/category trends

• Member Structure

o Statewide District Representatives

o Cross section of agency size and complexity

o Members selected by Liquor Enterprise COO

Customer Service / Call Center Operations

• A new customer service center is now in operation

o Same phone number you use today: 877-812-0013

o New email: liquoragencyhelp@com.state.oh.us

• Representatives available 24x7x365

• Calls will be assigned priority based on content and will be

responded to within a designated timeframe

Warehouse Inventory

Reduction Strategy

Warehouse Inventory Reduction

Background● Liquor Enterprise has over 3,000 SKUs in present portfolio

● Product listings added 800+ new products over past 3 years

● No products have been delisted during this time

● High congestion in bailment centers and backrooms of Agencies

● Avg days of AGENCY inventory for WIR products 250-300 days

● LMP Phase 2 requirement to reduce warehouse inventory levels to support

system implementation

Actions● Comprehensive review of all products by SIP Team and brokers/suppliers

● 700 SKUs are being removed from warehouses

● Agency needs will be met via Agency to Agency transfers or special orders

● If state sales dictate, we will review and work to provide access

● New product listing suspended until Qtr. 1 2017

● Listing/Delisting Process improvement (best practices) in process

● National Alcohol Beverage Control Association (NABCA) sales data

Warehouse /

Transportation

Optimization Initiative

Warehouse/Distribution Center Operations

● Warehouse Consolidation – moving from 4 to 2

● Cleveland and Columbus locations

● Efficiency improvements through establishing rigorous KPIs

● Improve inventory availability

● Streamline the Enterprise warehouse business processes

● Target start up/cutover April 2017

Retail and Wholesale

Terminal Solutions

All terminals (registers, point-of-sale) must integrate with

Microsoft Dynamics AX system when Phase 2 launches.

● Increased inventory accuracy

● Offers transaction-level detail

● Improvements to current business processes

● Upgraded technology for some

Retail Terminal Strategy

1. Integrate your existing retail terminals (this will require your existing provider’s support for the integration)

2. Use a new Clover terminal configured and provided

by the liquor enterprise

Integration Options

How to Make Your ChoiceOption 1:

Integrate your

Existing Retail Terminals

Option 2:

Use New Clover Terminal Configured

by Enterprise

Benefits

• Continue to use your current retail

terminals

• Continue to use your current support/IT

vendor

• No set up is needed for integration to Microsoft

Dynamics AX system - configured out of the box

and installed by a vendor

• Terminal can read chip cards

• Terminal can be used for non-liquor items

• Apps to help you run your business

• Reduced merchant services fees available

Conside-

rations

• There will be IT costs to integrate • Set up required to add non-liquor items – the

process is easy and tutorials are available

Costs

• IT costs to integrate will vary based on

your level of technology

• Ongoing support costs

• No cost for terminals or installation

• The liquor enterprise pays monthly support fees the

first two years – after that, based on the number of

terminals (approx. $50-$80/month)

Clover

Terminal

• Height: 11.0” x 7.5” Base

• Weight: 5 lbs.

• Hardware:

• Encrypted card reader

• Scanning camera

• Reporting

• Transaction reports

• Modify inventory

• Off-line capability

Retail Terminal Solutions

● Clover terminals provided for retail sales

● Enterprise will provide number of terminals based on most

recent terminal audit numbers

● Enterprise will pay for the Clover units

● Ownership - Agencies will own the units

● Monthly Service Fees - Enterprise will pay for first 2 years

Key Milestone Dates

Integrate Existing Retail

Terminals

• Oct. 24: Technical

requirements document sent

• Dec. 1: Decision due to DOLC

• Q1 2017: Testing of integration

(part of full system testing)

• April 1: All changes complete

and tested, integration ready to

go live

Receive

New Clover Terminals

• Dec. 1: Decision due to DOLC

• Q1 2017: Terminal installation

begins

We will provide a vendor, at no

cost, to work with you to set up

the fully configured terminals in

your Agency.

Wholesale Terminal Solution

● Agency will be provided a separate wholesale terminal that

directly interfaces with the AX platform

● Wholesale order processing only

● Configured hardware provided

● Transaction-level data

● Increased efficiency in system response time

Price Without Tax/Single

Shelf Price and Nickel

Rounding Update

Price Without Tax-Single Shelf Price

● Currently, tax and rounding are included in shelf price

● Moving forward, tax will be calculated at the time of sale

● Creates consistency and reduces confusion

● Removing prohibitive rounding requirements (aka nickel round)

● Using a phased-in approach

Price Without Tax/Single Shelf PriceCurrent State Transition State

(Feb. 1 through LMP rollout)

Future State(Phase 2 Rollout Complete)

System Changes

No changes No changesPrice file format, update process

change

Price File Changes

No changes No changes; nickel round removed Price file reflects price without tax

Shelf Tag

Final price only is listed Pre-tax price, final price listed Pre-tax price only is listed

Where Tax is Calculated

Sales, other applicable taxes included in the bottle price

Sales, other applicable taxes included in the bottle price

Sales, other applicable taxes calculated at the register

What’s on the Receipt

Customers see only final price w tax included

Customers see only final price w tax included

Customers see subtotal, taxes, final price

What the

Customer Pays

$16.95 $16.91 $16.91

Thank you

JobsOhio

Beverage System

Keep an eye on your email for future updates and event details.

Resources

New LMP Website: liqagency.com.ohio.gov/LMP2

Weekly Activity Report Email – delivered every Monday afternoon

Enhanced Help Desk:

Resources

Phone

877-812-0013

Email

liquoragencyhelp@com.state.oh.us