A New approach to Vendor Managed Inventory & Supply Chain Management

1. Supply Visualization V6.0 A New approach to Vendor Managed Inventory & Supply Chain Management

2. Supply Visualization Provide asingle unified visibility toolenabling trading partners to share supply chain information so they can deliver goods and services at increasedlevels of service and at lower costs.

3. Supply Visualization Inventory Demand Supply Browser Browser Browser Browser Browser QAD Supply Visualization Infrastructure Suppliers/Sellers Customer/Buyer ERP ERP MFGX.net Infrastructure Non-MFG/PRO ERP System Integration

4. Manufacturer Suppliers Material & Shipment Data Supply Visualization Advantages Information Flow Minutes Minutes MFGPRO/MFGX.net Application Infrastructure • Direct, real-time information access to trading partner data • Fast, reliable, easy to use , Web delivery and access, • Enables “pull-based” replenishment - with Kanban visibility • Collaborative, peer-to-peer environments, supports e-business solutions • Provides self-tracking of consignment inventory • Download/Upload capabilities • Automated Alerting infrastructure

5. QAD Supply VisualizationValue Proposition – Proven Results • Reduces supply chain costs • Reduce material shortages • Reduce premium freight charges • Reduce indirect personnel costs • Reduce inventory investment • Reduce Planning Horizons • Improve On-time delivery • Reduce Expediting/de-expediting activities • Avoid EDI Infrastructure Costs • Supplier benefits • Real-time visibility of customer inventory and demand • Avoid Costly EDI implementation & Maintenance • On-line, real-time visibility of consignment inventories • Reduce/eliminate unplanned change-over • Foundation for a collaborative environment

6. Supplier ASN Information with Drill Down to detail Main Inventory Status View Supplier Consigned Inventory Balance with Transaction Details Multiple user preferences: Last screen saved for Instant return access Icons show Status & Graphical data and indicate Open Alerts Current OH Inventory Balance And Inventory Control Parameters (Min/Max/ROP) are displayed with Suggested Replenishment Qty

7. Additional UI features: Row and Column headers can be frozen for easier navigation User Defined fields available For Customer only or Supplier input • Graphics available for: • QOH performance • Actual vs Forecast • Current Forecast vs Previous Auto-refresh with highlights To indicate changed data

8. Graphics Options – Forecast/Actual comparison • Graphics available for: • QOH performance vs target • inventory levels • Actual vs Forecast vs Trend • Current Forecast vs Previous

9. Company Policies – Variable Calculations • Calculations available for: • Min/Max Values • Order Point Calculation • Auto select new added items Auto select new added items Create Demand templates -

10. Item Policies – Variable Inventory Control Parameters by Item • Selections available for: • Min/Max Values • Order Point Calculation • Rounding control factors • Safety Stock etc.

11. User Defined Fields Available • User Defined Fields: • 9 fields - Customer Input Only • 3 Text • 3 Date • 3 Numeric • User Defined Fields: • 9 fields – Customer/Supplier Input • 3 Text • 3 Date • 3 Numeric

12. Multi-Item Qty Maintenance Screen Adjust Page size for Multi-Item Key value maintenance

13. Supplier Schedule View Supplier Release details provided With ship schedule, Cumulative or Net releases Icons show Schedule Status & Indicate type of Schedule

14. Purchase Order View Suppliers to Provide Open PO status information

15. Supplier Shipment Notice (ASN) Supplier options for manual ASN creation Or Upload from flat file. Customer can import To MFG/PRO from SV Icons show Status of ASN’s and indicate planned or Actual shipments

16. Kanban Visualization Kanbans in each loop are represented by colored rectangles in the Loop Status column

17. Kanban Loop Status ‪ Empty KANBANs Order Point Safety Stock  Filled KANBANs Acknowledged Kanban  Shipped KANBANs Accumulate

18. Key Differentiators • Publish detailed Supplier Schedules/Projected Requirements • Publish discrete Purchase Orders • Enable collaborative supplier PO Acknowledgment • Enable collaborative schedule forecast response • Provide detailed cumulative order management information • Provide supplier with Consignment inventory visibility • Publish consigned inventory transaction history • Provide highly configurable screens • Buyer administration of suppliers • Provide easy-to-use upload tables for supplier data entry

19. Cost Saving Examples

20. Inventory Cost Reduction • Safety Stock reduced • Reduced replenishment schedule transmission time • More reliable supplier forecast • Planning horizon reduced • Supply problems identified earlier • Improved on-time deliveries • Less expediting/de-expediting activities • Example: • Average On-hand Component & Raw Inventory = $ 5,000,000 • Inventory carrying costs @ 15% • Expense Reduction from Inventory reduction of 30% = $ 225,000

21. Freight Costs – Potential Reductions • Potential Reductions/Cost Avoidance • Calculate Number of Premium/Air Freight Shipments • Calculate Cost per Shipment • Calculate downtime occurrences and duration directly resulting from parts shortages • Percent related to supplier shipments that missed required ship dates • Percent related to shipments that left suppliers on time but did not arrive on time (delayed in transit at some point ) • Example: • Airfreight Shipment: • Cost per occurrence = $ 2,500 • Occurrences per year X 8 = $ 20,000 • Induced line stoppage: • Typical cost $ 5,000 per incident (6 per year per plant). Total cost per year per plant = $ 30,000

22. Reduce Acquisition costs by Lowering Supplier Expenses • Supplier Cost reduction • Reduced FG buffer stocks • Better capacity utilization • Less unplanned change-over and overtime • Reduced demand volatility • Avoid EDI implementation and maintenance costs Example: Annual material spend (including freight) $ 25,000,000 1% net reduction in acquisition cost (as a result of supplier price reduction and/or improved supplier relationships) Cost savings = $ 250,000 = 250 Suppliers at an average of $ 10,000 per achievable through……

23. Other Buyer Cost Saving Opportunities • Production stoppage due to Inventory Stock-out or late delivery, Costs may be idle machine and/or labor time, cost of lost/late sale etc. : • Example: Average cost per incident $ 15,000 Number of incidents per year 8 Cost avoidance savings $ 120,000 • Admin Cost savings, Labor and overhead reductions as a result of reduced expedite costs and manual procurement activity reduction: • Example: Number of material buyers/planners/expeditors 5 Average salary/overhead per employee $ 75,000 Staff Reduction or redirection of activity result 20% or 1 FTE Cost saving $ 75,000

24. EDI - Typical Implementation & Operating Costs • Typical Supplier traditional EDI costs: • One time set-up Costs – • EDI Translator package software $25,000 • Set up, Trans sets (830,862,856,850) Testing etc. $ 9,150 TOTAL $ 34,150 (over 5 yrs = $ 6,830 per year) • Annual recurring Costs – • Mailbox Rent & Trans Maintenance $ 1,720 • Character Charges (VAN)(@ 12 c per KC) $ 2,500 TOTAL $ 4,220 TOTAL = $ 11,050 • QAD SV Costs: • One time set-up Costs – • XML Message handler $ 0 • Standard BOD set up (830,862,856,850 equiv) $ 2,000 TOTAL $ 2,000 (over 5 years = $ 400 per year) • Annual Recurring Costs – • SV Service Fee (existing Fees) $ 0 • SVI Implementation Costs $ 0 TOTAL $ 0 TOTAL = $ 0 Savings per year to supplier = $ 11,050

25. The Value of SV….. • Exchange accurate information between trading partners to optimize production, capacity and minimize cost • Provide real time visibility into inventory / schedule changes/shipments • Improve production and transportation utilization – Fewer expedites • Provide critical information on shipment events as they occur • Manage by Exception – Use technology to Alert to unplanned or out-of-tolerance events. • Accelerate cash- to-cash cycle • Anticipate and manage potential breakdowns in plans and schedules. • Free up valuable resources, people, cash, & capacity

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