Hear How One Tier-One Supplier Eliminated Physical Inventories

1. Hear How One Tier-One Supplier Eliminated Physical Inventories Report to: QAD MWUG “The only basis for eliminating physical inventory is the certainty that you are working with fault-proof, trustworthy data. That’s where the work must begin.” Keith Register Materials and Logistics Manager Akebono   03/21/2016 Keith Register Akebono Materials and Logistics Manager (931) 320-7369

2. Who is Akebono? Established: January, 1929 Annual Revenue : 236.7 billion Yen (FY2013 Consolidated) Market position: Akebono Brake is an independent company that supplies brake products to virtually all automotive manufacturers, the automotive aftermarket, and customers in other sectors. OEM customers include: Toyota, GM, Nissan, Honda, Isuzu, Mitsubishi, Yamaha, Mercedes Benz, Chrysler, Ford, Subaru, Audi, VW, Hino, Suzuki, Porsche and Saab. Facts at a glance Number of Associates 8,505 As of March 31, 2014

3. Who is Akebono? Global operation: Japan ①Global Head Office ⑥Akebono Brake Yamagata Manufacturing Co., LTD. Manufacture of disc brake pads and other brake components ②Ai-City (Headquarters) Akebono Research & Development Center LTD. ⑦Akebono Brake Fukushima Manufacturing Co., LTD. Manufacture of brake linings and other brake components ③Akebono Central Pier (Chubu Office) ④Proving Grounds Testing and evaluation ⑧Akebono Brake Iwatsuki Manufacturing Co., LTD. Manufacture of drum brakes, disc brakes and brake components ⑤Tatebayashi Foundry Casting ⑨Akebono Brake Sanyo Manufacturing Co., LTD. Manufacture of drum brakes, and wheel cylinders

4. Who is Akebono? Global operation: Europe ①Akebono Brake Europe N.V. Diegem,Belgium EU Headquarter, Marketing ②Akebono Europe S.A.S. (Gonesse) Gonesse, France Marketing & Sales CREA (Centre de Recherche European Akebono) R&D Center Pull system ③Akebono Europe S.A.S. (Arras) Arras, France Manufacturing (Pad) ⑤Akebono Advanced Engineering (UK) Ltd. Berkshire, UK R&D ④Akebono Europe GmbH Limburg, Germany Sales, R&D

5. What is Akebono? Global operation: Asia ①Akebono Brake (Thailand) Co., Ltd. Chonburi, Thailand Disc Brake, Disc Pad ②Akebono Corporation(Guangzhou) Guangzhou, China Disc Brake, Drum Brake ③Akebono Corporation (Suzhou) Suzhou, China Disc Pad ④PT. Akebono Brake Astra Indonesia Jakarta, Indonesia Disc Brake, Disc Pad Drum Brake, Brake Lining Brake for Motor Cycle, Master Cylinder Brake Parts ③Akebono Brake Astra Vietnam Hung Yen Province, Vietnam Disc Brake, Master Cylinder

6. Who is Akebono? Global operation: North America 1. Akebono Brake Corporation (North America) Elizabethtown, KY. US Headquarter, Marketing, Sales , Financial, Purchasing, Administration 2. Akebono Brake Corporation Engineering Center Farmington Hills, MI R&D and Sales Liaison Office 4. Akebono Brake “Glasgow Plant” Glasgow, KY Manufacturing (Disc Brake, Pad) 3. Akebono Brake “Elizabethtown Plant” Elizabethtown, KY Manufacturing (Disc Brake, Drum Brake, Pad) 6. Akebono Brake “ Colombia Plant ” Colombia, SC Manufacturing (Disc Brake, Corner) 5. Akebono Brake “ Clarksville Plant ” Clarksville, TN Manufacturing(Corner, Rotor, HUB, Brake Drum, PKB) 7. Akebono Brake Mexico S.A.deC.V. Guanajuato, Mexico Manufacturing and sales of automotive brakes

7. Introduction to Akebono Clarksville Site Data • Customers: • GM, Ford, Toyota, Nissan, Honda, & Chrysler • Associates: ~600 • Sales: ~$450M • Site area: 3.8mio ft2 (353k m2, 87 acres) • Building area: 572k ft2 (53k m2) • Heat Treat: 27k ft2 (2.5k m2) • Warehouse: 150k ft2 (14k m2) Resources to support our customers

8. Step 1: Be Clear on the Benefits of Inventory Accuracy Significant Cost Savings: Inventory • Too much inventory means unnecessary carrying cost, over-ordering and excess warehouse space; too little has potential for disappointing customers and failing to meet deadlines; inaccurate inventory eliminates insight into obsolete and slow-moving inventory. 2. Significant Cost Savings: Labor • Reduce overtime: build only what is needed when it is needed • Reduce labor in Materials Department: no hunting for parts • Reduce labor in Planning Department – no need to “go and see” • Track production; eliminate overproduction 3. Improved Relationships with Customers and Vendors • Lack of real-time information affects ability to plan at every level. 4. Lays the groundwork for: • Passing external audits AND eliminating physical inventory.

9. Step 2: Define the Path to Inventory Accuracy Change the culture: get “buy in” at all levels that inventory accuracy is everyone’s responsibility Put a proven, real-time automated data collection solution to work: • Establish detailed Inventory Locations • Minimize data entry through scanning, RF • Require that the system be used for all inventory/production decisions (no side spreadsheets) • Make the data easily accessible to all employees Begin building trust: Inventory Audits – By Associates on all shifts, Cycle Counters as Requested Establish a robust, trustworthy Cycle Count Program

10. Develop a Location Schema for the Entire Plant Inventory locations should be a physical address so that any associate can “find” the location quickly. Aisle, Row, Bin, Pole, Quadrant, etc. • We have over 1,700 locations identified • Label each location • We use highly reflective large barcode signs that hang from the ceiling or are attached to the racks. These can be scanned at range of over 30 feet away • Train Associates on Location Naming Schema • Anytime a new location is needed a new sign must be made and put up

11. Warehouse Location Signs Warehouse Location Signs Mounted to the Ceiling – 19’ feet high Warehouse Location Signs Mounted to 19’ High Ceiling

12. Locations An Associate Can Find Warehouse Pole Marking and Ceiling Location Signs

13. Warehouse Racking Labels

14. Warehouse Racking Labeling Label Wraps Under for Easy Scanning

15. Plant Location WIP Storage Signs

16. Production Line Location Sign

17. Get Ready to Put a Proven Solution to Work Purchase Required Software • ERP System: QAD • Automated Data Collection Solution Train Associates • How to Log In • Inquiries • How to perform transactions • How to make corrections • Drive the message: “If you move it, you scan it” Eagle’s Automated Data Collection solution, RF Express™ for QAD Enterprise Applications, is seamlessly integrated with QAD.

18. Supplier Barcode All movement after receipt by Serial Number

19. Purchase the Tools You Need Purchase Hardware Required for Inventory Management • Scan Guns – Long Range? Short Range? Both • Cradles – for fork lifts • External scanner • Tool Balancer to hang external scanner from • Spare Batteries • External charges • Fork Lift Power Supply to power all accessories • Scan gun • Radio • LED safety light • Fork Lift Safety/Logon Control • Printers – Barcode

20. Standard Fork Lift Scanning Setup Scanner, Cradle, External Scanner

21. Details of how we manage our inventory Inventory is managed at the skid level • We have over 10,000 unique serial numbers in stock To move inventory all the user has to scan is the Serial Number and the “To Location” • The scanning program looks up where the serial number is in stock and the quantity on hand. The transfer is then made from where the system says the inventory is to the new location. This greatly reduces the time to scan and move inventory. It also “self corrects” any previous missed scans. • We process over 15,000 inventory transactions per day Having serial number tracking allows for inventory aging at the skid level. It is easy to spot slow moving inventory and processing out of FIFO sequence. Serial Number Tracking

22. Details of how we manage our inventory • Use a 2-bin system at most lines. No more than 2 skids of material can be delivered to the line at any one time. • The Transfer program strips the serial number when parts are delivered to the line. This is so Backflush transactions can relieve inventory from the pooled inventory with a “blank serial number.” • If components are pulled back from the line, a “Pallet Load” transaction is performed to associate the serial number back to the skid so it can be scanned and moved. • No parts are moved from the line without a barcode label. If for some reason labels cannot be produced the inventory is held line side and blue tagged until the label printing issue is resolved Shop Floor Inventory Management

23. Details of how we manage our inventory • Created Kanban’s within QAD with Item Number, Dunnage Item Number, Standard Pack Quantity, Production Line • Interfaced PLC output from Production to Kanban Card Number. When the line reports completing a skid (Automatically or HMI), a PLC code is sent and captured by our Controls Group and cross referenced to the QAD Kanban number and sent to Pocket E. • Pocket E then sends the required information to Eagle for a BKN – Backflush Kanban and production is reported and barcode labels are printed line side. This all happens “real time.” • Operators can see line side – current item being produced and standard pack quantity. They can also see any serial numbers produced that have not been transferred away from the production line. Shop Floor Production Reporting

24. Cycle Counting Process • All parts must be on the list and assigned an A,B,C classification • All parts are assigned to the weeks they are to be counted • A items are counted 4 times per year, B items 2 times and C Items 1 time • Log daily all items counted (Our goal is to count 20 items per day) • Verify new items are added to the cycle count log • Perform Count • If variance is greater than 2%, then recount. If variance is still greater than 2%, then have 2nd person count to verify. Once verified post the count. • Fill out cycle count summary sheet and route for signatures • $5,000 or less – Materials Manager; $100,000 or less – Controller; Over $100,000 – Plant Manager • Scan and file Must have Cycle Counters Who Care: This is a thankless job

25. Eliminating Physical Inventory We have passed our external quarterly audits and year end audits 3 years in a row and have been exempted from taking year-end physical inventories. • This was very difficult to get approved • The auditing company must verify our inventory records are accurate and be willing to put their name on our financial statements. There is a rigorous process to get them comfortable with the process and data provided. • They randomly select a subset of our inventory at year end by: Item, Serial Number, Location, and Quantity. We then go and put our eyes on the inventory and verify it is 100% correct. • Then they select a random sample of items from the warehouse and shop floor and verify the system agrees with what they find. • We avoid creating errors that are caused while taking a physical inventory with 100’s of volunteers from the Plant on a weekend who are not familiar or don’t care to be taking a physical Inventory. • We avoid huge financial swings from surprise physical inventory adjustments.

26. The Results Inventory Reduction • Total reduction over 4 years -42% Manning Reduction • Reduced Materials manning -22% over 4 years On Time Shipment OEM% • 99% or better Cash Flow • Inventory turns improved from 21 to 38.5 over 4 years Happy Accountants – Priceless

27. Contact Information Corporate / The Americas Bill Paone, Executive VP, Sales and Marketing +1.973.838.5006 Ext. 119 Bpaone@eaglecondev.com | www.eaglecondev.com Eagle Certified Global Services Jim McNeilly, Principal Application Consultant +1.973.838.5006 Ext. 122 Jmcneill@eaglecondev.com | www.eaglecondev.com International contacts available upon request.