Speed, Visibility and Control for Improved Profits Grant Woolf ClearOrbit

1. Speed, Visibility and Control for Improved Profits Grant Woolf ClearOrbit

2. Agenda • Company Overview • Hidden Costs of Returns • Solutions • Oracle Strengths and Weaknesses • ClearOrbit Returns Solution • Q&A

3. Company SnapshotClosed-loop, bi-directional goods movement across the value chain • Founded in 1994, headquartered in Austin, Texas • Customers include over 275 leading manufacturers and distributors • Deployed globally at thousands of locations serving tens of thousands of users • Solutions in: • Supply management collaboration • Mobile applications • Manufacturing execution • RF & barcode printing applications • Returns management (new in 2006) • Technologies that leverage enterprise investments • Profitable and growing

4. The Problem:Hidden Costs of Returns “There are up to 12 times the number of transactions involved in the returns process than to sell the product in the first place.” (AMR 2004) “Improperly handled returns erode 30-35% of potential profits.” (Gartner 2004) Warranty repairs Return Credits Buy backs Write-offs Cycle count discrepancies Manual reconciliation Administrative labor Freight costs Excessive inventory Reserve forecasting Facility overhead Customer Service contacts $100 billion in goods returned each year Claims liabilities Metric reporting Aberdeen Group 2006

5. Overall Reverse Logistics Costs as Percent of Sales

6. Hidden Costs of Returns Management • Hidden Labor Costs • Grey Market Items • Lack of visibility • Inability to forecast accurately • Credit reconciliation • Poor response time

7. 1. Hidden Labor Costs Customer Customer Service Finance Sales Traffic Rcvng Whsing Repair Asset Mngment • Return policies • Customer-specific issues • Product eligibility • Credit timing issues • Warranty support • Perception • Warranty policies • Service contracts • Product rules • Credit rules • Advance replace • Special customer needs • Record of RMA • Financial impact • Process, approval rules • Debits • Problems found in Receiving • Ability to reconcile • Write-offs • Account management • Ineligible returns • Revenue recognition • Margin protection • Special programs • Quality impact • Return rate forecasts • Carrier control • Non-contract rates • Transit damage – claim recovery • One-off shipment issues • Inability to track, route effectively • Facility and labor planning • Priority conflict • Very manual effort • Owner-ship issues • Exception Handling • Internal visibility • Repair – ship back • Replace • Credit • Invoice • Float stock • Resale • Scrap and reclaim value • “Green” needs

8. 2. Grey Market Items • Even if warranty is controlled by serial number or other unique identifier - if company ships large volumes it’s very difficult and time consuming for manual lookups • Return requests approved in one geography may not stop product from moving to another – processes may not exist to capture associated, unbudgeted costs • Product sold into specific markets may not be visible if service is requested in another • Product designated as scrap may re-appear for warranty but not be easily recognized in manual operations • Product sold to jobbers or liquidators for sale off-shore may appear for warranty/service and not be recognized in manual environment

9. 3. Lack of visibility • Customers want visibility to status of return requests – if no information readily available, customers will call/email customer service and sales teams • If a request falls inside of standard policy or purchase agreements but is from a customer on credit hold, returns may be approved when they should not be • If warehouses/returns centers are not aware of incoming returns, then valuable resources may be pulled away from new product sales, or other revenue generating activity • If the reason for return is not known, testing and other unnecessary effort will be involved at point of receipt • Discrepant or non-conforming product will continue to be a costly problem unless factual information can be presented to design, quality, marketing and other teams

10. 4. Inability to forecast accurately • Detailed historical information about returns may be trapped in local Excel spreadsheets and databases • Sales staff is often asked to provide forecasts for reserves but not given good returns information • Return requests approved but not valued or matched against receipts prevent good accruals • Return requests processed in one quarter but received in another may create problems for executives meeting SOX requirements • Lack of detailed return reasons – and lack of corresponding verification at receipt may hide serious marketing or quality issues • Lack of awareness of returning product that can be used for service parts float stock may result in purchase of new product

11. 5. Credit reconciliation • Since large customers often calculate their own credits – and take a debit on next payment – this is a very labor intensive problem • Since debits are taken before return is received, finance team is unable to match/reconcile • When product is received, any discrepancies will involve customer service, finance, sales, etc • Many customers require Proof of Delivery before accepting a difference in the credit amount • Fiscal year-end or end of quarter reconciliation often involves negotiating with the customer – and splitting the difference • Continued inability to prove case on the part of the supplier invites customer abuse

12. 6. Poor response time • Manual return request processing and validation cause delays in approving or rejecting return requests and frustrates customers • Delays in validation and approval result in multiple contacts from the customer, affecting their perception • Discrepancies caught in receiving cause delays in communication to finance and to customers about returns issues • Manual resolution of discrepancies is time-consuming and may be inconsistent and inaccurate • Difficult reconciliation processes result in delays and additional reconciliation needs • Slow and potentially confused service levels affect customer retention

13. The Biggest Problem Nobody owns the problem!

14. Solutions • Get customers, vendors, 3PLs, repair depots, and other 3rd parties looking at the same data • Access method and content driven by roles • Simple implementation and integration drives adoption • Don’t make partners transact in multiple systems • Leverage Your ERP and CRM systems where you can • Supplement your ERP and CRM where they fall short

15. Return Request Validate RMA Ship Receive / Handling Repair / Refurbish Resell / Recycle How do the solutions stack up?

16. Oracle Applications for Returns • Strengths • Strong integration with inventory • Basic Request and approval • Integration with finance • Internal Repair Depot • Integration with Order Management • Weaknesses • Integration with 3rd parties • Gate keeping • Routing and manifesting • Exception Handling • Material Tracking (outside of inventory) • Dispute Resolution • Disposition and value recovery of returned material

17. CRM ERP ERM WMS, TMS Enterprise Returns Manager from ClearOrbit • Revenue and profit management, not just material movement • Control and visibility for the entire returns process • Automated management of: • Customer relationships • Financial decisions • Up-sell opportunities • Product dispositions • Discrepancy tracking • Regulatory compliance • Environmental impacts

18. ERM Data ERP, Quality, Mfg Systems ClearOrbit System Architecture ClearOrbit Enterprise Returns Management ERM Application Server ClearOrbit Web Services ClearOrbit Web Pages End Users -Customers -3PLs -Internal Excel Integration Workflow Engine Rules Engine End User Systems -WMS -ERP XML Integration Carrier i.e. FedEx

19. ClearOrbit’s Enterprise Returns Management Request Route Receive Disposition Recovery Phases Reconcile, Dashboard & Intelligence Visibility • Web-based RMA entry • Eligibility validation • Automated & manual RMA approval/rejection • Email alert/confirmation • Dynamic user interface • Destination determination • Manifesting • Packing • Label generation • Inbound ASN's • Shipment tracking • Pickup request • Shipment Optimization • Configurable workflows via Visio • Rules-based disposition • Asset history • Warehouse document generation • LPN processing • Advanced exchange • Asset allocation • Return routing • Cross dock • Auto-scrap • Intelligent fuzzy match • Match-up management • Auction • Return unit receipt • Manual RMA creation • Resolve discrepant lines • Containerized dock receipt • Scanner data capture • Outside processing Key Activities

20. ERM Release 4.1bRequest RMA - Customer

21. Flexible Folders Context Sensitive Menus ERM Release 4.1b Search RMAs – Return Management

22. ERM Release 4.1b Receive Item Level Detail

23. ERM Release 4.1b Dashboard

24. ERM Release 4.1b Scorecard Drill Down

25. Q&A