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BEAL Solutions Confidential

Raising the Bar in Inbound Supply for: Global Benchmarking Council 12 November, 2002 Mike Beal C.E.O. BEAL Solutions Carrie White Account Mgr BEAL Solutions Larry Brown Vice-Chairman BEAL Solutions www.bealsolutions.com. BEAL Solutions Confidential.

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BEAL Solutions Confidential

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  1. Raising the Bar in Inbound Supply for:Global Benchmarking Council 12 November, 2002Mike Beal C.E.O. BEAL Solutions Carrie White Account Mgr BEAL SolutionsLarry Brown Vice-Chairman BEAL Solutionswww.bealsolutions.com BEAL Solutions Confidential

  2. 2002 State of Art in Electronics Manufacturing Status: During the last 10 years, Achieved 10X improvement in the build cell quality, velocity and cost Business issues: Improve quality; Feed build cells; Reduce costs Assembly Supplier Warehouse BEAL Solutions: Re-engineer inbound w/ RPCs & RF & Web & Services Expected Results: 10X improvement in inbound quality, velocity and cost BEAL Solutions Confidential

  3. 10X Inbound Supply Performance 1X 2000 2005 2010 RPCs: New 10X Paradigm for Inbound Supply Next 10 years assertion for electronic industry: RPCs with new RF tags & Applications, yield unexpected benefits: - in-transit damage made visible -receiving process quality & productivity -inventory control issues resolved: discrepancies, location, visibility, levels RPCs replace inbound disposable containers with expected benefits: -packaging -freight -productivity 80% RPC Cost Savings Will Come From the Unexpected Benefits! BEAL Solutions Confidential

  4. BEAL Solutions: Incubating an Industry Leader BEAL Solutions history: April 1997 - New Dell OptiPlex factory: Ramped production rates to 30K/day; total waste tonnage >90 tons/day October 1998 – Dell Reusable Container Program started as BPI initiative in Austin manufacturing facilities January 2000 - Elevated to WW operations strategy group for global implementation – N. America, Europe, Asia-Pacific April 2001 - Dell outsources worldwide implementation and mgt of RPC program to BEAL Solutions, LLC, made up of core Dell team members September 2002 - BEAL China joins Austin, Guadalajara, Penang, Limerick. Dell project count at 25; Dell cumulative savings exceeds 30M$. BEAL Solutions Confidential

  5. BEAL Solutions, LLC: Beliefs Become Actions “Customers for Life” Commitment • Proof of Concept pilots • Direct WW account management • Single point of contact for services Proven Solutions Faster Time to Value • Everyone Wins! • Proven tools, processes, & partners • Real results: Costs, Quality, Time, People • Immediate savings & benefits • Close the loop experience • Focus on Execution BEAL Solutions Confidential

  6. Result: BEAL Customer List is Growing # Customers Customers Pilots Proposals BEAL Solutions Confidential

  7. RPC Program Benefits Create Value C o s t Q u a l i t y • Eliminated Expendable Packaging • Freight Optimization • Inventory Space Reduction • Standardized Containers • No expendable packaging procurement • Product-specific RPCs & inserts • Fewer Touches • Cleaner Work Environment • 99% Reduction In-transit Damage V e l o c i t y P e o p l e • Reduced De-Trash time • Faster Point of use replenishment • Faster Build Rates • No supplier box assembly • Minimal Waste Disposal • Safer work environment • No knives, tape, nails, splinters • Reduced “lost time” incidents • Improved ergonomics • Environmentally responsible BEAL Solutions Confidential

  8. RPC Success Key: Closed Loop Management Assembly Supplier Warehouse ‘Close the Loop’ BEAL Solutions CLC clean, inspect, repair, store, deliver BEAL - Demonstrates Leadership in RPC Solutions with Customers for life: Custom Solutions; Low Cost; Low Capital $; Turnkey Install; WW Account Mgt BEAL Solutions Confidential

  9. BEAL Accounts: Strong Support Network Supplier #1 Warehouse #1 Assembly Warehouse #2 Supplier #2 BEAL Solutions CLC Multi-loop node example Note: All fees pay per use BEAL Account Mgr:  Configured Helm  Weekly Loop Calls  Issue Resolution R&D HW/SW RF Technology Installation Training IT Support CLCs Logistics Partners WW Acct Mgrs Nodes & Loops RPC Inventory BEAL Solutions Confidential

  10. Typical RPC Example: Server Motherboard Current Costs: Disposable Packaging (Box, Pallet, Foam, Insert) $2.88 Inbound Freight (84 parts per pallet , 30 pallets) $0.79 Total Current Costs $3.67 Proposed Costs: BEAL Solutions RPC & Services $2.57 Freight with RPCs (105 parts per pallet , 60 pallets) $0.32 Total Proposed Costs $2.89 Total Savings per part $0.78 Total Savings per year (1.5 Million boards) $1,170,000 Typical Expected Packaging and Freight Savings 15%-25% Better Truck & Pallet Density 21% Savings BEAL Solutions Confidential

  11. Notebook Example- W/W Loop Management China Ireland Notebook Factory Component Factory BEAL Container Logistics Center Malaysia BEAL Services Partner Outbound Return BEAL Solutions Confidential

  12. Notebook Bases In-Transit Damage Example Annual In-transit Damage Unexpected Costs Exceed 3M$; RPCs eliminate 99% BEAL Solutions Confidential

  13. Notebook Example: In-Transit Cost Impact 5M$ 3500K$ Total Notebook Cost Savings 500K$ 0M$ Packaging Savings Packaging and In-Transit Savings Unexpected In-transit Damage Cost Savings is 85% Total Cost Savings BEAL Solutions Confidential

  14. BEAL Solutions Chassis Pack - Benefits Eliminates Expendable Packaging No Waste Handling/Removal Costs Provides Superior Protection Against Handling and In-Transit Damages Able to Stack 5 High in Trailer, Potentially Enabling Substantial Increase in Density = Lower Freight Costs Reusable Material Enables Use of RFID Tracking Devices Our New Chassis Pack Solution Drives Down Costs and Improves Quality! BEAL Solutions Confidential

  15. BEAL Solutions Chassis Pack - Design Assembled – 48.2” L x 40.2” W x 22.4” H Collapsed – 48.2” L x 40.2” W x 6.2” H Stacked 5 High = 106” 5 Chassis Packs per Pallet Space in Trailer 150 Chassis Packs per Trailer 3.6:1 Collapse Ratio 17 Chassis Packs per Pallet Space in Trailer 510 Chassis Packs per Trailer Mirror-image, legged end caps, with sidewall, interior divider and foam End caps designed to interlock in stack and nest when empty Designed to eliminate wood pallets, provide superior product protection, and optimize freight BEAL Solutions Confidential

  16. BEAL Solutions Chassis Pack - Process 2 3 4 1 Press in Passive Lock Cutout Set End cap to Side Remove End cap Collapse Partitions and Set to Side 6 7 8 5 Collapse Sidewall Set Sidewall in One Half of Pack Set Partitions in Other Half of Pack Flip and Replace End Cap 8 Easy Steps to Savings and Superior Protection BEAL Solutions Confidential

  17. Accuracy and Velocity of Helm RFID reads By using The Helm, customers can achieve a 99.98% accurate read rate on all RFID enabled RPC movements through RFID portals • More than 100 RFID tags can be read in one second • Each RFID tag can be read more than 50 times per second • Filtering software provides 1 “confirmed read” regardless of how many times RFID readers read each tag – ensures quality • RFID companies report reading tags at speeds up to 25 feet per second • Tags can be hidden inside the box - eliminates tampering possibilities Best Case Manual Bar Code Scans Have a 2% Error Rate – RFID-Enabled RPCs Offer Up To 100X Improvement! BEAL Solutions Confidential

  18. Configured Reports: Helm Application Outputs Questions people ask in manufacturing facilities around the world led to the creation of useful reports to manage inventory: How many days of inventory do I have at a location? How long have specific containers been sitting at any location? Where’s my stuff? The Flexibility Provided in The Helm Allows for New Reports to be Provided Quickly and Capably to Meet Your Business Needs! BEAL Solutions Confidential

  19. Customer Service: Helm & Custom RPC Example Days of Inventory ‘Real-Time’ 6,800K$ Reduce Scan Time 100K$ In-Transit Visibility with ETA 100K$ Proof of Delivery 100K$ Repair (300) Supplier (30) C/S Warehouse FIFO Dwell Time ‘Real-Time’ $300K RPC introduction 750K$ In-Transit damage 850K$ Web-based Mgt tools Benefit: Improved Account Mgt BEAL Solutions CLC BEAL Solutions Confidential

  20. Customer Service Example: Total Savings 9000K$ 10M$ Inventory Red. Total Service Cost Savings Obsolescence Discrepancies 1600K$ Expedites Labor 750K$ Transit Damage Package/Freight 0M$ Package/Freight Savings Package/Freight In-Transit Savings Total RPC & Helm Savings Unexpected Helm Cost Savings are 85% Total Cost Savings BEAL Solutions Confidential

  21. BEAL Asset Tracking: Pricing, Service and Funding Mexico Supplier Mexico Distributor U.S. Customer Supplier Totes Supplier Totes Supplier Inventory Supplier Inventory Supplier Inventory Nodes RF & Helm-enabled = 20K$US per node portal Tracking fee = 2$U.S. per use BEAL Account Mgr:  Install Node Portals & Train  Apply RF Tags  Configure Helm  Weekly Loop Calls  Issue Resolution  Inventory Reduction Proposals  Shrinkage Reduction Proposals Example 30 day turn Project Funding:  4000 Totes @ [ 50$ Cost + 100$ Matl]  Total Loop inventory = 600K$U.S.  Total N.R.E. Cost 3x20K$= 60K$ U.S.  All inventory $ & locations visible  Identify Level, Gates, Shrinkage  Reduce inventory 10% to cover N.R.E.  Reduce Shrinkage 4% covers mth fees BEAL Solutions Confidential

  22. Standard Reader Secure Assets: Channels of Digital Protection Typical Example: Armory Personnel ID Signature Data Capture Visual Evidence Digital Cameras Video Alert Location Movement Multiple Read Zones Surveillance Mode Mobile/Portable Readers Increasing Digital Protection Level ---> Door Operation Performance Tag Motion Sense Value Tag Real-time Read Ingress Egress Available Helm Channels BEAL Solutions Confidential

  23. Technology Challenges & Counter-measures High Effective counter-measures: Frequency Rotation- virtually eliminates nulls Separation- Create distance between tag & base Read capability- Multiple tags, Reader power Multiple Readers- Increase RF field strength Performance Tags- Multiple reads, Checksum Ease of Data Read Confirmation RF Technology challenges: Null zones- Read zone wave properties Compositions- Fluids, Metals, Conductors Buried Tags- Pallet middle, Carrying cases Facility construction- Concrete dissipation Machinery- Fork lift tongs, RF interference Low Low High Chip Excitation Signal Strength RF has challenges. BEAL has knowledge & experience to meet those challenges. BEAL Solutions Confidential

  24. Electronics Industry RPC Summary 10X Inbound Supply performance is a key next decade focus. An order of magnitude improvement is necessary. RPCs w/ RF Apps provide enablers & remove roadblocks. BEAL Solutions is the RPC leader for Electronics. BEAL Solutions can be a long-term business partner. Inbound Supply Performance 1X 2000 2005 2010 BEAL Solutions Confidential

  25. Backup BEAL Solutions Confidential

  26. Unexpected Service Savings Utilizing The Helm RPC-based Hard Savings$ Packaging and Freight : 750K$ In-Transit Damage: 850K$ 1600K$ Helm-based Unexpected Savings$ Inventory Level Reduction: 6,800K$ Obsolescence Inventory : 300K$ Expedited Freight: 100K$ Reduced Labor: 100K$ Payment Discrepancies: 100K$ 7400K$ Total 9,000K$ Supports ISO14001: Saves 1.1M pounds of waste The Helm Enables >80% of Total Savings BEAL Solutions Confidential

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