Orlando Evaluation (DRAFT) September 22 nd – 24 th , 2009

1. Orlando Evaluation (DRAFT) September 22nd – 24th, 2009

2. Outline • Background • Evaluation Process and Participants • Customer Impact Issues / Actions • Next Steps • Process / Efficiency Opportunities

3. Background • Orlando implemented “skinny” processes in Q1 2009 for the Merillat Brand • The Quality brand and inventory processes were implemented in late May / Early June • Significant resolved issues related to “pilot” • Customer OTC was impacted by several issues with the solution and processes • Stabilization at DVA causing partial shipments and confusion on shipping status • String table issues slowed order entry and resulted in errors for some end panels • Productivity • Duplicate IR / ISO’s caused spike in surplus (Oracle issues) • Mass pick release and corrective actions resulted in shortages and surplus • Physical inventory process in August caused additional shortages and surplus

4. Evaluation Process and Participants Evaluation Process Reviewed existing process documents and SOP’s Interviewed key personnel listed below Initiated corrective actions where possible – efforts will continue Reviewed detailed findings with Branch Manager, Tom Craig Participants Buyer: Roberta King Delivery Scheduler: Mario Correa Receiving Lead: Wanik Gilius Shipping Lead: Dexter Merriweather Inventory Planner: Rich Gorniak / Wanik Gilius Top Shop Lead Ricardo Lorenzo (Laminate) / Matthew Ahamdy (Solid Surface) FSR Dale FSC: Wendy Evans FSS: Mike Morales Operations Manager: Albert Robinson

5. Open Customer Impact Issues

6. Efficiency Improvement Opportunities - Observations • General Observations • Standard Operating Procedures (SOP’s) are not in place • Daily Dozen is a good tool, but without SOP’s less effective • Good knowledge level for key individuals • Inventory Cycle Count process is not in place • Lot Management (POM) is not being used • Up front order management process is challenged • Lack of time for checks • High number of TPI’s • Current State • Installing at around 42 kitchens per day • Seeing dramatic improvement in OTC this week – 100% 9/24 • Around 300 kitchens in stock – only 3 with known shortages • Surplus at around 1500 cabinets • @ 210 allocated to new orders in the past 7 days • Will need to discount some slower moving items

7. OTC History Updated after meeting with additional week of data

8. Next Steps • Integrate all issues into the shared “Issues List” • Prioritize • Action Plans • Follow up process (Below was the agreed list prior to this visit)

9. Efficiency Improvement Opportunities / Actions • Overall • SOP development will happen at Phoenix – introduce in advance of Merillat launch – PIT / Branch / CCC • Will likely introduce Lot Management (POM) at Merillat launch or before – PIT / Branch / CCC • Report clarity and definition – bt2 • Soma to visit week of 9/28 • Kaizen to be scheduled • Communication of changes to bt2 solution is not effective – bt2 • Clear definition needed of RED / YELLOW / GREEN status for daily dozen – PIT • Tasks take longer • Inventory +1 headcount (may be temporary) • Install planning +1 (may be until text integration) • Service +1 (may be temporary) • Reports Admin +1 (temporary and not on board)

10. Efficiency Improvement Opportunities – cont’d • Up front Field Service • Not all drawings are being scanned to Doc Link after measure – Branch / CCC • Order Management • Save orders not being booked in agreed 15 minutes - CCC • For skinny the JDE order number is not being input consistently into the Oracle order comments – CCC • Designer Doors are being entered as TPI’s (not allowed) - CCC • Procurement • Process for MISC (Corbels, 3rd party cabinets, countertops, Liberty) items is not 100% effective • Item setup – bt2 / Engineering • Process development – bt2 / PIT • Issues with 3-way matching – Branch / AP

11. Efficiency Improvement Opportunities – cont’d • Install Scheduling • Install task not created until 5 days prior to JSDD – limits ability to update confirmation status – bt2 / PIT • Communication to installers is not automated – bt2 (enhancement) • Process for maintaining installers / zones is not defined – PIT • Installation units are missing on some jobs (refer to order prep package) – bt2 • Would be nice to have links to documents within Oracle – bt2 (Stellent) • Would be nice to separate “kitchen” orders from service with a field versus cabinet filter – bt2 • Ability to drill in to maintain service tasks went away (have to go to another screen) – bt2

12. Efficiency Improvement Opportunities – cont’d • Warehouse Management • Reorder of “save” material that is issued from warehouse – In process – bt2 • Introduce Cycle Counts and revised physical inventory process in October – bt2 / PIT / Branch • Low frequency issue of missing order number on packing list – bt2 • Using order requests to pick service – picking / ship confirms done later – PIT / Branch • No notification when pac man allocation is cancelled on an order – also cannot move product reservation to allow cabinet to be staged with kitchen – SOP needed – bt2 / PIT • Descriptions not detailed enough on all items for reorder report – Engineering or enhancement • Unclear process for updating MIN / MAX – PIT • Issues with performing ship confirm for reordered parts – bt2 / Branch / PIT (probably driven by historical issues)

13. Efficiency Improvement Opportunities – cont’d • Countertops • Cost differences between back to back PO and order prep package – bt2 / CCC/ Branch • Service • Using Oracle combined with excel and MS Outlook – need to streamline – PIT / Branch • No notification when parts arrive for service – bt2 (enhancement) • Delivery instructions vary on service parts (Hub issue) – manual touch to direct delivery – bt2 / PIT

14. Orlando Oracle Process flow