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Forecast...Action...Contract...Trigger

Our Supply Chain Customers all fit into a similar methodology…..FACT. Forecast...Action...Contract...Trigger. Our Customers provide Avnet A Forecast of needed materials. Avnet procures and stocks components To support the customer’s forecast. (Action) All the activity is managed under the

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Forecast...Action...Contract...Trigger

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  1. Our Supply Chain Customers all fit into a similar methodology…..FACT Forecast...Action...Contract...Trigger Our Customers provide Avnet A Forecast of needed materials. Avnet procures and stocks components To support the customer’s forecast. (Action) All the activity is managed under the terms of a Contract and Scope of Work Material is then Triggered for release and delivery via JIT Methodology or Tools

  2. Benefits of FACT Model • Material Held awaiting Trigger release • Ownership Postponement • Supplier Reduction / Consolidation • Supply Chain managed by Avnet • Reduced inventory Levels • Reduced FulfillmentLead-time • Reduced Obsolescence / Risk • Upside Flexibility for ‘spikes’ and troughs • Allows Buyer /Planners to focus on critical responsibilities ( Contracts/ Vendor Performance/ Quality issues/ etc) • Lowers your Working Capital needs • Contract Pricing…Price Protection on Inventory

  3. FORECAST DEMAND Forecast Smoothing Customer Forecast & Demand Profile QTY TIME • Upside Demand • Utilize “on-hand” flex material model • Tap general Avnet Inventory $1B+ • Expedite Avnet supplier pipeline ($3B+ on order) • Cross reference to alternate line card Mfg. • Purchase on open market • Downside Demand • Move to Avnet general inventory (100K+ customers) • Utilize supplier return privilege • Alternate channels • Price Protection on existing inventories

  4. The Value of Price Protection Customer negotiates new pricing on Strategic Components with its OEM at the beginning of Month 1. Customer currently has two months of existing Inventory in stock at the old price. New Price cut in does not impact BOM Cost until the Existing Inventory is consumed. When did the standard price change in the system? Month 1 or 3? Both are problematic….if it changed in month 1, Gross Margin for that product Is mis-stated. If it changed in Month 3, impact from the lower standard is less. New Price Established New Price Cut-in?? $$$ Material Cost Customer Inventory Position based on 6 turns Month 1 Month 2 Month 3 Avnet’s extended ownership models allow for pricing adjustments to take place Immediately, and even up to the point of consumption.

  5. The Execution Programs

  6. Supply Chain Solutions Program Terminology • BIPP (Bonded Inventory Planning Program) • A Supply Chain program for small or emerging accounts. Bonded inventory without a contract. No NCNR parts. • F.A.C.T. (Forecast, Action, Contract, Trigger) • Elevates the supply chain to a new level, including Contractual Agreements, Scope of Services and entire BOM management (franchised & non franchised) • VMI (Vendor Managed Inventory) a.k.a: Consignment • Available On-site, Avnet-owned inventory by Avnet, managed by the customer. • InPlant Stores • An InPlant Store provides on-site Avnet SCS personnel, inventory and systems to directly support planning, purchasing, material management and warehousing functions • Proximity Site • Incorporates the elements of an InPlant Store, but moves the material off-site into a warehouse that is in proximity of the manufacturing location.

  7. Supply Chain Solutions Terminology- Continued- • 3PL (3rd Party Logistics) • Typically a service that is supported from a InPlant/Proximity store. Customer/Supplier owns the product, but Avnet provides a warehouse service for a handling fee. • POURSweb • Web-based tool using an open architecture to support KanBan, VMI, min/max programs, bread man and 3PL managed replenishment. A tool to generate “triggers” internally and externally to the customers suppliers. • Supply Chain Central: • The eCommerce link to your Supply Chain Information and Self-Service Portal

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