Best Practices in Greening Your Supply Chain

1. Best Practices inGreening Your Supply Chain Hank Canitz Senior Director Vertical Solutions QAD, Inc.

2. Agenda • What is a “Green” Supply Chain? • What is Driving Green Supply Chain Efforts? • Focus Areas for Greening Efforts • The Value of Green • Best-in-Class Green Practices • Actions You Should Take Today • Q&A “Going Green” has moved beyond Buzzword status to become a Business Imperative that can Lower Costs and provide a Global Competitive Advantage.

3. Sustainability Defined • A characteristic of a process or state that can be maintained at a certain level indefinitely. • Development that "meets the needs of the present without compromising the ability of future generations to meet their own needs."

4. Sustainability Defined Help secure the future of your organization brands reputation and will help you minimize business risk reduce bottom-line costs increase top-line profits enhance the experiences of employees, customers, and stakeholders

5. Sustainability Efforts Affects… • People & how they work • Evolution of products • Distribution & transportation • Manufacturing processes • Infrastructure of the organization • Product lifecycle

6. What is the Green Supply Chain? • An industry-accepted definition of a green supply chain does not exist today • So how does one build a green supply chain? • Is it enough to be eco-friendly in some processes like transportation or manufacturing to qualify your company as being green? • What about warehousing, inventory management and the efficient maintenance of your capital equipment? • Must every supply chain function be eco-friendly, or can you focus on some areas of the supply chain and still be considered green?

7. Sustainability:Being Green More Valuable Than Price • In May 2009 a US-based survey by Progressive Grocer found that a product’s “energy footprint” influences 77 percent of consumers purchasing decisions, with 76 percent willing to pay more at the register for environmentally-friendly products. • A similar survey conducted in the UK in 2008 found that 60% of UK customers said sustainability issues were the most important were willing to spend up to 45% more for green products.

8. "Being a good steward of the environment and in our communities, and being an efficient and profitable business, are not mutually exclusive. In fact they are one in the same.” - Lee Scott, Twenty First Century Leadership, October 24, 2005 “We do not see this (sustainability) as a trend that will fade. Higher customer expectations are a permanent part of the future. At Walmart, we’re working to make sustainability sustainable, so that it’s a priority in good times and in the tough times. An important part of that is developing the tools to help enable sustainable consumption.” - Mike Duke, Walmart Announces Sustainable Product Index, July 16, 2009

9. Walmart’s Sustainability Product Index15 Questions to Suppliers • Energy & Climate: Reducing energy costs & greenhouse gas emissions. • Material Efficiencies: Reducing waste & enhancing quality. • Natural Resources: Producing high quality & responsibly sourced raw materials. • People & Community: Ensuring responsible & ethical production. Index will drive higher quality, lower costs and measure sustainability of products for first time

10. Forces Driving Green Initiatives

11. Best-in-Class Goals for the Green SC

12. Common Projects to Achieve Goals • Distribution network redesign • Collaboration efforts • Demand management improvements • Capital equipment maintenance improvements • Product reformulation, packaging redesign • Enhanced transportation and warehousing capabilities

13. Areas of Green Supply Chain Focus • Most companies start by focusing on one or two processes, for example: • Reducing energy consumption through lean manufacturing methods and machine preventative maintenance • Measuring and minimizing transportation and warehousing energy usage and carbon footprint • Working with suppliers to minimize excess shipping and end-item packaging • People, process, technology, and organizational structure.

14. Building a Green Supply Chain • Involves making tradeoffs • Requires a holistic approach Extended Supply Chain

15. Product Lifecycle Management • PLM solutions help to enable companies to innovate, design, source, and manage products in more sustainable ways including:

16. Supply Chain Challenges Addressedby Supplier Collaboration • Supply Chain Visibility • Automating reactive and manual Supplier communication • Eliminating shortages that lead to more inventory, breaks in production, delivery delays • Improving In-transit visibility • Inventory Costs • Reducing excess inventory • Reducing premium freight costs • Eliminating non-value add activities - expediting, overtime, line shut-down • Labour • Reducing non-value added costs • Eliminating Inefficiencies

17. S&OP Demand Management • DM enables Green supply chain efforts • Reducing spoilage, obsolescence, & excess inventory • Improving new product introductions • Optimizing roll-out of environmental friendly packaging • Improving manufacturing efficiencies by removing surprises and smoothing the flow of products. “The best forecasters have 15% less inventory, 17% stronger fulfillment, and 35% shorter cash-to-cash cycle times.”AMR Research

18. Sales & Operations Planning • Links day-to-day operations with business goals, operational planning, and financial planning • Helps management model the effect of meeting demand on the company’s supply capabilities & financial goals • Becomes the tool for senior executives to manage the business • S&OP is the catalyst for reaching consensus & running efficient green operations.

19. Enterprise Asset Management “As much as 50% of capital investment in new equipment is made to compensate for the under performance of existing equipment.“ Michael L. George, Lean Six Sigma, 2002 • Well-managed plant maintenance increases production efficiency. • Higher performing equipment uses less power, produces less waste and less carbon emissions leading to greener supply chain operations. MRO Purchasing Project Controls Plant Maintenance MRO Inventory

20. Lean Manufacturing Department Deploying Lean Supporting Technologies

21. Transportation Management One of the most frequently discussed areas of SC Greening efforts. Immergence of making sustainability information available to consumers. Close alignment with transportation efficiency and rising transportation costs. Transportation Pressures Transportation Action

22. Warehouse & Inventory Management • Minimizing Inventory Carbon Footprint ≠ Reducing Working Capital • Have to consider; efficiency, customer service, flexibility. • A holistic approach must be taken to also consider transportation, customer fulfillment, & production. • » reduction in power consumption & total emissions. Warehousing Pressures Warehousing Actions

23. The Value of a Green Supply Chain Source: Aberdeen Group – March 2008 The business case for green initiatives hinges on the ability to literally turn Green to Gold by impacting the top and bottom line.

24. Best-in-Class Green Practices • Holistic, lifecycle approach • Senior executive in charge • Well-developed green training programs • Actively recruit talent with expertise in green • 30% more likely to use advanced transportation and logistics systems • 70% more likely to use asset management solutions • Commitment to track and measure key supply chain cost metrics

25. Top Five Strategic Actions

26. QAD’s Enabling Solution Extended Supply Chain • PLM – Product Lifecycle Management • SV – Supply Visualization • DM – Demand Management • SOP – Sales & Operations Planning (Part of DM) • EAM – Enterprise Asset Management • Lean Mfg - Lean Manufacturing • TMS – Transportation Management System • DRP – Distribution Requirements Planning (Part of SCP – Supply Chain Planning) • WMS – Warehouse Management Systems

27. Three Actions You Should Take Today • Engage QAD to help evaluate your supply chain processes and supporting systems. • Start collecting the necessary data to build the required foundation for supply chain environmental footprint visibility. • Focus on operational excellence, reliability and agility which builds a foundation to enable green practices.

28. Upcoming Related Webinars • “Greening the Supply Chain” Webinars • Greening the SC Webinar Series Overview- Wed 10/14 • Greening the SC through Lean Mfg– Wed 11/4 • Greening the SC through Enhanced EAM – Spring 2010 • Greening the SC through Advanced WMS – Spring 2010 • Greening the SC through Holistic TMS – Spring 2010 • Greening the SC through Enhanced PLM – Spring 2010

29. September 29, 2009 8:00 ampst THE QAD 2009.1 ADVANTAGE:QAD 2009.1 Webinar Featured Speakers: Pam Lopker, QAD Founder and President Gordon Fleming, Chief Marketing Officer Bill Keese, Sr. Vice President, R&D Register at: www.qad.com

30. Where to go for assistance Phil Friedman – Vice-President, Vertical and Product Solutions PHF@QAD.com 1-631-474-2055 Hank Canitz – Sr. Director, Vertical Solutions – Consumer/Food & Beverage HCC@QAD.com 1-720-238-7439 Steve Wobschall – Sr. Director, Vertical Solutions – Industrial/High Tech SWO@QAD.com 1-303-290-7347 Riya Cao – Director, Vertical Solutions – Life Sciences ZRC@QAD.com 1-248-320-1909 Terry Onica – Director, Vertical Solutions – Automotive TJO@QAD.com 1-586-747-9495

31. Best Practices inGreening Your Supply Chain Hank Canitz Senior Director Vertical Solutions QAD, Inc.