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STV Corrugated Project

STV Corrugated Project. Current Model. Stephenville Incumbent Supplier – Harris Packaging (18 years) Contract End Date - March 31 st 2006 12 Month spend at current cost - $640K 159 SKU’s 115 SKU’s with receipts in last 12 months Pareto – 80% of spend with 30 SKU’s

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STV Corrugated Project

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  1. STV Corrugated Project

  2. Current Model • Stephenville • Incumbent Supplier – Harris Packaging (18 years) • Contract End Date - March 31st 2006 • 12 Month spend at current cost - $640K • 159 SKU’s • 115 SKU’s with receipts in last 12 months • Pareto – 80% of spend with 30 SKU’s • Payment terms – 5th 3rd Prox • Mullin (200 lb test) Paper • Daily Deliveries from Harris HQ (Harris no longer has warehouse in Stephenville) • Stephenville faxes daily releases to Harris for daily delivery • Releases come from Stephenville stock at Harris

  3. Smurfit • Located in Grand Prairie TX (100 mi from Stephenville) • Corporate Agreement: • 10% reduction on new business transition – Approx. $64K (additional savings oppr. if we change material) • 7% rebate at end of every fiscal till FY09 – Approx. $40K for 1st Year • FY07 – 2.75% reduction – Approx. $16K • FY08 – 3.00% reduction – Approx. $17K • FY09 – 2.00 reduction – Approx. $11K • Payment Terms – 5th 3rd Prox ***Figures to change if tentative $40/tonne increase on liner is effective in the market place for February 2006 • Samples/Specs – 3 to 5 business days (up to 15 samples per LT) • If part # outsourced, will advise LT and expedite • Tooling LT – 7 business days • Transition – 10 items per week • Production LT – 10 business days on new part #, 3-5 business days on repeat part #’s • 3 – 5 days LT on repeat parts should not apply to stocked items • Total time for production – 22 days to delivery

  4. Exit Strategy • Create Team • Terry Jenkins, Paula McCoy, Steven Kim…need engineer for 1st articles…marketing? • Phase 1 • Inventory • Identify O/H & O/H $’s in Stephenville and Harris • Tie out current O/H to part #’s • Inventory on tooling (die’s and printing plates) • Have Smurfit to identify which items they will manufacture and which they will outsource • Outsource partner may be Harris, but Smurfit will manage all orders, service • Request samples every 3 – 5 business days descending by highest volume part #’s • Do 1st articles on each sample upon completion • Who/how long to evaluate? • Must do transit test if material changed from Mullin to 32 ECT • how many samples of each part # required ? • Phase 2 - After 1st articles and transit test on 32 ECT • Confirm which part #’s to transfer on 1st schedule • Work with Smurfit to identify Min/Max inventory for 1st transition parts • (concerns with SOX?) • Confirm Harris has approx. 30 days inventory on 1st transition part #’s (rolling transition process) • Advise Harris of business transition • Move 1st schedule tooling (die’s, printing plates) from Harris to Smurfit (allow 3 days) • Smurfit to confirm tooling is in good shape and it works on there machines • Phase 3 • Smurfit to produce to agreed upon levels for 1st transition part #’s • Send all requirements for 1st transition part #’s to Smurfit • Repeat Phase 2 until all items are transitioned

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