Michael Oldham, P.E., CPSM ISM-Denver Pre-Dinner Seminar 1/15/2015 1

 Strategic Role of Supply Chain Management  Supply Chain Strategies & Performance Metrics  Supply Chain Design & Planning  The benefits of SMI (Supplier Man. Inventory)  Convincing your supplier to participate  The Supply Contract’s Role  Case studies, both high and low volume  Emerging Trends in global supply chains  Metrics and supply visibility 1/15/2015 2

3 1. Disposition/Investment Recovery 2. Distribution 3. Inventory Control 4. Logistics 5. Manufacturing Supervision 6. Materials Management 7. Packaging 8. Product/Service Development 9. Purchasing/Procurement 10. Quality 11. Receiving 12. Strategic Sourcing 13. Transportation/Traffic/ Shipping 14. Warehousing 3 1/15/2015

 Key Participants ◦ Suppliers ◦ Manufacturers ◦ Warehouse, Distribution Centers & 3PL’s ◦ Customers  Processes ◦ Supplier Selection and Sourcing/Purchasing ◦ Manufacturing / Processing ◦ Transportation/Logistics/Distribution ◦ Customer Service ◦ Reverse logistics  Costs ◦ Material (purchasing & holding), Manufacturing (including product design & development), Transportation & Distribution 4 1/15/2015

East CoastWest CoastEast EuropeWest Europe Retail USA EMEA (Germany) Distribution centers China Assembly GermanyChina Tier 1 Major subassemblies GermanyMexicoUSAChina Tier 2Components SwedenUSAMalaysiaCanadaThailand Tier 3 Raw materials 5 1/15/2015

Deciding how to best move and store materialsLogistics Determining location of facilitiesLocation Monitoring supplier quality, delivery, and relations Suppliers Evaluating suppliers and supporting operationsPurchasing Meeting demand while managing inventory costsInventory Controlling quality, scheduling workProcessing Incorporating customer wants, mfg., and timeDesign Predicting quantity and timing of demandForecasting Determining what customers want (Product Mix)Customers Typical IssuesElement

Customer RelationshipOrder FulfillmentSupplier Relationship  Percent of orders taken accurately  Time to complete the order placement process  Customer satisfaction with the order placement process  Customer’s evaluation of firm’s environmental stewardship  Customer retention  Percent of incomplete orders shipped  Percent of orders shipped on-time  Time to fulfill the order  Percent of botched services or returned items  Cost to produce the service or item  Customer satisfaction with the order fulfillment process  Inventory levels of work-in- process and finished goods  Amount of greenhouse gasses emitted into the air  Percent of supplier deliveries on-time  Supplier lead times  Supplier flexibility  Percent defects in services and purchased materials  Cost of services and purchased materials  Inventory levels of supplies and purchased components  Evaluation of supplier’s collaboration on streamlining and waste conversion  Amount of transfer of environmental technologies to suppliers 7 1/15/2015

Return on assets (ROA) Increase ROA with higher net income and fewer total assets Total assets Achieve the same or better performance with fewer assets Working capital Reduce working capital by reducing inventory investment, lead times, and backlogs Fixed assets Reduce the number of warehouses through improved supply chain design Net income Improve profits with greater revenue and lower costs Total revenue Increase sales through better customer service Cost of goods sold Reduce costs of production, shipping and purchasing Operating expenses Reduce fixed expenses by reducing overhead associated with supply chain operations Net cash flows Improve positive cash flows by reducing lead times and backlogs Inventory Increase inventory turnover 8 1/15/2015

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 2-4 weeks of stock  Each week: 17 week commit  Dwell period - supplier ownership Company  Taxes, insurance, importation duties  Transportation costs, warehouse costs  FiFo considerations / EDI is required  3PL contracts - Required  Quality and inspection costs 1/15/

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Company Receives Customer PO and creates SO Company Collects from 3PL and ships to customer to close SO Supplier receives PO from Company Supplier sells Product to Company without A suffix Canada Customer Company Receives back to back PO from Supplier EMS maintains SMI based upon Company forecast EMS receives PO/pull from Supplier & moves inventory to Company Company Sells Inventory to Supplier NOTES/REQUIREMENTS 1.Supplier will have to manage many high volume low value customer specific Company PO’s 2.Supplier must agree to EDI implementation 3.Supplier must agree on similar model for EMEA & AP SMI Supply Start Modified Supplier Managed Inventory Process Flow Company Collects from 3PL and ships to customer to close SO 1/15/

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16 The supply management component is either part of the individual’s personal job responsibilities and/or supervisory responsibilities or the responsibility of someone else in the supply management organization. 1/15/2015

Mike has a master’s degree in Mechanical Engineering from the University of Colorado, Boulder. Mike has worked for McDonnell Douglas, IBM and Rockwell International before joining AT&T/Lucent Technologies in Colorado. For the past 11 years Mike has been employed by Avaya Inc. with the title of Sourcing Manager. Acknowledgements: 1. Sanjay L. Ahire, Ph.D. & John B. Jensen, Ph.D., University of South Carolina, Columbia 2. Institute for Supply Management 1/15/