THE APPAREL LOGISTICS GROUP, LTD OPERATIONS EXCELLENCE October 2014

AGENDA 2 Definition of Operations Excellence Principles of Operations Excellence Achievement of Operations Excellence Benefits of Operations Excellence Questions & Answers

Sustainable profitable growth World class operating systems and procedures Margin target Performance based cultureThe best people The right customers and suppliers To create common world class operating systems and procedures, facilitating sustainable, profitable growth To create a performance based culture managed by a measurement structure that will enable continuous improvement To create a development program that provides opportunity for our associates and attracts the people that we need for the future To become the supplier of choice to our chosen customers and customer of choice for our chosen suppliers Definition of Operations Excellence 3 Operations Excellence is the application across the entire company of principles, systems and tools that drive continuous improvement that is sustainable in key performance metrics. Everyone “gets”it!

Definition of Operations Excellence (12) focus areas encompassing the full business spectrum that go beyond the traditional event-based model of improvement toward long-term change in the organizational culture, whereby each associate sees the value to the customer. When associates see it, then senior management can focus on top line growth. Ops Excellence is not simply about cost reduction, but perpetual business growth. 4

5 Respect for all Lead with humility Pursue improvement Assure quality at the source Flow value Principles of Operations Excellence Embrace strategy & systems Focus on process & metrics Think systemically Create constancy & consistency of purpose Create value

6 Operations excellence helps to serve customers better by blending the core principles of other “failed” toolkits:  LEAN: systemic thinking  Six Sigma: constancy / consistency  Total Quality Management: quality  Business Process Reengineering: process  Kaizen: flow  Value Engineering: value Principles of Operations Excellence

7 Define ideal principle based behaviors for everyone within the organization to follow Build commitment to those behaviors throughout the organization on a consistent basis Align & reward individual behaviors to permanently shape corporate culture Design systems to drive ideal behaviors Develop best tools to enable systems Ensure all associates actively deploy those tools to achieve continuous improvement in the scope of their daily work Achievement of Operations Excellence

8 It requires Great Leaders / Smart Managers / Empowered Associates who buy into the platform of Ops Excellence It requires anchoring the company’s mission, vision and values on the principles of Ops Excellence It requires a transformed culture whereby every single associate is engaged in the practice of Ops Excellence It requires an enterprise-wide practice of ideal behaviors based upon the correct principles of Ops Excellence It requires the coexistence of (3) three dimensions of Ops Excellence: principles (meaning) / systems (order) / tools (enabler)

Drives Best Practices across enterprise Facilitates improvement initiatives already in progress Delivers improvement through efficiency and effectiveness Efficiency is doing the thing right Effectiveness is doing the right thing Establishes a culture of continuous improvement Attracts talented, highly-skilled people Great brand and strong market position Financial strength for investment & acquisition 9 Benefits of Operations Excellence

10 Beyond margin improvement Integrating sustainability into all business practices Ensuring long-term business continuity Investing in people development Improving risk management / Reducing risk through controls & testing Achieving health and safety goals Becoming the employer of choice Changing to a performance-based culture Benefits of Operations Excellence

11 Benefits of Operations Excellence

Q & A 12 Examples of US Operationally Excellent Companies: GM / Chevron / Koch Industries QUESTIONS / COMMENTS – related to the presentation FEEDBACK