Unapplied Cash – Canon & Ricoh Credits, Discrepancy in System Project # Black Belt - Jonathan Williams Division- Service/ Order Entry/Vendor

2 $71.5MM Unapplied Cash (a/o 5/31/03) Dealer Comp Vendor CreditTrade A/R OMD $18.1MM eIKON $5.7MM OMD $14.5MM eIKON $26.7MM OMD $1.3MM eIKON $7.2MM 8/12/03 Little/No Reason Code Data at MSSC Top 3 Defects ($$ & Counts) Need Service Invoice Missing Serial Number NeedEquip Invoice Top 3 Defects $$ Need Equip Invoice Further Research: Equip Billing Error: Equip Invoice Top 3 Defects (counts) Converted items Unclaimed property 3 rd Party Top 3 Defects (counts) Underpaid Overpaid due to adjustment Payment sent to wrong address Top 3 Defects ($$ & Counts) No Bill Not Linked No Equipment IKON MSSC Unapplied Cash Flow Down

3 Project Definition n Problem Statement: Discrepancies in systems of record (Canon, Ricoh) result in payments received from vendors that do not match the invoices in Oracle resulting in unapplied cash. This causes an increase in DSO, decrease in customer satisfaction and considerable research and rework by multiple functions within IKON. n Project Definition: Reduce number of “no service invoices” by 70% which will result in a decrease of unapplied credits received from Canon and Ricoh and the elimination of 8 cash application positions. Six Sigma Project ( ) to be completed by 12/31/03 n Project Benefits: Decrease labor required to research and correct unapplied cash

4 Project Definition, Cont’d n Financial Benefits: Reduction of 8 full time Cash Application employees: Annual savings estimated at $276k n Project Metric “Y”: Y 1 = Unapplied cash discrepancy in System of Record Y 2 = No service invoice n Defect Definition: Any vendor remittance that doesn’t match an IKON invoice n Leveragability: Project can be leveraged across every Oracle implemented Region, Customer Care Centers (CCC) the Macon Shared Service Center Cash Application function.

5 Project Team n Champion – Donna Wood n Financial Analyst – Frank Eaton n Black Belt – Jonathan Williams n Team Members: IT Support – Anne Quigley Cash Applications – Lynn Hester Customer Care Center – Sue Knight Service – Cedric Trice, Josh Alexander Master Black Belt – Laura Wells

6 Financial Impact

7 CT Tree

8 SIPOC

9 Cash Application Unapplied- Atlanta CCC Invoice that has no base or meter Missing Serial # in PO Field Service invoice w/multiple errors Lack of Equip. Invoice Service invoice pending research by the MSSC April 03 May 03 June 03

10 Cash Application-credit matching process flow

11 Data Collection Plans

12 Headcount Currently 20 (actual) 22 (budgeted) personnel scheduled to support entire company Currently supporting two of five regions Performing 60% of current unapplied dollars, 0% of backlog At current levels, Cash Application team would have to add 13 people to stay current for two regions, with no decrease to the backlog ($ ). Future At current performance levels, team would have to add 63 additional headcount (over $2M in expense) with no decrease to the current backlog. Backlog will continue to grow. This is not the answer! Focus areas : Meter Reads not accurate or timely (47% of errors), Lack of service & equipment invoices(26%) Missing serial # (15% of errors)

13 Benefits of focusing on the supplier Current error rate on first time matching is 94%. Effective error rate is 100% because even first time matches must be reviewed Cash application associates currently resolve 1 transaction every 17 minutes Cash application receives averages 16,195 new credit transactions each month For every sustained incremental improvement of 720 (.04% of the total) matched transactions, Cash Application organization can reduce one associate.

14 Next Steps Enhance measurement system – include metrics that reflect: o First time match, remittance to receivable percentage o Aged unapplied by reason code and functional responsibility o Resolution productivity (time to complete MSSC, CCC’s) oTransactions resolved by MSSC Cash Application Perform Measurement Systems Assessment on unapplied reason codes Expand cash applications sample to enhance accuracy of DPMO Determine if scope of this project should be expanded to include meter read accuracy.