1. Template April 20, 2007 1Copyright © 2001-2007 Infor Global Solutions1 enterprising U

2. Infor Confidential Template April 20, 2007 Copyright © 2001-2007 Infor Global Solutions “Best Practices” Inventory Management Grant W. Howard, Founder GWHCO, September 10, 2007

3. 3Copyright © 2001-2007 Infor Global Solutions Service, Profits and Growth to the Next Level

4. Template April 20, 2007 4Copyright © 2001-2007 Infor Global Solutions  “Getting Results” - Taking Profits, Longevity, and Growth to the Next Level  Authority on “Best Practices” Inventory Management, Operational Efficiency, Systems Utilization  Wholesale Distribution Degree  Many Years of Experience  Works with Multiple Distributors, Associations and Software Systems, 80% of Time at Distributors On-site  Inventory Management, Operations and Systems Workshops/Conferences  Multiple Boards of Directors  Conceptual Designer Behind Infor’s Sx.e “AIM” and other ERP Platforms  Software Development, Enhancements and Spec/Design Work  Our Expertise is “Best Practices” - Improving and Implementing Proven Practices that Work and Get Results - Profits, Longevity and Growth  PLG, MOT, PET, ACE Grant Howard and GWHCO

5. Template April 20, 2007 5Copyright © 2001-2007 Infor Global Solutions Company Objectives Inventory Management Objectives Inventory Management Model: When to Replenish What to Replenish & How Much Other Things We Can’t Forget Inventory Management – 10 Steps 10 Actions to Success Our Session Today

6. Template April 20, 2007 6Copyright © 2001-2007 Infor Global Solutions Company Objectives - The Big Picture Bottom Line Profits (P&L) GM and Oper. Efficiency Asset Management Customer Service & Retention Maintain the base ProfitabilityLongevity Employee Happiness Growth

7. Template April 20, 2007 7Copyright © 2001-2007 Infor Global Solutions Maximizing Indicators (Turns, A/R Days, Etc) May Not be Maximizing the Bottom Line The Impact Zones – Company Objectives Customer Service  Inventory Availability  Backorder Handling  On-Time Delivery  Accuracy  Entry, Shipping, Invoicing  Product, Quantity, Price  Fair Price Profitability  Revenue Generation  GM Improvement  Costs Reduction:  Cost of Inventory  Cost of A/R  Freight x 2  Cost of Transactions x 3  Cost of Errors and Fires  Administrative Costs PROCUREPROCURE WHSE&OPSWHSE&OPS SALESSALES Longevity Profitability Growth

8. Template April 20, 2007 8Copyright © 2001-2007 Infor Global Solutions Inventory Management and Replenishment

9. Template April 20, 2007 9Copyright © 2001-2007 Infor Global Solutions The Replenishment Model The Replenishment Model Addresses the Two Objectives of Customer Service and Profitability When to Replenish? What to Replenish and How much? What is Incoming and Will be Late? What is Incoming and Will be Early or is Not Needed? What is Not Needed?

10. Template April 20, 2007 10Copyright © 2001-2007 Infor Global Solutions The Replenishment System – When, What, How Much PNA/Level Surplus Point Line Point or Max/EOQ Order Point or Min EOQ Order Cycle Lead Time Safety When to Replenish? What is Not Needed? What to Replenish and How Much? When, What, How Much?

11. Template April 20, 2007 11Copyright © 2001-2007 Infor Global Solutions “Best Practices” Inventory Management – 10 Steps 1. Set-Up 2. Data 3. Forecasting 4. PNA/Level EOQ Dmd during Order Cycle Dmd during Lead Time Safety OP LP SP 5. Replenishment 6. TimeLine Analysis 7. Surplus/Excess 9. Measurement and Monitoring 10. Controlled Replenishment & Maintenance 8. Proactive Maintenance 1. Set-Up 2. Data 3. Forecasting4. Level PNA/Level EOQ Dmd during Order Cycle Dmd during Lead Time Safety OP LP SP 5. Replenishment 6. TimeLine Analysis 7. Surplus/Excess

12. Template April 20, 2007 12Copyright © 2001-2007 Infor Global Solutions “Best Practices” Inventory Management - 10 Steps Numbers: 1. Parameters/Set Up - Collection and Use of Data/Tools 2. Data - Usage, Lead Times, Purchasing History 3. Forecasting - Safety, Order Point, Line Point, EOQ 4. Stock Level Accuracy - On-hand and Paperfloat Tools: 5. Replenishment Process -When, What, How Much 6. Timeline Analysis - Too Late and Too Early 7. Long Term Surplus - Identification and Disposition Maintenance and Measurement: 8. Proactive Maintenance - DWIADT & DIRTFT 9. Measurement - Profits, Service, Improvement 10. Controlled Replenishment and Maintenance - The Entire Company Missing Steps - Missing Results Expectations?

13. Template April 20, 2007 13Copyright © 2001-2007 Infor Global Solutions Step 1: Smart Parameters and Set Up  Set Up and Parameter Maintenance is Continuous and Ongoing. Not Just at Start:  The World is Dynamic, Things Change  New Items at Beginning vs Once Established  Implement “Smart Continuous” Set Up, Mass Update Capabilities and Good Proof Reporting or a Good PET Wrapped Around This … Critical  Review Parameter Review/Setting Tools At Start Up and as Needed

14. Template April 20, 2007 14Copyright © 2001-2007 Infor Global Solutions Step 2: Data Collection  Usage Buckets: Sales, Transfers, Lost Sales, Exceptional Sales, and Manual/Automated Overrides  Lead Time Buckets: P/Os, Transfers, and Manual Overrides  Implement Lost Sales and Exceptional Sales at OE  Review Demand Planning Tools  Review Data Cleansing Tools Where Does Most of this Data Come From?

15. Template April 20, 2007 15Copyright © 2001-2007 Infor Global Solutions Usage/Demand The Cornerstone Sales/Transfer History + Lost Sales - Exceptional Sales/Xfer +/- Human Input Usage/Demand What is Demand Planning? Future Forecast, Forecast Accuracy (Safety), Collaborate/MRP Data, Visibility, Bucket Size

16. Template April 20, 2007 16Copyright © 2001-2007 Infor Global Solutions Demand Management/Planning Understand and Use the Strengths of Each Level 1: Full P/O generation from the DP to ERP Level 2: AMU, Safety, Order Point, Line Point and EOQ from DP to ERP; ERP generates P/O's Level 3: AMU and Safety Suggestions from DP to ERP; ERP generates OP, LP, EOQ and P/O's

17. Template April 20, 2007 17Copyright © 2001-2007 Infor Global Solutions Step 3: Forecasting  Rank  Average Monthly Usage/Demand  Review/Order/Transfer Cycle  Safety, OP, LP, EOQ  Exception Center Reporting  Implement Hits/Customer Based Ranking System  Implement Smart Forecasting, ie Seasonal Demand Trending, Demand Roll up, Tmin/ASQ/5HI, “Smart” Exception Reports or Center Monthly and as Needed

18. Template April 20, 2007 18Copyright © 2001-2007 Infor Global Solutions Ranking  Good Product Ranking is Critical for:  “Smart” Parameter Maintenance  Good Exception Reporting  Good Analysis/Priority Reporting  Using Line Hits:  Hits: Sales, Transfers, Lost Sales, No Exceptions  Percentage and Set hits  New Items?  Frozen, OAN, DNR?

19. Template April 20, 2007 19Copyright © 2001-2007 Infor Global Solutions Step 4: On-hand, Available and Stock Level The Other Cornerstones On-Hand - Committed + Incoming Stock Level/PNA On-Hand - Committed Available CC, WMS, and Solid PET for Accuracy and Efficiency Paperfloat Control is Critical

20. Template April 20, 2007 20Copyright © 2001-2007 Infor Global Solutions Step 4: On-hand, Available, and Stock Level The Other Cornerstone  On-hand Integrity:  Cycle Counts/Suggested Counts  Warehouse Management System  Paperfloat Control  Open Doc Control Center  Proper Dates  Implement Proper Use of Dates (Orders, Transfers and P/O’s) on System and Paperfloat Control Process  Implement On-Hand Integrity by the Way Things are Done  Implement a Warehouse Management System (WMS) Daily

21. Template April 20, 2007 21Copyright © 2001-2007 Infor Global Solutions Warehouse Management Systems Accurate On-hands, Shipping and Receiving A WMS is great tool and it will do great things for your company and your customers. It will really shake you up the first 2-6 months because it is very unforgiving and will make your people follow the processes and steps with no deviations. At first, it will absolutely drive you crazy and you will cuss it every morning when you arrive and every evening when you leave. But once you have it up and running and the company procedures and people working with it and not against, you will love the results. Be sure to do lots of discussion and homework, lots of planning and testing, and get lots of advice and support. Accuracy, Consistency and Efficiency Source: Email GWHCO to Customer

22. Template April 20, 2007 22Copyright © 2001-2007 Infor Global Solutions Step 5: Replenishment  Implement On-Line BCC, One Stop Drill Down Inquiry/Maintenance  Implement Priority Reporting  Implement Making Targets Properly and When to Make Freight Minimum and When to Pay Freight Daily PNA/Level Surplus Point Line Point or Max/EOQ Order Point or Min EOQ Order Cycle Lead Time Safety Inventory Management is at the Time of Replenishment... “When, What, and How Much” Everything Else is Inventory Correction.

23. Template April 20, 2007 23Copyright © 2001-2007 Infor Global Solutions Buyer’s Control Center (BCC) On-line, Priorities, One-Stop, Drill Down, Maintenance, Targets

24. Template April 20, 2007 24Copyright © 2001-2007 Infor Global Solutions So Many Stop Here It’s 10 Steps, Not 5

25. Template April 20, 2007 25Copyright © 2001-2007 Infor Global Solutions Step 6: Time Line Analysis  This is a Missing Piece in Most Inventory Systems  Identification and Prevention are the Key  Implement Timeline TODAY, The Logic is Not Hard Out 0-30 days In Out 30/+ days Too Early Incoming and will be early or not needed Out Incoming and will be late 0/- days Too Late

26. Template April 20, 2007 26Copyright © 2001-2007 Infor Global Solutions Step 7: Excess/Surplus Inventory  Implement Long Term Surplus Definition:  Short Term/Internal (EB, GAP): Surplus = Available > LP+EOQ  Long Term/External (Take Action, Gone): Surplus = Available>X Months Usage  Implement Visibility and Utilization Monitoring  Implement Goals with Disposition Plan Responsibility Coordination Prevention Identification Disposition Goals/Plan CONTINUOUS

27. Template April 20, 2007 27Copyright © 2001-2007 Infor Global Solutions Step 8: Proactive Maintenance  Proofing Reports (Pline and Product) - Get a Clean Start  While Doing the Inventory Management Functions  Good Exception Center/Reports are a Must!  Good Company Understanding - All Eyes and Ears Watching  Implement Good Proofing Reports  Implement BCC and ECC with Drill Down Inquiry/Maintenance  Implement Proactive Maintenance Thinking  Implement Inter-Departmental Education

28. Template April 20, 2007 28Copyright © 2001-2007 Infor Global Solutions Step 9: Measurement and Monitoring Customer Service:  Fill Rates/Availability  Accuracy - Product, Quantity, Price, Terms  On-Time-Delivery - OTD  Backorder Handling Profits and ROI:  GM Improvement (Sales and COGS)  Operational Cost Improvement  Cost of Inventory and A/R  Cost of Freight x 2  Cost of Transactions x 3  Cost of Fires/Errors  ROI/Turns/Days Supply  Implement Measurement Tools  Implement “Processes to Improvement” & “Closed Loop”  Implement Inter-Departmental Education

29. Template April 20, 2007 29Copyright © 2001-2007 Infor Global Solutions Uncontrolled Replenishment Leads to Uncontrolled Results Step 10: Controlled Replenishment  Implement Controlled Replenishment  Implement Controlled Maintenance  Implement Controlled Replenishment  Implement Controlled Maintenance  Implement Inter-Departmental Education

30. Template April 20, 2007 30Copyright © 2001-2007 Infor Global Solutions “Best Practices” Inventory Management – 10 Steps 10 Steps - 10 Actions for Success 1. “Smart” Continuous Parameter Set Up - Daily 2. Data Accuracy and Proper Use of Data - Daily 3. Forecasting: Safety, Order Point, Line Point, EOQ - Daily/Monthly 4. Stock Level/PNA Accuracy - Daily 5. Replenishment: Worthy Items Below Order Point - Daily 6. Timeline Analysis: “Too Late” Report - 2X/Week “Too Early” Report - 2X/Week 7. Surplus Inventory - 1X/Week 8. Proactive Maintenance - Daily Good Proof Reports for Start Up While doing Replenishment Good Exception Control Center Information from Other Sources (Internal, Customers and Vendors) 9. Monitoring and Measurement - Continuous Improvement 10. Controlled Replenishment - Critical and Always

31. Template April 20, 2007 31Copyright © 2001-2007 Infor Global Solutions Top 10 Actions for Success – Implement Now 1.“Smart Continuous” Set Up 2.Lost and Exceptional Sales 3.Hits/Customer Based Ranking System 4.Proper Use of Dates (Orders, Transfers and P/O’s) and Paperfloat Control Process 5.Priority Reporting 6.Timeline Analysis – Its Powerful 7.Long Term Surplus Definition, Identification and Disposition Plan 8.Proactive Maintenance Thinking 9.“Processes to Improvement” & “Closed Loop” Processes 10.Controlled Replenishment and Controlled Maintenance Don’t Forget the Others

32. Template April 20, 2007 32Copyright © 2001-2007 Infor Global Solutions Remember the Objectives  Increase Margins and Control Costs:  Sell Higher and More  Buy Lower and Less  Reduce Costs (Freight, Inventory, A/R, Cost of Transactions and Cost of Errors)  Offer Stellar Customer Service:  Availability of Inventory  Flawless Backorder Handing  On-time Delivery (OTD)  Accuracy of Orders  Smart Growth - MOT and PET in Place to Maintain and Gain Distributors of Choice Execute

33. Template April 20, 2007 33Copyright © 2001-2007 Infor Global Solutions Everyone’s Priorities  Profitability: Revenue and GM Improvement, Costs Reduction  Service the Customer: Availability of Inventory, Proper Backorder Handling, On Time Delivery, and Accuracy of Shipping and Billing  On-hand, Available and PNA/Level Integrity - On-hand, Alt-Inv, Paperfloat  Usage/Demand Accuracy - Lost/Exceptional Sales and Human Input  Flawless Backorder Handling - Policies, Info To/From Customer, Procurement of and Receiving/Filling  Help Maintain the Stocking List  Prevention and Disposition of Excess Inventory  Smart/Controlled Replenishment

34. Template April 20, 2007 34Copyright © 2001-2007 Infor Global Solutions The World is Changing! YesterdayTodayTomorrow Buyers/Inv. ControlInventory/Asset Managers??? Freight and Review CycleOrder Point and Order Cycle Turns/Profits DominatedProfits and Service BalanceIf you can’t Inaccurate DataData/Information Managers handle today, Four Glass WallsCommunications & Team how will you Learned from “Bill”Education & Understanding handle Pencil and PaperTechnology and Efficiency tomorrow? If your company is stuck in Yesterday or having troubles with Today, how will it survive Tomorrow?

35. Template April 20, 2007 35Copyright © 2001-2007 Infor Global Solutions Thank You Building the Bridges to Operational Excellence – PET, ACE, Closed-Loop and Processes to Improvement Tomorrow