SCM presentation -beta

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Slide Description Work History 1 Military – Aviation maintenance and supply Commercial - Manufacturing/Production and Distribution Competencies and Expertise 3 -4 Value Added Services (VAS) 5 Innovation 6 Multi-Project Portfolio Management (RPM) / Critical Path Management (PERT) Practices and Philosophies Supply - “right material, right price” 7 Sourcing 8 Supply Base Management (SQM, SRM) 9 Cash Management 10 Total Cost of Ownership (TCO) Demand – “right quantity, right time” 11 Synchronize Demand and Supply (S,I&OP) 12 Inventory Management and Control 13 Product Lifecycle Management Logistics – “right place, right quality” 14 Worldwide Networks 15 Transportation, Traffic and Trade 16 Fulfillment 17 Continual Improvement Process (CIP) 18 Matrix Management 19 Financial Management 20 Management Information Systems (MIS) 21 Summary Table of Contents

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Contracting Officers Representative United States Army Commissioned Officer Aviation Branch Airframe and Powerplant (A&P) license Commercial Airplane and Helicopter license 10+ years Aviation Aerospace Engineer, Saint Louis University 1 Engineering Technologies, Georgia Southern University Aviation Officer Logistician Certification

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Surface Mount Technologies Silicon wafer processing and packaging 10+ years Manufacturing and Distribution Component (OEM) Commercial / Industrial Assembly Not to scale 2 Enterprise Consumer (CPG) Hearing Aid micro-electromechanicals representative work Medical Imaging Displays Modems , Hubs , Routers Cell Phone microphones Internet Service Providers

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Software download and programming Assembly and Configure To Order Integration 3 representative work Wiring / Cabling Network /Telco FDA CFR 820 Med class II Value Added Services (VAS)

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4 Troubleshooting and Repair Logistics –Transportation and Customs clearance Inventory consolidation and staging Project and Program management Purchasing and Purchase Order management Value Added Services (VAS) Reverse Logistics Service/Warranty inventory planning and management

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5 Postponement 1.) Disassociate hardware from software 2.) Assemblies -PROM/Flash/connectors, etc. 3.) Regionalization –power, manuals, etc. Configure To Order (CTO) Factory Management System (FMS) 1 – 2 – 3 – 4 – 5 – 6 – 7 – 8 – 9 – 10 – 11 – 13 – 14 Hardware Software Hardware Software Power (AC 110/ 115/230) Centralized QA EMEA Asia Americas Completion Centers FMS Innovation

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6 Multi-Project Portfolio Management (RPM) Critical Path Management (PERT)

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Sourcing Supplier Qualification 7 Technically Capable Affordable (see slide 10 - eye chart )) Stable Financials Employee turn over –Management and Direct Labor Politics –Country, State, Region (State, Province, City) Sophistication Quality systems Management Information Systems Equipment Facility Integrity Transparency Ease of doing business Fit and scalability % loading % New business of Total Facility Staff availability–technical, cost, reliability Sociably responsible

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Supplier Base Management Supplier Relationship Management (SRM) Supplier Report Card Technical Qualification Audit Standards Corrective Action Request (CAR) BOM management Quality Systems Returned Material Authorization (RMA) Regulatory Compliance (CE, RoHS, UL) Roadmaps Engineering Change Traceability Contract SOW RFP, RFQ, RFI Terms & Conditions (T&C’s) Attainment, change management T&C compliance Quality Systems Reverse Logistics Trade Compliance Roadmaps Incremental expenses Traceability 8 Supplier Quality Management (SQM)

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T&C’s FTZ / FTA Consign Distributors Tax F/X 3PL Cash Management Currency “Cost vs. Ownership vs. Supplier Relationships” 9

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Total Cost of Ownership (TCO) 10 PO versus Supplier Agreement Price Discounts Net Payment terms Credit terms Warrantee / Guarantee Quality Assurance Return Material Authorization (RMA) terms Repair, replace Stock rotation, exchange, credit INCO Terms Freight Terms Forecast terms Back order terms Quantity (MEQ, MOQ) Service level (Fill rate/OTD) commitment Order Fulfillment (O/F) scheduling/release Sample policy Proto., TMS., 1st WMS. run terms Design-in suppliers (1st and 3rd party) Original Design Manufacturers (ODM/DOF) PO acknowledgement terms Cancelation terms Advanced Shipping Notification (ASN) Supplier warehousing Supplier’s supplier management Logistics (merge, drop ship, in transit trade) Packaging and palletizing Consolidation (ship with, pack with) Value Add Services (distributors, 3PL’s) Kitting (supplier, distributor, 3PL) Stock keeping unit locations (SKUL) Consigning and Consignment Vendor/buyer managed inventories Insurance terms Part Change Notification (PCN) policies Engineering Change Order (ECO) terms Corrective Action Response (CAR) terms Failure Mode and Effect (FMEA) terms Approved Vendor Lists (AVL) TMDE terms Fixture, form, template, & screens costs Harmonized Tariff Classification (HTC) Economic Zones (FTZ, LMW, Free Port) Foreign Trade Agreement (FTA) Foreign Currency Exchange (F/X) Controlled currency management Management Information Systems (MIS)

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Inventory 30 60 90 120 30 60 90 120 Demand Supply Planning/Scheduling Sales, Inventory & Operations Planning (S,I & OP) Horizon (Days) forecast Availability Cash ($) 11

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Obsolete Slow Within Financial plan Invested Capital and Lifecycle Continuum “SLOB” Reserves Inventory Balanced Scorecard COGS / PPV Risk / Strategy Gross Inventory ($) Service Levels Inventory Management and Control Gross Inventory ($) 12

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13 Product Lifecycle Management Affordability for Profitability -the over “Arching” consideration 1. Design for manufacturability 2. Accessibility of material Concept –> engineering drawings/bill of materials (BOM), software specifications -> prototype -> source -> engineering build -> 1st mfg build Ramp to production -> service & support -> re-engineering for savings 2nd source for savings and scalability -> design out -> last time buy last production run -> end of life buy for service support -> End Of Life Saint Louis, Missouri Gateway Arch

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Worldwide Networks Distribution Centers (5) Warehouses (22) Stock Keeping Locations (>50) (2) (JV) 14

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Transportation, Traffic and Trade (Inbound, Outbound, Reverse) Container (FCL, LCL) Intermodal Pack, break, ‘pack with’, ‘ship with’, ‘invoice as’ Pallet, consolidate, stack, wrap, cross-dock, break, Dock to Dock Dock to Stores End User drop ship Vendor drop ship Inter-company drop ship Virtual consolidation Merge in transit 3 and 4 party in transit sale Wholly off shore trade Importer of Record Representative Import/Export Agent Customer consignment Vendor consignment Free Trade Zone Special Processing Zone Special Export Zone Free Port Bonded warehouse Bonded Carrier Limited Manufacturing Warehouse Truck (TL, LTL) Air (freight, parcel) Sea Rail 15

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16 Fulfillment Channels and VAR’s 3PL e-Commerce/end user/engineer Manufacturing Warehouse / Distribution Center Manufacturers / Retailers (VMI/Consignment)

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A B C D Goal / Objective Pareto Analysis Key Performance Indicator (KPI) Gap Corrective Action or Process Improvement 17 6Sigma – Statistical Process Controls (SPC) LEAN systems and process re-engineering

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18 WMS QA PLN TMS CS PO LOG BOM WMS QA PLN TMS CS PO LOG BOM WMS QA PLN TMS CS PO LOG BOM WMS QA PLN TMS CS PO LOG BOM Business Process Owners Subject Matter Experts General Management General Management General Management

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Operating Plan % Sales FY Budget Department A 40% - 1.2% Sales $400K Department B 20% - 0.6% Sales $200K Department C 20% - 0.6% Sales $200K Department D 10% - 1.0% Sales $100K SG&A 3% Sales $1M Hold % Sales during shortfalls, justify budget increase during revenue gain Transportation spend consistent % Sales Facility fixed MRO consistent % Sales 19

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20 Enterprise Resource Planning (ERP) Global Customs Compliance Shipping Barcode, Shop Floor Management (SFM)

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21 Twenty continual years study, training and practice in Supply Chain Management A career solely dedicated to Supply Chain Management spanning aviation maintenance and electrical, electronic and micro-electromechanical manufacturing and distribution -including FDA CFR 820 Class II medical devices Expert in Global, multi-site operations and recognized authority in Multinational Corporations (MNC) international trade for both procurement and fulfillment Global competence acquired though living and working in Latin America, Europe, Asia and the US developing supply and customer bases Repeated and documented successes developing maximum efficiencies, minimum operating expenses, lowest total cost of ownership (TCO) and maximum profitability A certain, immediate contributor and trustable advisor for your business’ Supply Chain Management needs. Brad Knechtel   SUPPLY CHAIN MANAGEMENT Email: Brad_Knechtel@yahoo.com | Phone +1 (815) 578-9352 | Fax: +1 (509) 692-4917 | Address: 5187 Grape Leaf, Las Vegas, NV 89141