Supply Chain Visibility and Global Quality Assurance

1. Supply Chain Visibility andGlobal Quality Assurance Braddock Cunningham CTO, eBridge Solutions

2. The Emergence of Global Operations‘Problem at Hand’ • Designing, sourcing, manufacturing, selling and delivering new products rapidly for world-wide markets are today's realities. • Your suppliers are located in North America, Europe and China. • Your customers are in the U.S., Europe and Japan. • Your factories are in Brazil, Europe and North America. • Your development engineers are in Europe, India and North America. • Cash is tight - you must deliver your product at your target price and brace yourself for margin erosion when competition sets in.

3. The Emergence of Global Operations‘Problem at Hand’ • Two Methods for Dealing with today’s global operations: • Outsourced Manufacturing • Separation of Manufacturing Into Distinct Levels • One or a combination of both of these methods are used in most situations – requiring complexities to be dealt with in Supply Chain Operations. The SCOR model provides a systematic approach for providing solutions to these issues.

4. The Emergence of Global Operations

5. Method # 1: Outsourced Manufacturing • Firms with strong brand awareness may decide to focus on what they do best-product design and marketing. End Result: The Company decides to discontinue internal manufacturing effort and outsource to a third party provider for part or all of their manufactured goods.

6. Method # 2: Manufacturing Layer Separation • Lower levels which require less skilled techniques can be sent to other parts of the world where resources are far cheaper. Higher levels such as final assembly still reside within location like the United States. End Result: Less skilled processes are off-shored while more skilled processes remain in their original areas.

7. A Single Common Denominator‘Quality Management’ • The ability to access and consolidate product quality information is hampered. • Many of the resources responsible for product auditing are external. • Task of collecting and consolidating data may seem insurmountable. • Even in a best case scenario, the quality consolidation effort is tremendous. • Time lag associated with audit consolidation and resolution can result in monetary costs and reduced customer satisfaction.

8. SCOR: Applicability in Global Quality Management Effective Product Quality Management within the Distributed Model at an affordable cost.

9. ‘Global TQM’ Derived from SCOR Global TQM through Collaborative and Cooperative Design

10. ‘Global TQM’ Derived from SCORPLAN • Supplier Enrollment and Qualification process • Product Design process • Identify, Assess and Aggregate SC Resources • Implement Platform and Standards for assessing adherence to quality levels/metrics • Establishing Method for Communication of standards, procedures, spec changes, etc.

11. ‘Global TQM’ Derived from SCORSOURCE • Manage/Monitor Supplier Qualification, Performance and Certification • Communicate Product Designs/Bids/Specs • Manage/Monitor Sourcing Process • Communication of standards, procedures, spec changes, etc.

12. ‘Global TQM’ Derived from SCORMAKE • Produce and Test Products • Manage/Communicate Rules/Metrics/Compliance • Manage/Monitor Production Network • Quality Auditing throughout manufacturing processes • Communication and Aggregation of Quality Information DURING production process – “nimble”

13. ‘Global TQM’ Derived from SCORDELIVER • Assess Deliver Performance • Manage Import/Export Requirements • Quality Auditing Throughout Distribution Chain (DCs, receiving docks, carriers, etc.) • Assessment of product quality from manufacturing location to end consumer and everything in between • Catching Issues while still in the Delivery Chain – Important $$ • Real-time analysis of this data!

14. ‘Global TQM’ Derived from SCORRETURN • Identify Product Condition/Nature of Issues – Quickly • Determination of Responsible Party • Association and Management of Charge backs – Return Authorizations • Assigning Rework Costs • Manage Debit/Credit/Allowance Memos • Deriving Total Cost for Returns – Aggregated throughout System • Find Common issues (contractors, countries, styles, carriers, etc) • Track these costs and manage the invoicing/crediting processes • Goal – Reduce Rejected Shipments in the first place!

15. Liz Claiborne A Quality Case Study

16. The Historical Situation • Orders are filled at outsourced facilities around the world. • Quality inspections are performed prior to leaving the manufacturing locations. • The shipments are again inspected after reaching the distribution centers. • The Challenge: • How to aggregate the quality inspection information? • The fact that much of the manufacturing effort is outsourced • Disparate technologies are used throughout manufacturing and distribution • QA managers needed a low cost alternative to consolidate QA data

17. Other Options – Why Not? • ERP systems such as SAP, JD Edwards and Oracle • ARIBA and other supply chain integration systems • Continue manual methods • Full system integration for each location

18. Meeting the Challenge • How to approach Quality Management holistically, when all aspects of the supply chain have to be considered from Planning to Returns? • How to aggregate the quality inspection information, given the fact that much of the manufacturing effort is outsourced? • Disparate technologies are used throughout manufacturing and distribution. • QA managers needed a low cost alternative to consolidate QA data.

19. Meeting the Challenge • Liz Implemented a centralized Web-Based System • Hosted Externally • Available to 100% of outsourced locations (contractors, DCs, etc.) • Implemented a method for integrating to data from ALL outsourced locations • Managed all five aspects of the Quality Process from SCOR

20. The Integrated Solution

21. The Integrated Solution • Open Source Software – i.e. inexpensive/affordable • Distributed cost structure across supply/distribution chain • Flexible approach to integration

23. Example Dashboard (Liz Claiborne)

24. ROI • Ability to pinpoint locations / subcontractors / regions that are performing below standards for improvement / corrective measures. • Ability to pinpoint distributors / transportation vendors that seem to cause higher defect levels than others for improvement / corrective measures. • Capability of charging back responsible parties for defects where appropriate (i.e. corporate no longer having to absorb such costs internally). • Ability to highlight products / styles that seem to have higher defect levels across all sites to support R&D review and possible corrective style resolution. • Ability to lower overall corporate defect levels and improve customer satisfaction.

25. ROI • Liz Claiborne, Inc. recognized over $750,000 in ROI in Six (6) Months! * • Previously, Liz absorbed these costs due to a lack of real-time information and visibility into QA activities throughout distribution-chain. • * Based on system being live for over one year and then a six month window of measurement

26. Conclusion • 75% Reduction in overall Defect rates within 18 months. • Recognition of Quality efforts are not just during ‘building’, but have to be handled during Plan, Source, Delivery and Returns in order to achieve Substantial ROI and overall Success. • Holistic Approach across all aspects of the supply chain enabled a solution that created visibility into complete quality picture. • In Liz’s case, up to three weeks of time were stripped from the quality process per order. • One year’s estimated ROI: excess of 1 million.

27. eBridge Solutions: Serving the Entire Supply Chain Total Supply Chain Management www.ebridgesolutions.com

28. eBridge Solutions: Serving the Entire Supply Chain SupplierBRIDGE- iSOURCE (Design) SupplierBridge – iSource is part of the powerful SupplierBridge software suite that helps simplify the new product design process. iSOURCE workflows all aspects of designing a new product incorporating appropriate security roles and collaboration of all data/information involved in the process with the end goal of preparing a sourcing packet in sight. SupplierBRIDGE- iECC (Enrollment, Compliance and Certification) SupplierBridge – iECC is designed to centralize and automate the enrollment and ongoing management of certified/authorized suppliers for your organization. The software manages enrollment and oversees regulation compliance among a company's many vendors and suppliers.

29. eBridge Solutions: Serving the Entire Supply Chain SupplierBRIDGE- iSOURCE SupplierBridge – iSource is part of the powerful SupplierBridge software suite that helps simplify vendor sourcing. iSource provides real-time deployment of sourcing packets, requests for quotes (RFQs) and requests for proposals (RFPs) to selected suppliers, automated emails to suppliers, communication between suppliers and sourcing departments and more. iSource also enables suppliers to electronically accept a sourcing bid, saving time and money.

30. eBridge Solutions: Serving the Entire Supply Chain SupplierBRIDGE- ScheduleFLEX MFG SupplierBridge – ScheduleFLEX MFG is part of the powerful SupplierBridge software suite that provides a complete MTO/BTO production management application and finite scheduling system. ScheduleFLEX is an innovative, flexible process scheduling solution that offers ERP power at a price you can afford. ScheduleFLEX is a complete manufacturing production system that is both Affordable and Flexible. For customer driven production processes in the BTO and MTO market…ScheduleFLEX is the solution!

31. eBridge Solutions: Serving the Entire Supply Chain • Solve(IT)2 from Order Logistics - Order, Warehouse, Transportation, and Installation Management for Stocked, Make-to-Order, and Engineer-to-Order Product • All order management steps from processing customer inquiries and quotes to routing shipments and selecting carriers. • Warehouse management from receiving and picking product to load and ship product. • Receive and verify product at customer site and install, if necessary. • Invoicing customer. • Manage Deliver business rules, performance, information, finished product inventories, capital assets, transportation, product life cycle, and import/export requirements.

32. eBridge Solutions: Serving the Entire Supply Chain • Solve(IT)2 from Order Logistics • Return of Raw Materials and Receipt of Returns of Finished Goods • All Return Defective Product steps from source – identify product condition, disposition product, request product return authorization, schedule product shipment, and return defective product – and deliver – authorized product return, schedule return receipt, receive product, and transfer defective product. • All Return Maintenance, Repair, and Overhaul product steps from source – identify product condition, disposition product, request product return authorization, schedule product shipment, and return MRO product – and deliver – authorize product return, schedule return receipt, receive product, and transfer MRO product.

33. eBridge Solutions: Serving the Entire Supply Chain

34. eBridge Solutions: Serving the Entire Supply Chain Additional Contact Information Braddock Cunningham Website: www.ebridge.ws Email: brad.cunningham@ebridge.ws Office: (864) 322-6286 (888) 304-6286