The Case for Automated Data Collection A Guide to Calculating Your Potential Return on Investment

© Copyright 2011 Eagle Consulting & Development. Making the Case Organizations face tough choices in optimizing the use of their IT dollars. This document is intended for the use of a Manufacturing Manager, IT Manager or internal group to help you: Gather the data you need and Evaluate the case for Automated Data Collection (ADC) So that you can make the case to your management. This document also provides the supporting data you need to assess Eagles solution and potential ROI. solution and potential ROI.

© Copyright 2011 Eagle Consulting & Development. Gathering the Data This section will ask you to articulate your business objectives, constraints and criteria. This is simply a template for your organization to use as you make the case for ADC.

© Copyright 2011 Eagle Consulting & Development. Gathering the Data ObjectiveCriteriaConstraintsNotes/Comments

© Copyright 2011 Eagle Consulting & Development. Business Challenges What are the specific business challenges you hope to eliminate or remediate by implementing the Eagle ADC solution?

© Copyright 2011 Eagle Consulting & Development. Business Challenges ChallengeProject ConstraintBudget ConstraintContingencies

© Copyright 2011 Eagle Consulting & Development. Risk Assessment Failure to meet customer requirements for accurate and timely information can have very serious consequences Too much inventory means unnecessary carrying cost and over-ordering. Too little has potential for disappointing customers Lack of real-time information affects ability to plan at every level.

© Copyright 2011 Eagle Consulting & Development. IT Initiative Experience What do you know about software implementation projects from past history? – Were resources available? – Was management committed? – Did you get the results you anticipated? How does ADC fit into your overall short- and long-term IT strategy?

Who/What will be Impacted – and how? Who Is Impacted?Describe the Impact Customers Employees What Is Impacted?Describe the Impact Business Processes Technology Infrastructure Existing hardware Existing software, databases Integration with existing systems Competitive Position Revenue Security

© Copyright 2011 Eagle Consulting & Development. Assessing the Eagle Solution This section will look at: – Tangible Savings Receiving/PutAway Picking Machine Shop Sales Order Picking Cycle Count/General Inventory – Intangible savings – ROI data from QAD customers

© Copyright 2011 Eagle Consulting & Development. Tangible Savings Summary Cost Reduction – Packaging costs – Raw materials costs – Inventory carrying costs (interest expense, etc.) – Overtime costs – Expediting charges – Scrap / rework Inventory Savings – Too much – or too little – inventory – Inventory warehouse space reduction – Increased inventory value accuracy – Inventory value reduction Labor Savings – Clerical / administrative – Warehouse – Data Entry – Increased production time – Fewer management meetings Data Accuracy = Error Reduction Decreased clerical/accounting errors Decreased shipping errors Decreased manufacturing errors

© Copyright 2011 Eagle Consulting & Development. Receiving / PutAway Areas Overall Number of man-hours per day processing receipts. Number of man-hours per day counting product on PO receipts. Number of man-hours per day typing lot/serial#/qty information on PO receipts into Eagle/QAD. Number of man-hours per day putting away material. Number of man-hours per day looking for empty locations. Number of man-hours per day spent writing down put away information. Number of man-hours per day keypunching put away transactions. Number of man-hours per day recording and processing returns (RTV).

© Copyright 2011 Eagle Consulting & Development. Picking Area Overall Number of man-hours per day spent replenishing shop floor. Number of man-hours per day spent manually recording material move information. Number of man-hours per day spent keypunching material move information. Number of man-hours per day spent managing vendor re-order process. Number of lost man-hours per day looking for material.

© Copyright 2011 Eagle Consulting & Development. Machine Shop Area Overall Number of man-hours per day spent manually recording labor hours. Number of man-hours per day spent manually recording material issues to jobs. Number of man-hours per day spent manually recording WO completions/WIP updates Number of man-hours per day spent keypunching the above transactions.

© Copyright 2011 Eagle Consulting & Development. Sales Order Picking Area Number of man-hours per day spent manually recording serial number information. Number of man-hours per day spent keypunching sales order information. Number of man-hours per day spent generating packing slips. Number of lost man-hours per day looking for proper serial number machine.

© Copyright 2011 Eagle Consulting & Development. Cycle Count / General Inventory Number of man-hours per day spent on cycle counts. Cost of all forms related to Cycle count Number of man-hours per day keypunching all of the above (separate job function?). Inventory value at last physical Number of material turns per year. Total of Last fiscal year positive inventory adjustments. Total of Last fiscal year negative inventory adjustments.

© Copyright 2011 Eagle Consulting & Development. Soft / Intangible Benefits Company image with customers: a trusted, accurate supplier – Improved customer service and satisfaction Better decision making: based on accurate and timely data – Improved ability to schedule – More accurate and real-time management reporting – Improved cost data for bidding purposes Greater efficiency – Improved factory utilization, productivity and employee morale – Improved ability to schedule – Reduced machine maintenance costs Not easily quantifiable in hard dollar terms, soft benefits are important because they quantify other factors that may be important when evaluating whether to proceed. Improved communication – Customers are more connected – Improved communication within the company More Accurate Payroll Costs

© Copyright 2011 Eagle Consulting & Development. ROI Data From Eagle Customers Eagle solicits ROI data from all of its installed base customers. This data usually falls into one of the following categories: Data accuracy Order accuracy Cost of inventory Delivery and execution Some examples follow…

© Copyright 2011 Eagle Consulting & Development. Customer ROI: A.J. Antunes Prior to the Eagle implementation, the company used an in-house system for data collection which was estimated at 10% real time. Now they operate at 100% real time. Real-time Eagle RF transactions on the floor replaced many transactions that were previously written down and keyed into QAD later in the day. 98% on time delivery – 200 line items a day shipping

© Copyright 2011 Eagle Consulting & Development. Customer ROI: Ace Controls Real time access to information replaced transactions that once took hours. Data accuracy improved to 99%. Other departments and planners were no longer impacted by lengthy delays. 50% improvement in receiving area transactions yielded an annual cost savings of over $12,000. Replacing handwritten labels/tags in receiving, inventory control and shop floor with automatically printed labels translated to a saving of over $12,000 annually.

© Copyright 2011 Eagle Consulting & Development. Customer ROI: Remy Remy saved over $20,000 in reprogramming costs because Eagle was able to modify location-based picking to work with multiple primary locations across multiple sites. Remy's Problem Reporting and Resolution costs dropped by over $50,000 following implementation of Eagle's Advanced Containerized Shipping module.. Eagle integrated handheld picking and containerization routines with the Remy Shipping module, creating a single seamless picking routine that reduced manpower costs at one distribution center by approximately $90,000.

© Copyright 2011 Eagle Consulting & Development. Customer ROI: Remy (continued) Utilizing the Eagle RF Purchase Order Receipt and Transfer functions, Remy created a virtual cross-dock between OE and Reman manufacturing and the Laredo distribution center. Materials transferred between these facilities are 100% controlled, which has made it possible to reduce material transit times and the corresponding inventory. Remy expects over $600,000 in annual savings from the distribution center consolidation, with no small part attributed to Eagle.

© Copyright 2011 Eagle Consulting & Development. Customer ROI: Cascade Engineering The company estimated an annual saving of $500,000 in productivity and efficiency improvements following the implementation of the Eagle and QAD solution. Improvements in inventory tracking allowed Cascade to purge $3 million worth of on-hand inventory without sacrificing customer service. Month-end reporting time decreased dramatically from 15 days to 2-3 days. Inventory turns increased 47 percent, from 22.6 percent to 49.5 percent. Inventory accuracy increased by 25 percent.

© Copyright 2011 Eagle Consulting & Development. Gathering Your Numbers: What is… The average hourly rate for personnel performing functions listed in the previous slides. The number of working days in your fiscal year. The number of work hours per day. The average number of overtime hours accrued in warehouse area last week, month, year (whatever is easiest). Your average overtime rate. Your managements growth plan for next fiscal year (%). The number of material handlers being added to workforce next year. Your carrying cost for warehouse materials. The extra cost(s) which is likely to be addressed through bar coding and ADC.

© Copyright 2011 Eagle Consulting & Development. Return on Investment When you have your numbers and would like to talk to Eagle, we will be happy to help you calculate projected ROI, revenue impact and project cost. Contact Eagle for information about our ROI Calculator.

© Copyright 2011 Eagle Consulting & Development. Top Benefits of Adding Eagle ADC List benefits for your organization – Prioritize by business impact List major new features and benefits

© Copyright 2011 Eagle Consulting & Development. Alternatives and Options Eagle SolutionOther SolutionNo ADC System Real-Time InformationYesNo Data AccuracyValidated by QADNot knownSubject to human error Requires separate database/PC NoYesNot applicable Global sales/support locations YesNoSubject to internal process consistency Exclusive to QADYesNoNot applicable Chosen by 800+ QAD customers worldwide YesNoNot applicable

© Copyright 2011 Eagle Consulting & Development. Recommendation Recommend one or more of the strategies Summarize the results if things go as proposed What to do next Identify action items Identify key success drivers

© Copyright 2011 Eagle Consulting & Development. Contact Eagle Corporate / The Americas Bill Paone, Executive VP, Sales and Marketing Ext 119 Europe & Africa Robert Freeman: Director, Eagle-Europe +44(0) Asia Pacific Ian Watts: Director, Eagle Asia Pacific