Welcome to QLogitek Information Web-cast Series! Today’s Topic: Demand Driven Supply Chain Transformation Series: Inbound Logistics

QLogitek is a thirty year old Canadian applications development and systems integration company with its head-office in Toronto. It proudly counts several blue-chip Canadian companies in its clients roster - such as The Hudson's Bay Company (major Canadian retailer), the Toronto Transit Commission, The Royal Bank of Canada (Canada's largest financial institution), Harlequin Enterprises and others. QLogitek has a significant presence in Canada, the U.S. and in 27 additional countries across the world. Our software-as-a-service (SaaS) division, L’eBIZ, is currently utilized by a client community of over 5,000 companies which is poised to grow significantly over the next few years. L’eBIZ provides “On Demand” supply chain collaboration solutions to major Enterprise Hub customers. The division facilitates collaboration between enterprise retail, distribution, logistics and manufacturing Hubs and their worldwide Spokes for their complex supply chain processes. Our clients are supported by QLogitek in a 7x24 environment. L'eBIZ solutions are Quick-Time-to-Market for its enterprise Hub customers and are Better, Faster, and Cheaper than any other competing solution model. Please visit for more information!

Presenters Neel Sharma, Vice President Global Customer Operations Neel Sharma is responsible for QLogitek’s global customer operations. He has worked with several retail, distribution, manufacturing and logistics enterprises to tie together their supply chains electronically. These enterprises have interactively transformed their supply chain and have achieved enhanced visibility in their thought-to-shelf processes through electronic supply chain collaboration. Bill Preston, Implementation & Relationship Manager Global Customer Operations Bill Preston is responsible for all customer implementations at QLogitek. Bill comes with a wealth of experience in supply chain implementations and relationship management under his belt. Prior to assuming his position at QLogitek, Bill spent 34 years at Sears Canada and brings expertise from Distribution, Logistics and System Portfolio spheres.

Agenda 1.A Demand Driven Supply Chain Network (DDSN) –What is this & why should it be important to you? –The Perfect Order concept 2.The Role of Inbound Logistics within a DDSN 3.Benefits of an optimized Inbound Logistics environment 4.How does one know they have an Inbound Logistics issue? 5.The role of technology in optimizing Inbound Logistics –Inside your four walls and outside (supplier technology) 6.QLogitek’s Quick-Time-to-Market approach for Optimizing Inbound Logistics 7.Benefits achieved by a major Canadian retailer in a high volume environment

What is a Demand Driven Supply Chain Network? Buzzword alert! – DDSN (Demand Driven Supply Network) –These supply networks depart from the traditional systematic “push” of products to shelf/market – which meets the demand of the distribution center, but not of the end customer. –Since actual buying decisions are made with the shopping cart, not the warehouse picker, DDSN turns the business around: customers actually “pull” products to the point of sale. The “Perfect Order” concept –The Perfect Order pulls in the right goods at the right time to the right place for the right cost. This requires suppliers to collaborate with you in real time. –The Perfect Order minimizes the “Cash-to-Cash cycle” and maximizes customer service and profitability. This requires that you maintain visibility throughout your supply chain. –In many instances, the “Perfect Order” means that a traditional Purchase Order is never issued to kick-off the supply cycle. This means that you have to maintain systems control and not physical control of your supply chain. A DDSN that strives to continuously deliver the Perfect Order will not be successful without systemic control and visibility throughout the supply chain and a high degree of collaboration with all supply chain trading partners Take-away

Why is a DDSN important? Supply chains are transforming at a breathtaking pace Leading Retailers, Manufacturers and other supply chain organizations are building all supply chain processes, infrastructure, and information flows to serve the downstream source of demand --whether a consumer in the supermarket or the Department of Defense--rather than the upstream supply constraints of factories and distribution systems. - Kevin O’Marah, AMR Research Why would you consider a transformation to a DDSN? –Our research suggests that organizations that are implementing DDSN are seeing the following benefits: Working capital Reduce inventory levels 7%–15% Improve asset utilization 10%–15% Decrease cash-to-cash cycle 10%–30% Revenue & Customer Service Increase in fill rates 3% - 10% Reduction of out-of-stocks 3%–10% Operating cost Increase in production efficiencies 1%–5% Decrease in freight charges 5%–15% Increase staff productivity 7%–12% Reduce obsolescence and waste 35%–50% There are tangible benefits you can realize within your organization by adopting a DDSN transformation Take- away

How Can Trading Partners Affect The Perfect Order? Orders can be “imperfect” for any of the following reasons: 1.Out of stocks at supplier location 2.Manufacturing delays 3.Poor quality of finished goods; mislabeled cartons 4.Damage to finished goods in Transit, 5.Transit delays and inaccurate shipments; substitutes 6.Substantial inventory carrying cost, or freight cost, associated with the order. The essential players within a DDSN CUSTOMER DEMAND RETAILER TIER 1 MANUFACTURER TIER 2 MANUFACTURER AGENTS / CONSOLIDATOR IMPORT SHIPPER DOMESTIC CARRIERS THIRD PARTY WAREHOUSE While you may be running a great internal operation, you are still heavily dependant on the behavior, motivation and systems capabilities of your trading partners as you strive to build a DDSN. Take-away

The Role of Inbound Logistics in the DDSN According to Hau Lee, professor of operations, information and technology at Stanford, Semiconductor manufacturers in Silicon Valley were among the first to use the term "accurate order" in the early 1980s. By the 1990s, this focus on measuring order delivery rates had spread to other industries, including food service, which was losing money because food distributors (the companies that deliver food to restaurants and other outlets) would withhold payment for what they considered imperfect orders. Lee says that while manufacturers understand the importance of aiming for accurate orders, many have underestimated the cost consequences of imperfect orders. At Seven-Eleven Japan, says Lee, the company noticed that highly paid truck drivers were often idle because of an imperfect order. As a result, the company started measuring perfect order rates and noticed that when an order is perfect, the driver can leave the DC right away (inbound or outbound)”. Source: CIO Magazine, August 2005  The rapid growth of Tier 1 “Software-as-a-Service” providers in the 2000s made it possible to quickly and inexpensively achieve real time visibility and collaboration between trading partners to optimize the inbound movement of goods.  Streamlining the inbound logistics process with your trading partners, to reduce DC congestion and delays, to reduce freight costs and to track the receipt of the right goods, will have a direct impact in getting closer to “The Perfect Order” by reducing the thought-to-shelf and the cash-to-cash cycles.

Benefits of Optimizing Inbound Logistics 1.Near-perfect order visibility –Imports/Low Cost Country Sourcing: When’s the boat arriving? Do I have a consolidated view of all shippers with my inventory? Are the shipments store-ready? If not, how do I receive? –Domestic Inbound What’s coming? Less than Truckload (LTL) - what’s in the trailer? Who’s bringing it in (Carrier)? Is it the right order? Do I have an Advance Ship Notice (ASN)? When? Exactly when will the delivery be made How much time will it take to unload/receive? 2.Near-perfect DC/store efficiency –Do I have the right/adequate staff to receive the inbound load? –Do I have right type of conveyance available for the appt.? –Am I set up for optimum DC through-put today? (Put away, cross-dock, flow through schedules) –Am I maximizing receiving dock-door turns? 3.Near-perfect order cost tracking & scorecard sharing –Did I receive what I ordered? –Are there Shipment Quality issues? –Was the delivery made on-time and as expected? Visibility gives you control Receiving efficiencies cut cycle times and costs Compliance Tracking shifts costs to where they belong Take-away

Collaborative Inbound Logistics The QLogitek Approach

Classic Symptoms of an Sub-optimized Inbound Logistics Environment How do you know if you have a problem with Inbound Logistics? 1.DC/Store receiving area filled with “un-received product” that has to be put away or cross-docked. 2.Constant expediting to outbound docks or to put away area 3.Low visibility into inbound deliveries. ASN may give some visibility but it’s not good enough at the door-level; DC/Store manager complaints. 4.Sub-optimal receiving staffing schedules (especially if high part-time staff ratio); too many or too few staff on hand to receive 5.Several people booking appointments for deliveries/pick-ups and changes to dock-door appointments; phone/faxes back and forth 6.Changing appointments is a communication and rescheduling nightmare 7.Congestion at yard and gate – poor supplier and carrier relations (demurrage charges, drivers waiting queued up for an available dock-door) 8.Unhappy customers – stock outs at the shelf or low PO Fill Rate, even though there is inventory in your supply chain 9.Yard is filled up with off-shore containers or domestic trailers waiting for days to be unloaded/received 10.Sub-optimal asset management; assets should be highly utilized or shouldn’t be there. Look at your DC and talk to your DC staff. You’ll know right away that you have a significant Inbound Visibility opportunity. Take-away

How Do You Optimize Inbound Logistics? Define Key Metrics –Transportation Cycle Time –Average Dock-door turns –Average PO Lines Receiving Time –Shipment Quality Metrics (Fill Rate, On time Delivery, No ASN, etc) –Many others Align Internal Processes –Align internal processes to achieve the KPI that are important to you Refine Trading Partner Processes –Work with all Trading Partners to understand your logistics “Rules of Engagement” What common goals are you going to work together to achieve? How will performance to plan be tracked? Synchronize IT systems –Make sure internal systems (such as Warehouse Management System- WMS or Transportation Management System-TMS) are set up to execute the processes you need –Make sure vendors have the systems, tools and technical capabilities to collaborate with you on the key cross-enterprise logistics processes and to follow your mandate.

Synchronizing Technology to Optimize Inbound Logistics Inside your four walls: WMS, TMS, Workforce Scheduling, etc. –The most common systems that affect your inbound logistics capabilities are WMS, TMS, Scanning devices and Workforce Scheduling software. –Several good packages are available off the shelf Outside your four walls: L’eBIZ Collaboration Hub –Suppliers generally do not have the tools available to give you the visibility you need. –A “collaboration hub” approach that uses a software-as-a-service model to provide hosted portals and middleware for supply chain integration –Four areas where hosted technology can provide quick & inexpensive means for your suppliers to accelerate the goal of optimizing Inbound Logistics. 1.EDI/E-Commerce & Advanced Ship Notice (ASN) proliferation 2.Standardized Bar-code labels proliferation (such as MH-10) 3.Automated Dock-door appointments & Pick-up appointments (back haul) scheduling 4.Shipment Quality Compliance Management & Scorecard Inbound Logistics optimization is a much bigger challenge outside of your enterprise than inside it. Supplier systems and readiness, or lack thereof, are often a key constraint to achieving goals. Take-away

L’eBIZ Logistics: Major Features & Services MAJOR FUNCTIONALITY DC Optimizer – to configure the software for the optimal DC (or any receiving area) through-put. Administration module to allow for rules-based setup of users (DC staff, suppliers, carriers, etc) Rules-based Alerts & Notification workflow; exceptions management Supplier and carrier “self-service” appointment scheduling for deliveries and pick-ups LTL load consolidation feature for 3PL/Carriers “ASN and MH-10 on the Web” functionality Shipment Quality Compliance Management – approvals workflow and supplier notification INTEGRATION Real time or near-real time integration with back end systems for higher quality appointments (PO validation, ASN validation, etc) Business rules management SERVICES Solution Customization, High Availability Hosting & 7x24 Support Supplier Training, Rollout & 7x24 Global Support 1.Speed-to-market 2.Turnkey Take-away

Benefits Achieved By Major Retailer L’eBIZ solution deployed across 7 national distribution centers (DCs) Reduced DC appointments staff from 55 to 3 ($2M year- over-year) Appointments Booking time from 5 days to 3 seconds 3,000+ suppliers across North America Top 100 carriers on-board Fully integrated to back end systems Hudson’s Bay Company had a 6-month ROI with the system

“On Demand” Supply Chain Collaboration Functionality

Some Enterprise Hubs Include…

Thank You! This is the end of our presentation! Q&A period Please ask questions by using the chat function located on the right hand side of your screen. Please make sure that the questions are directed to all participants. To do that, ensure that “All participants” is selected from the drop down menu right under the chat box. Contact Information: Neel Sharma, VP, Global Client Operations ext Bill Preston, Implementation & Relationship Manager, Global Client Operations ext