Global SCM IT Application & IT Profession Hans Chen TestRite International Inc. May 31, 2007

2 Personal Background 6 years in Mechanical Engineering academic training (NTU + Cornell) 11 years in 3D imaging research (UCSF) –Technical staff 2 years in airport security equipment (GE) –Control Software Manager 2 years in semiconductor equipment (Apply Materials) –Control Software Manager 6 years in trading (TestRite) –Head of MIS (5 year) –Head of SIT business unit (1 year)

3 Outline Global Retail SCM IT Application –4 Retail Challenges Right product, right price, right time & right quantity –Real time supply chain visibility is a must –Wal-Mart warehouse service case study IT Profession –IT Role & Responsibility –Key Characteristics

4 4 Retail Challenges Right Product –Shopping is an entertainment Right Price –Value sell a product not price Right Quantity Right Time –Slim margin & short product life cycle –Inventory control is critical

5 Global Sourcing Evolution Supplier market research Supplier identification & qualification Supplier development Identify saving opportunity Product Quality Inspection Supplier database development Execute bidding Logistics management Procurement transactions Invoicing & payment Category management Develop supplier market strategies Inventory management Procurement & sourcing training Fundamental capabilities Transactional capabilities Progressive & sustaining capabilities Over 70% of China IPOs are focusing on the development of fundamental capabilities To materialize identified saving opportunities, China IPOs needs to develop transactional capabilities To maximize and sustain saving achievement, China IPO needs more sophisticated capabilities 0% 50% 100% *Source: Accenture and CSCC IPO Survey, 2005

6 Global Sourcing Obstacles and Risks Source: March 2006, “Sourcing in Low-Cost Countries” by eyeforprocurement

7 Global Logistics Overview SCM Strategy Supply Planning Exception Management Sales forecast management Supply planning management Order processing Shipment Consolidation Under Forecast Management Over Forecast Management Delay Shipment Management Fulfill -ment Order Processing Inspection Shipment management Payment Management Warehousing Supply Chain Collaboration Platform Demand Planning Logistics Master Plan Implemen- tation Plan Definition of Role and Responsibilit y of all parties

8 Asia Buying Office Head Office Asia Warehouse Consolidation Yard US DC Store Asia Factory Replenishment 5 Day Lead Time ASN Factory PO 2W Lead Time Factory PO Receiving 4W 6W FactoryOn Water Import Warehouse Store 4W Inventory Production Global Supply Chain Overview

9 Retail SystemGSS* Store DC 3PL POS Store Inventory Receiving DC Inventory Store Order Booking Shipment Container Loading Freight Invoice Demand Forecast Rebuy PO Supply Planning Exception Alert PO Acknowledge Factory Inventory Asia Factory Supply Specialist Demand Specialist Integration AsiaHomeland Supply Chain Visibility & Collaboration * Global Sourcing Solution

10 Complete Supply Chain Visibility Weekly Store Sales Monthly Store Sales Monthly DC Demand Monthly DC Demand Forecast Monthly DC Supply Monthly DC On Hand Qty Day On Hand

11 Test Rite Experience Test Rite Logistics Operation Summary Period: August,05 ~ August,06 8+ DC Inventory Yearly Turnover Rate

12 Test Rite Experience Test Rite Logistics Operation Summary Period: August,05 ~ August,06 Store Count Average In Stock % 97.5%95.6%98.5% Average Turn/Year

13 Wal-Mart 2006 Storage Business Performance Sales: $43.9M $31.4M 39.87% Instock: 95.17% 92.61% 2.76% Retail Turns: % Net Margin %: 46.46% 42.32% 9.80% Avg Lead Time: % Repl Order Fill Rate: 95.13% 89.73% 6.02%

14 SCM DEMO

15 Outline Global SCM IT Application –4 Retail Challenges Right product, right price, right time & right quantity –Real time supply chain visibility is a must –Wal-Mart warehouse service case study IT Profession –IT Role & Responsibility –Key Characteristics

16 IT Application Development Application Analysist –BA/SA Application Architect –Frame work, design pattern, etc Database Architect –Data store, modeling, backup, restore, etc. GUI Designer –User interface, fool proof, online help, etc. System Engineer –Hardware sizing, performance tuning, etc. Report Manager –Management report design, access control, etc. Deployment Manager –QA, QC, configuration management, etc.

17 IT Roles & Responsibilities From “What business wants IT to do” to “What can IT do for business” From cost management to investment management From operation support to business strategy partner IT play a vital role in business evolution

18 Key IT Profession Characteristics Business Orientation Communication Analytical Flexible Technical

19 Business Orientation Industry overview Company competitive advantage Company challenges and weakness Short & long term business focuses

20 Communication Proactive Feel the pulse of business life line. Propose a solution before it is asked Multidiscipline Management view Operation view Technical view IT Business view Confirm understanding is critical

21 Analytical Understand history, support today business and ready for tomorrow challenges Assemble whole picture from segmented inputs See beyond the surface Never expect user give you the whole picture

22 Flexible “Changes” is part of business Business survive by being able to catch up with the changes. Business succeed by being able to lead the changes. Foresee changes, prepare for changes and welcome changes

23 Technical Timing is critical, schedule is the key Be as broad as possible Don’t have to be my way Fast learner Think twice before committing any in-house development project

24 To be successful, learn from ….