Distribution Primer December 20, 2010

“As with other investments, IT expenditures require careful consideration and planning, however now is not the time for undue caution or risk aversion. As long-term, profitable growth again becomes a realistic expectation, distributors must prioritize strategic investments in IT. Those that create an agile, insight-driven, differentiated organization will be best positioned to thrive in our increasingly complex, volatile, and unpredictable economic environment.”

Markets for 2011 Industrial Equipment & Supplies Consumer Packaged Goods Food & Beverage Medical Equipment & Supplies

Distribution Value Chain Planning Procure-to-Pay Supply Chain Execution Order-to-Cash Value Added Services Enterprise Management Suppliers Planning Purchasing Logistics Sales Customers Distribution Value Chain

Distribution Requirements Order management Inventory management Purchasing Financial management Warehouse management Transportation management eBusiness Complementary technology

Order Management Order entry –Counter sales Signature capture –Credit card processing –Light manufacturing/assembly Kits Multi-level bill of material –Order management Quotes and bids Accessories Substitutions/supercedes Buy lists and historic sales –Mobile order entry –Service and maintenance

Order Management Customer relationship management –Contact history –Improve customer service –Task management Integrated fax –Covering all functional areas Billing Purchasing Quotes

Order Management Expanded pricing –Mark up cost or percentage discount off list –Multi-tier pricing with breakpoints for quantity –Job-based pricing –Promotional/contract pricing –Group pricing (customers/products/product lines) Pricing service –IDEA/Trade Services/others Monthly/on demand import of products and prices Scheduled price updates Analytics on impact of price changes

Inventory Management Replenishment and forecasting –Look back and look forward –Determined by product, product group, supplier or class –Seasonality –New product introduction –Exponential smoothing Lot/serial tracking and traceability Vendor managed inventory

Purchasing Auto purchase order generation based upon replenishment rules –Ability to adjust to targets based upon: Dollars Units Free freight Optimal order quantity for price breaks Auto PO generation from SO –Drop ship to customer –Ship to warehouse and cross dock Accumulative purchase orders Blanket purchase orders

Financial Management Accounts payable –Rebate management and return to vendor –EDI integration Accounts receivable –Master accounts/hierarchy –Collection system –Lien management General ledger –Audit trails –Complex account structure –Financial reporting tools

Warehouse Management RF handheld functionality –Picking –Receiving –Counting –Adjustments Integrated parcel shipping Multiple unit of measure –Stock/pack/count Integrated returns –From customer –To vendor

Transportation Management Integrated multi-carrier parcel system –Rate shopping/least cost shipping –Shipping history/trackability –Automated paperwork/international documents Integrated LTL system –Least cost shipping –Cost allocation down to the order level Load building and routing –Either owned assets or brokered –Consolidate shipments/optimize load and route

eBusiness EDI –Customer focused –Supplier focused –Vendor managed inventory Web storefront –Real time inventory availability –Access to historic customer information –Reprint documents

Complementary Technology Document imaging Business intelligence Integrated forms designer Mapping Reporting Collaboration

Vertical Fit Industrial equipment and supplies –Market dynamics Much, if not all, profit made through rebates and special price agreements Heavy dependence upon EDI More commodity products than other verticals so purchasing and forecasting more important

Vertical Fit Medical/dental equipment and supplies –Market dynamics Medical/dental equipment has specific need for serial tracking for recall/warranty work Medical supplies often requires expiry management and related recall/warranty capability

Vertical Fit Groceries, beer/wine –Market dynamics Groceries and beer/wine need catchweight and compliance labeling and RFID Beer/wine have lot considerations, expiry concerns and some HazMat considerations

Key Competitors Vertical players –Activant / Prophet 21 / Eclipse - $225M Building Material, Industrial Supply, Electrical, Plumbing, HVAC –Infor - $100M Electrical, Plumbing, HVAC, Building Material, Industrial Supply, Paper Products –Small Players IBS Gillani Sentai Mincron Mid-market providers –Sage MAS 90/200, MAS 500, Horizontal –SAP Business One Tier 1 providers –SAP All-in-One –Oracle / Peoplesoft / JD Edwards –Lawson –Epicor

Activant Microsoft Dynamics message: –Leveraging $7B in R&D investment –Tight integration with familiar products like Office –Futureproof technology choice with.NET –Delivered through local resources that understand regional issues and opportunities –Extended through vertically specific ISV partnerships that deliver best of breed functionality

Infor Microsoft Dynamics message: –Leveraging $7B in R&D investment –Tight integration with familiar products like Office –Futureproof technology choice with.NET –Delivered through local resources that understand regional issues and opportunities –Extended through vertically specific ISV partnerships that deliver best of breed functionality