Assets Returned From Lease Project: Bill Cody Operations Columbus OH

2 Background – Current Process n IKON assets remain at customer locations after lease obligations are completed. n Nationally, 84,000 assets are tied to contract terminations yearly; 23,000 are in the West Region n Recovery rate in West Region is 79%, therefore, 4,920 assets are not being systematically recovered. (based on OMD assessment) n Of these 4,920 assets it can be estimated that 3,280 of these assets are available for resale through IKON Wholesale or Used Equipment (Retail) markets. n Non-recovered assets at customer locations represent lost revenue and margin opportunities.

3 Project Definition n Problem Statement: Annually, 23,500 assets tied to lease contracts terminate in the West Region. Current recovery rate is 79%, leaving 4,920 assets not being recovered and thus represents potential loss of revenue and margin opportunities. n Project Definition: Increase the number of assets recovered for the West Region from 79% to 95% without increases in headcount or IT expense to IKON. n Project Benefits: Additional revenue opportunities in wholesale and retail markets with associated positive margin implications.

4 Project Definition, Cont’d n Financial Benefits: Revenue opportunities: Wholesale $607,000 and Retail $3,300,000 Margin opportunities still need to be determined n Project Metric “Y”: Y = percent of recovered assets not being billed at IOSC n Defect Definition: Any asset that is no longer being billed by IOSC and has not been picked up from the customers location n Leveragability: Project can be leveraged across every division within and across BU’s with some exception to system-specific constraints.

5 Project Team n Champion – Tom Hammond n Black Belt – Bill Cody n Process Owner – John Totah n Finance Analyst - Frank Eaton n Team Members: Paul Tavilla, Asset Manager, NER Michael Howard, West Region - Logistics Mary Czekaj, West Region - Order Management IOSC Representative - TBD Steve Hamel, IKON Reman/Wholesale Master Black Belt – Dan Douglas

6 Financial Impact

7 Initial Data Observations

8 CT Tree

9 SIPOC

10 Process Map - Asset Recovery

Output Characteristics

12 Process Metrics n Definition of Y Process Metric n % of Assets Recovered through the System (OMD/Oracle reconciled to IKONICS) after Lease Termination. This encompasses: n Terminations where assets are recovered through normal lease expiration n Terminations where customers maintain assets (rewrites, outright purchase, or term renewals) after lease expiration n Early lease terminations due to Bankruptcy/Bad Debt (non-pay) n Recovery opportunity starts with Lease Termination and ends with all Systems Updated and Reconciled to reflect recovery

Define Performance Standards

14 Process Opportunity n Project is focused on improving recovery percentage and increase revenue/margin opportunity n Recovery to be 95% n Revenue is incremental with no added headcount to achieve n Secondary opportunity may be to Reduce the Cycle Time in the process n No metrics are currently tracked n Reducing cycle time will allow for quicker revenue/margin recognition opportunity n Third opportunity may be to reduce headcount associated with the process n Currently 10 FTE’s assigned to Lease Recovery with an additional 115 people involved in the process

Validate Measurement System

16 Measurement System n Objective: Increase Recovery Rate on Lease Terminations to 95% for West Region n Measurement system to be used: n OMD: Terminated Assets by Termination Code - Recovered/Unrecovered/Total by Region, by Marketplace n IKONICS: Same Data but is considered the Standard n Discreet data - Recovered? Yes or No n Gage problem identified n OMD requires clean up to correct measure process for future data analysis n Coding errors identified and need reconciled

17 Measurement System - Baseline Data

18 Measurement System - Baseline Data Dollars are based on original charter - currently under review

19 Measurement System - Data Collection Plan n Daily: Lease Termination Reports n Source: IKONIC’s (IOSC supplied) n Data includes: Customer Name, Equipment Serial Number, Termination Code, Date of Termination, Marketplace, etc. n Provided to Marketplaces for Disposition and/or Comments n Weekly: Reconcile Reports n Source: IKONIC’s and OMD n Data merged and reconciled between systems (in Oracle Discovery) based on Equipment Serial Number n Rolling 12 months to capture all aged open items n Used to insure Recovery of Asset is complete

Establish Process Capability

21 Measurement System Capability Measurement system in place: n Data is extracted from both OMD and IKONIC’s and can be reconciled n Details by marketplace, by customer, by equipment serial number, etc. are available n Data testing for capability required to determine: n proper coding assignment occurring n physical asset receipt opportunity n are assumptions for revenue/margin potential valid? n Marketplace specific area for improvement

22 DPMO - Long Term n Defect Rate(OMD): 4,918 defects on 23,412 opportunities n Based on 1,000,000 opportunities = Long term DPMO of 210,063 n OMD data needs to be scrubbed to exclude Customer maintained equipment n Expectation is defects will be reduced to 3,200 equating to a Long term DPMO of 154,084 n Process can be made to reach ~ 30,000 DPMO n Represented by Bankruptcies which require legal release

23 Process Performance and Entitlement

Define Performance Objectives

25 Define Performance Objectives n Based on 100% recovery for all assets that can be returned $3,930,000 in incremental revenue will be achieved based on current assumptions n if only 95% are returned - $3,730,000 (objective) n if only 70% are returned - $2,750,000 n if only 50% are returned - $1,970,000 n if only 20% are returned - $790,000 Note: OMD is considered System of Opportunity

26 Defect Chart by Marketplace Multitab: Marketplace Detail Multitab: Marketplace Defect Detail

27 Defect Chart by Type Multitab: Defect Detail

28 Pareto Chart for Defects by Type Multitab: Defect Detail

29 Pareto Chart for Defects by Marketplace

30 Cycle Time - IKONIC’s

Issues and Next Steps

32 Issues to be Addressed n Differences between OMD and IKONIC’s need to be identified as to cause and reconciled n Current processes still need to be documented for the West Region and IOSC as it pertains to this project n Agreement on data needs to occur and acceptance of opportunity in the West Region

33 Next Steps n Validate revenue and margin opportunity from IKON Wholesale and Used (Retail) Markets - submit Project Amendment if warranted n Document process gaps in the West Region based on current Northeast Region flow - scheduled for 9/9- 9/11 in Phoenix n Reconcile OMD to IKONIC’s based on Termination Coding n Document IOSC process n Begin detailed process mapping for deployment

34 Project DMAIC Checklist/Status X X X