Assets Returned From Lease Project: Bill Cody Black Belt Week 3 Report Out

2 Project Characteristics n IKON assets remain at customer locations after lease obligations are met n Nationally, 84,000 assets are tied to contract terminations yearly; 24,600 are in the West Region n Recovery rate in West Region is 88%, translating to 2,961 assets not being recovered. n Assets remaining (Unrecovered) at customer locations after lease termination represent lost revenue opportunity from a wholesale and retail perspective n Six Sigma will focus on improving the recovery rate for the West to 95% providing IKON with incremental revenue

3 Performance Standards n Definition of Y Process Metric n % of Assets Recovered after Lease Termination This encompasses IOSC Leases where: n Terminated 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 Equipment Disposition and all Systems Updated and Reconciled to reflect Recovery

4 Measurement System Analysis n Data is extracted from both OMD and IKONIC’s n Details by Marketplace, by Customer, by Equipment Serial Number, Term code, etc. are utilized for Asset Recovery Opportunity and Reconciliation n Measurement System Analysis (MSA) is Required to Validate Baseline Accuracy of the Data within the Focus Area (Terminated Assets) n 317 Samples were extracted from OMD n If “Recovered” - customer signature to be validated n If “Unrecovered” - no customer signature should be on file For Purposes of Success - OMD is the Master Record

5 MSA Validation Date of study: October 13, 2003 Reported by: Bill Cody Name of product: Attribute Gage R&R Study Misc: Assets Returned from Lease Each Appraiser vs Standard Assessment Agreement Appraiser # Inspected # Matched Percent (%) 95.0% CI POD on File? ( 95.1, 98.9) # Matched: Appraiser's assessment across trials agrees with standard. Attribute Gage R&R indicates Data is VALID - Recovery Receipts on file for Equipment that has been Recovered and so Coded within OMD

6 Product Capability n Capability can be Expressed as: Non-Recovery Total (NR T ) = NR Recoverable +NR Bankruptcy +NR Customer Keep 210,140PPM = 114,950 DPMO + 5,450 PPM + 89,740 PPM Project Focused to Eliminate & Drive Revenue (Data Validated by Serial Number and Termination Code) Recovery Data as of 9/30/03 (September West Recovery Data.xls)

7 Product Capability - NER Process n Capability in the Northeast can be Expressed as: Non-Recovery Total (NR T ) = NR Recoverable +NR Bankruptcy +NR Customer Keep 143,267PPM = 65,842 DPMO + 6,579 PPM + 70,846 PPM 114,950 DPMO From the West: To the East: 65,842 DPMO Initial Entitlement will achieve 3.0 Sigma Level

8 Product Capability -Baseline Data Asset Recovery Opportunity Bankruptcies - IOSC Controls Customer Maintained Source: September West Recovery Data.xls

9 Performance Objectives- Baseline Data Source: Steve Hamil - Blended Wholesale Values Objective Validation.xls West Region - Unrecovered Asset Opportunity: $3.9 Million is the Opportunity at Hand!

10 Performance Objectives n If 100% recovery for all assets that can be returned, $3,880,000 in incremental revenue will be achieved based on wholesale/used market assumptions by equipment segment. n if only 95% are returned and sold - $3,690,000 n if only 70% are returned and sold - $2,720,000 n if only 50% are returned and sold - $1,940,000 n if only 20% are returned and sold - $776,000 Incremental Revenue is Achievable!

11 Variation Sources Significant Inputs: OMD Updated IKONIC’s Updated Termination Codes Term Requests Marketplace Processing OMD/IKONIC’s Reconciled _CodyC&E_matrix.xls

12 Variation Sources Process Inputs that Impact Recovery: Data Reconciliation between OMD/IKONIC’s Communications with and between - too many assumptions: Customers Marketplaces CCC CC’s

13 Potential Causes Test and CI for Two Proportions Sample X N Sample p Estimate for p(1) - p(2): % CI for p(1) - p(2): ( , ) Test for p(1) - p(2) = 0 (vs not = 0): Z = P-Value = Northeast Data West Data Hypothesis: H o : West Region Process is as Successful as the NER H a : West Region Process is not as Successful There is Statistical Evidence that the NER Recovery Process is Significantly more Successful

14 Potential Causes CCC Process: Marketplace Process: CC Process: No Centralized Ownership/ Accountability….. Individual Processes Provide Too Many Areas of Opportunity for Assets to be Missed

15 Potential Causes Marketplaces Identified to Go Get!! Minitab - September.mpj Defects by Marketplace

16 Termination Codes Identified to Go Get!! Minitab - September.mpj Potential Causes Defects by Term Code

17 Next Steps n Continue Variable Relationship Analysis - Impact of each Significant Variable to the Process Output n What is different and successful in the Northeast? n Submit New Charter Request based upon Process Discovery to run Concurrent: n LEAN Process Review Identified Redundant Activities that when Eliminated Should Provide for Fewer Associates in the Process (Multiple Machines in Same Location - Separate Orders Required) n Establishment of Cycle Time Requirements to Reduce Process Time and Recognize the Revenue Sooner n Review Project Status and Projected Change Requirements with Process Owner (John Totah) n Target Date for Roll-out => by 12/31/03

18 Project DMAIC Checklist/Status X X X XX

Appendix

20 System Variation

21 Process Map - Asset Recovery Northeast Region (Baseline)

22 Current Process Map - Phoenix - Asset Recovery Team Activity requires redundant action

23 Current Process Map - Phoenix - Logistics Team

24 Current Process Map - Phoenix - System Updating

25 Multiple machine impact Current Process Map - Midwest Region (Cincy CC) - Logistics Process

26 Process Capability: Detailed NER Process - Lease Recovery

27 C&E Diagrams

28 C&E Diagrams

29 C&E Diagrams

30 C&E Diagrams

31 C&E Diagrams

32 C&E Diagrams

33 C&E Diagrams