1. Managing Subcontracting in Advanced Repetitive MWUG 2013 Grand Rapids, MI 1

2. Why Subcontract? Increase capacity during peak demandReduce overtimeReduce temporary or fulltime staff needsReduce overheadReduce costsCover for temporary in-house down-time 2

3. Subcontract Triangle Supplier Schedule (PO) RoutingCumulative Work Order PO and Line Routing Code WO ID OP Work Center Item Planning Production Line 3 Process Flows

4. Normal Scenarios #1 - Permanent Supplier schedules for RM and WIP RM shipped directly to Subcontractor Charged only for value- added Both RM and WIP in perpetual inventory #2 - Temporary Forming tool down Standard costs are based on in-house manufacturing Charged only for value- added Blank and formed parts are both single operation routings 4

5. #1 Permanent Steel mill Sub- Contractor Plant RM Release WIP Release RM delivered Receipt acknowledgment PO Receipt (special location) WIP Shipped / Invoiced PO Receipt (WIP) with backflush 5

6. Setups Only set up one SUBCON even though multiple suppliers Work centers Not used since new part numbers returning with single op Item Master (WIP Item) Created unique location for each subcontractor Locations Created only one SUBC for all arrangements Production Line Not used since subcontract cost is not consistent by vendor Standard Operations Set to be special location for default during receipt and issue Item (Item-Site) Inventory Single operation SUBCON work center, link to PO / line Routing Type S, link WO ID and Routing operation Supplier Schedule Created linked to production line with alternate routing CumulativeCumulative Work Order 6

7. #2 Temporary Sub- Contractor Plant Shipped Receipt acknowledgment Inventory transfer WIP Shipped / Invoiced PO Receipt (WIP) with backflush Blank made Formed item made 7

8. Setups Created unique location for subcontractor, if new Locations Add subcontracted item to special SUBC production line Production Line Specify alternate routing Change location for component will outsourced Item (Item-Site) Inventory Create alternate routing for SUBC Update special subcontract cost Routing Either create schedule or discrete PO Type S, link to WO ID and milestone op Purchase Order Created linked to production line with alternate routing Cumulative Order 8

9. Special: Lot Controlled Component Temporary movement of lot controlled component to subcontractor Standard costs are based on in-house manufacturing Charged only for value- added Standard PO receipt upon return of new item 9

10. PO Receipt RCT-WO and ISS-SO do not complete due to lot/serial control 10

11. Backflush Transaction 11 Follow-up receipt with modified backflush to report and issue lot specified components

12. THANK YOU 12