1. 1 NorCal OAUG Use Only Stratex Networks Scott G. Snyder Assistant Controller Scott G. Snyder Assistant Controller Case Study: Stratex's New Automated Approach to Supply-side Order Management Case Study: Stratex's New Automated Approach to Supply-side Order Management

2. 2 What You Will Hear From Me Today  Stratex Networks – who we are and what we do  System topology and metrics  Our economic situation and initiatives  Our solution  Implementation  Where we are today  Where we are going

3. 3 Who Is Stratex Networks?  Founded in 1984  Headquartered in San Jose, CA with major manufacturing operations in Wellington (New Zealand), Cape Town (South Africa) and Taiwan  We are one of the world’s leaders in providing high-speed wireless transmission solutions  We design, manufacture, and market advanced wireless solutions for mobile applications and broadband access to enable the development of complex communications networks worldwide  $157 million in sales for fiscal 2004

4. 4 Our System Topology  ERP - Oracle 10.7  Started on Oracle in January, 2000  Use Oracle for finance functions, Purchasing, Order Entry, Inventory & Mfg.  Upgrading to Oracle 11i (11.5.9) in October, 2004  Concur for web-based, automated expense reports  Use ADP for payroll  T&E card – American Express

5. 5 Current environment. PeopleSoft Agile Product data mgmt Items, BOMs, ECOs Order Management Items, BOMs Shipping/Logistics Finance (GL, AP, AR, FA) iProcurement Time and Expense Service Contracts and Billing Installed Base Depot Repair Oracle 11i Opportunity Management Items Configurator (node/site) Quotes MDS Product Ordering Guides Orders (pre-book) Pricing Forecasts TAS Approval Siebel 7.5 Customer Sales Cycle Pre-SalesOrder SubmissionOrder FulfillmentSupport Suppliers/Contract Manufacturers Customer Online Ordering Customers Employees – Sales Customer Support Portal (Service) Network Configurator Online Ordering Tool (sales focused) Employees – Management and Staff Licensing Web Interface Data Warehouse/ Repository Vitria (EAI Framework) Oracle 11i, Siebel 7.5, and/or Custom Supplier Portal Enterprise Portal (Employee/Exec/Business Intelligence) Inventory Management Purchasing Manufacturing Planning Data Management Systems

6. 6 Metrics (U.S. operations)  1,210 – Average Invoices Per Month (2003)  $18.3 M in disbursements (2003)  797,446 – POs  1 – 60 Pages  1 – 80 Revisions  5 buyers  3 key receiving areas  2 AP clerks, 1 supervisor

7. 7 Economic Situation (Our Challenges)  $418 million in sales in FY-01, down to $229 million in FY-02, now $157 million in FY-04  Cost reductions were required, decision to outsource manufacturing from San Jose to Taiwan & other locations  Outsourced model meant large portion of shipments to drop-ship direct from key suppliers  Documents all paper and in various locations geographically around the world

8. 8 Economic Situation (Our Challenges)  Reductions in force meant very lean accounting staff to get the work done (AP staff reduced to two clerks and one supervisor-including T&E)  AP staff were in constant “fire-fighting” mode with no time to address issues on a timely basis  Turnover in receiving due to reductions in force and outsourced manufacturing  Receiving worked in a reactionary mode, not a proactive mode

9. 9 Initiatives (Where we needed to go)  Corporate Goals  Reduce costs from anywhere possible  Manage contract manufacturers  Improve existing supplier interactions  Finance Goals  Automate wherever possible while keeping costs down (started as Evaluated Receipts Settlement (ERS))  Make an impact on the company through change

10. 10 Solution: Automate and Improve Supply-Side OM  Automate the routine matching of invoices to receiving documents & purchase orders  Migration to a paperless AP environment through integration of our paper (images) with the transactions (data) into one source  Solve discrepancies within hours not days – avoid “fire drills” to resolve invoice discrepancies  Automatic sending of invoice images for approval of expense purchases (2-way match)  Overcome our geographical problems  De-Compartmentalize supply chain – one team (receiving, purchasing & accounting)  Focus our employees on our core competencies and outsource the rest (AP clerks to issues analysts)

11. 11 Parts To Our Solution (In-House / Outsourced)  In-House  Supplier communication  Receiving transactions  Discrepancy resolution  Payment  Outsourced or Outtasked  Data entry (routine matching)  Data conversion  Image archival and storage

12. 12 The Implementation  We chose AcceLIM to meet our company goals and initiatives while keeping costs down  We had to outline the handoffs in the process between Oracle and AcceLIM  We identified what items would be our responsibility and what AcceLIM would do  Required some work from IT, but not months of development

13. 13 The Implementation

14. 14 Implementation – Flow of data  Purchase orders (and changes to PO’s) and receiving data downloaded daily from Oracle to AcceLIM  Receiving paperwork (packing slips, bills of lading & receipt travelers) sent by fax or scanner to AcceLIM daily  Invoices faxed directly from suppliers or from us to AcceLIM daily  AcceLIM matches daily and provides daily exceptions reports  Matched items are downloaded daily from AcceLIM back into Oracle as payables objects for payment  Issues are highlighted daily for resolution

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17. 17 rcarbajal@stratex.com Just curious, who did we windup sourcing the other wire from?

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20. 20 - ssnyder

21. 21 - ssnyder There was problem with this supplier’s data, please reprocess tomorrow.

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23. 23 Where are we Today  Signed agreement in October 2003  Pilot in November and December  Started production in February  Successes and struggles

24. 24 Our Successes - Accounts Payable  Currently about 30% of invoices come through the automated AcceLIM system for payment  Images of invoices are e-mailed for approval on expense PO’s  Document images along with the data from invoice to packing slip to PO can be accessed while discussing with a supplier  Proof of receipt documents can be easily accessed and printed during audit  Better collaboration with purchasing and receiving

25. 25 Our Successes - Receiving  Receiving used to have a complete row in the warehouse for receipts with various issues, this has been reduced to one shelf and now just a small pile  Majority of receipt issues are resolved the following day, based on the exception report, rather than only when suppliers call  Better collaboration with purchasing and accounting

26. 26 Our Successes - Purchasing  Real-time resolution of purchase order issues and invoice issues  Addressing issues on a daily basis rather than waiting for a crisis  Access to all data related to a purchase order: PO, order confirmation, receiving documents and supplier invoices  Better collaboration with receiving and accounting  Faster identification and resolution of problems

27. 27 Where we struggle(d)  Initial buy in and acceptance from all departments involved  Overcoming the challenge of defining and implementing the data flow in and out of Oracle  Achieving supplier support for sending invoices directly to AcceLIM and the right method of sending that data  Clearly documented training and help material for new users  Lessons learned

28. 28 Lessons Learned  Implementation timeline needs to be realistic, not too aggressive  Involve all departments early in the process, do not wait to include any departments  Clearly define what our I.T. department will do and what AcceLIM will do  Have a clear method for discussing and resolving issues as they arise

29. 29 Where are we going  Within the next 12 months have over 90% of all suppliers sending their invoices directly to AcceLIM, no paper coming to Stratex  Have all key warehouse locations sending receiving documents directly to AcceLIM for all U.S. purchase orders  Further develop purchasing and accounting departments as analysts and not data entry clerks  Automate purchase order changes through AcceLIM  Achieve over 50% of invoices on automated matching

30. 30 Questions  Questions…