ATC Logistics Electronics IS OUT SOURCING THE

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ATC Logistics & Electronics IS OUT SOURCING THE WAY TO SUPPLY CHAIN EXCELLENCE? Prepared For: LQ SYMPOSIUM Prepared By: Bill Conley President (817) 491 -7727 November 9, 2006 Copyright 2006 ATC Logistics & Electronics 1 Proprietary & Confidential

IS OUTSOURCING “THE WAY” ? ? ? § Introduction to ATC Logistics & Electronics § Is Outsourcing “The Way” to Supply Chain Excellence § ATCLE Conclusion Copyright 2006 ATC Logistics & Electronics 2 Proprietary & Confidential

Who We Are Parent Company – ATC Structure Drivetrain Operations Engineered Products Nu. Vinci Logistic Services Electronics Material Recovery § Aftermarket Technology Corp. , Downers Grove, IL § 3, 280 Employees § Specializes in supply chain management, forward and reverse logistics, electronics repair and remanufacturing, and powertrain, transmission, and engine remanufacturing Copyright 2006 ATC Logistics & Electronics § 2005 Revenue: $442 million § Publicly Traded on NASDAQ as ATAC 4 Proprietary & Confidential

Who We Are ATCLE - Full Service Value Add Supply Chain Management Company 1. Customers 2. Forward Logistics/New Product Suppliers Customer / Stores § Web site § Call Center § Advanced Exchange § Returns management Outbound Fulfillment § Direct to Consumer and Bulk Fulfillment § New and Refurbished § Warehouse and Inventory Management § Kitting and Light Assembly Outbound Finished Goods § OE quality and specification § Specialized technology 4. Test / Repair / Refurbish 3. Reverse Logistics Value Added Services § Testing and sorting § Quality inspection § Return product inspection § Packaging ATCLE Customer Value Proposition Quality Supply Chain Velocity Copyright 2006 ATC Logistics & Electronics Enhanced Profits 5 End-User Satisfaction Growth Proprietary & Confidential

Is Out Sourcing “THE WAY” To Supply Chain Excellence? OR more correctly stated: Can you achieve superior supply chain performance, serve your customers, maintain control over costs, maintain expertise over the process, and deliver exceptional results through a service provider and better utilize critical corporate resources for core competencies that improve your competitive position ? ? ? YES AND NO Copyright 2006 ATC Logistics & Electronics 8 Proprietary & Confidential

Is Out Sourcing “THE WAY” To Supply Chain Excellence? IT ALL STARTS WITH THE CUSTOMER AND THE CUSTOMER’S CUSTOMER DO YOU REALLY KNOW THEM ? Copyright 2006 ATC Logistics & Electronics 9 Proprietary & Confidential

Is Out Sourcing “THE WAY” To Supply Chain Excellence? THE BASIC QUESTIONS ARE OFTEN LEFT UNANSWERED § Who are they § What do they do best § What is their long term strategy § Where are they located § What do they need § Why do they need it § Why do they buy your product or service § What happens if it does not work § What is the best way to serve them § What keeps them up at night Copyright 2006 ATC Logistics & Electronics 10 Proprietary & Confidential

Is Out Sourcing “THE WAY” To Supply Chain Excellence? IT IS ABOUT EXPECTATIONS WHAT DO THE CUSTOMER’S EXPECT ? HOW DO YOU MANAGE EXPECTATIONS? Copyright 2006 ATC Logistics & Electronics 11 Proprietary & Confidential

Is Out Sourcing “THE WAY” To Supply Chain Excellence? Do Customer Expectations Conflict With Corporate Goals ? CORPORATE § Expand market share in new locations § Introduce new products or services § Drive Lean, Continuous Improvement § Lower Costs § Reduce Headcount § Focus on core competencies § Capital for non-core hard to secure § IT resources dedicated to production CUSTOMERS § They want it at the lowest cost § They want it tomorrow or soon § They need after sales and service § They expect total visibility to orders § They need information Outsourcing Is A Way To Close The Gap Between Customer Expectations And Corporate Competencies/Resources Copyright 2006 ATC Logistics & Electronics 12 Proprietary & Confidential

Is Out Sourcing “THE WAY” To Supply Chain Excellence? There is a belief that outsourcing can solve the ills of the past and pave the way to the future YES NO § If you have well understood and documented processes § If you have a clear understanding of what you want to accomplish § If you have executive commitment to resources § If you have specific metrics you wish to achieve § If you answer NO to any of the items to the left Many Companies Outsource For All the Wrong Reasons That May Have Seemed Like The Right Reasons Copyright 2006 ATC Logistics & Electronics 13 Proprietary & Confidential

Is Out Sourcing “THE WAY” To Supply Chain Excellence? REASONS GIVEN TO OUTSOURCE: • Cut Costs • Reduce Capital Expenditures • Upgrade IT • Improve Service Performance • Improve Quality • Reduce Obsolescence • Lower Headcount The Reasons Will Vary With Each Situation: Should You Still Outsource To Achieve Excellence? Copyright 2006 ATC Logistics & Electronics 14 Proprietary & Confidential

Is Out Sourcing “THE WAY” To Supply Chain Excellence? YES, IF … FIRST, DEFINE WHAT IS EXCELLENCE? “THE QUALITY OF BEING EMINENTLY GOOD, FIRST CLASS, SUPERIOR” Merriam-Webster Look For Best In Class Performance And Never Settle for Second Best Copyright 2006 ATC Logistics & Electronics 15 Proprietary & Confidential

Is Out Sourcing “THE WAY” To Supply Chain Excellence? EXCELLENCE IS IN THE EYES OF THE BEHOLDER • Order to Delivery • Dock to Stock • On Time Delivery • Perfect Order • Inventory Turns • First Pass Yield • RMA Order Processing • Cycle Count Accuracy • Return on Assets • Return on Invested Capital • EBIT/EBITDA You Have To Know What You Want To Achieve Copyright 2006 ATC Logistics & Electronics 16 Proprietary & Confidential

Next: List the Services That You Need To Serve Your Customers § Dedicated and Multi-Client Contract Warehousing and Distribution § Logistics and Supply Chain Consulting § E-commerce Order Fulfillment Ø B 2 B and B 2 C deliveries Ø Inventory management Ø Collateral distribution Ø Web store design, hosting, and management § Fulfillment Services Ø Direct and bulk fulfillment Ø Turnkey fulfillment solutions Ø Insurance Replacement Program Ø Configuration and bundling services Ø Kit-to-order (KTO) fulfillment Ø Custom seasonal kitting Ø Cycle counting Ø Inspection – over, short, and damaged § Reverse Logistics Programs Ø Advance exchange Ø Post exchange Ø Same unit repair Ø Cradle-to-grave serial number tracking Ø Asset recovery Ø Recall management Copyright 2006 ATC Logistics & Electronics § Contract Repair Services and Logistics Ø Repair center management Ø Test and repair Ø Services parts support § Billing Ø Credit line management Ø Invoicing Ø Receivable collection Ø Web-based Reporting § Other Value-Add Services Ø Testing and sorting Ø Quality inspection Ø Return product inspection Ø Packaging § Procurement Services Ø Operating supplies § Call Center § Transportation Ø 24/7 Ø Multi-modal and carrier neutral Ø Credit card Ø International (Mexico and Canada) transactions Ø Same day special delivery courier Ø Client specific script Ø Integrated with Fed. Ex and UPS Ø Next day and two day (air/truck) 17 Proprietary & Confidential

Next: Divide And Conquer. Determine What To Outsource and What To Keep 1. Be Realistic In Expectations, and Evaluations Of Capability 2. Ensure That There Is Corporate Buy-In And Support 3. Establish Realistic Project Plans and Road Map To Success 4. Be Clear From The Start On Roles And Responsibilities 5. Secure The Proper Resources At All Levels 6. Be Prepared For Contingencies And Potential Road Blocks 7. Stay Focused On The Customer And The Goal 8. Communicate, Communicate Copyright 2006 ATC Logistics & Electronics 18 Proprietary & Confidential

Finally: Establish Agreed Upon Performance Goals And Make Them Reality Customer Expectations Are Defined In Quality Metrics Everyone Is Measured Off The Same Dashboard Copyright 2006 ATC Logistics & Electronics 19 Proprietary & Confidential

Conclusion Features 1. Best-in-class service and quality 2. Fully Integrated Turn Key Solution 1. Full Integration with the customer 2. Fully integrated with Fed. Ex, UPS, DHL, and the USPS 3. Experienced responsive operations and transition team 4. Proven ability to deliver and exceed quality SLAs at high volumes 5. Option to have returns and test/repair activity co-located 6. Green friendly programs 7. Cradle to grave serial number tracking 8. ISO 9001: 2000 certified processes 9. Carrier and geography neutral 10. Ability to flex and scale Benefits Supply Chain Excellence Can Be Achieved By Outsourcing 1. Improved customer experience and satisfaction 2. Improved control and visibility 3. Single point of accountability 4. Compressed turn-around times 5. Reduced handoffs 6. Reduction of total stock days on-hand 7. Reduced risk of obsolescence 8. Improved velocity of the supply chain Copyright 2006 ATC Logistics & Electronics 21 Proprietary & Confidential

Conclusion Supply Chain Excellence Can Be Achieved By Outsourcing IT ALL DEPENDS ON THE CUSTOMER AND HOW YOU MANAGE THE EXPECTATIONS Copyright 2006 ATC Logistics & Electronics 22 Proprietary & Confidential