Global SCM IT Application IT Profession Hans

Global SCM IT Application & IT Profession Hans Chen Test. Rite International Inc. May 31, 2007

Personal Background • 6 years in Mechanical Engineering academic training (NTU + Cornell) • 11 years in 3 D imaging research (UCSF) – Technical staff • 2 years in airport security equipment (GE) – Control Software Manager • 2 years in semiconductor equipment (Apply Materials) – Control Software Manager • 6 years in trading (Test. Rite) – Head of MIS (5 year) – Head of SIT business unit (1 year) 2

Outline • Global Retail SCM IT Application – 4 Retail Challenges • Right product, right price, right time & right quantity – Real time supply chain visibility is a must – Wal-Mart warehouse service case study • IT Profession – IT Role & Responsibility – Key Characteristics 3

4 Retail Challenges • Right Product – Shopping is an entertainment • Right Price – Value sell a product not price • Right Quantity • Right Time – Slim margin & short product life cycle – Inventory control is critical 4

Global Sourcing Evolution Fundamental capabilities Transactional capabilities Progressive & sustaining capabilities Supplier market research Supplier identification & qualification Supplier development Identify saving opportunity Product Quality Inspection Supplier database development Execute bidding Logistics management Procurement transactions Invoicing & payment Category management Develop supplier market strategies Inventory management Procurement & sourcing training *Source: Accenture and CSCC IPO Survey, 2005 Over 70% of China IPOs are focusing on the development of fundamental capabilities To materialize identified saving opportunities, China IPOs needs to develop transactional capabilities To maximize and sustain saving achievement, China IPO needs more sophisticated capabilities 0% 50% 100% 5

Global Sourcing Obstacles and Risks Source: March 2006, “Sourcing in Low-Cost Countries” by eyeforprocurement 6

Global Logistics Overview SCM Strategy Logistics Master Plan Implementation Plan Definition of Role and Responsibility of all parties Demand Planning Supply Planning Sales forecast Supply management planning management Order processing Shipment Consolidation Fulfill -ment Exception Management Order Processing Under Forecast Management Inspection Over Forecast Management Shipment management Payment Management Delay Shipment Management Warehousing Supply Chain Collaboration Platform 7

Global Supply Chain Overview Factory PO Head Office Factory PO 2 W Lead Time Asia Buying Office Recei ving ry PO Facto ASN US DC Store Asia Warehouse Consolidation Yard Asia Factory Replenishment 5 Day Lead Time Inventory 6 W Store 6 W Import Warehouse 4 W On Water Production 4 W Factory 4 W 8

Supply Chain Visibility & Collaboration Homeland Asia Demand Specialist • Demand Forecast • Rebuy PO Supply Specialist • Supply Planning • Exception Alert Store • POS • Store Inventory Asia Factory Integration Retail System DC • Receiving • DC Inventory • Store Order • PO Acknowledge • Factory Inventory GSS* • Booking • Shipment • Container Loading • Freight Invoice 3 PL 9 * Global Sourcing Solution

Complete Supply Chain Visibility Weekly Store Sales Monthly DC Demand Forecast Monthly DC Supply Monthly DC On Hand Qty Day On Hand 10

Test Rite Experience Test Rite Logistics Operation Summary Period: August, 05 ~ August, 06 8+ DC Inventory Yearly Turnover Rate 11

Test Rite Experience Test Rite Logistics Operation Summary Period: August, 05 ~ August, 06 Store Count 2500 2200 Average In Stock % 97. 5% 95. 6% 98. 5% Average Turn/Year 10. 5 9. 6 8. 8 12

Wal-Mart 2006 Storage Business Performance 2006 Sales: Instock: Retail Turns: Net Margin %: Avg Lead Time: Repl Order Fill Rate: 2005 $43. 9 M $31. 4 M 95. 17% 92. 61% 6. 49 5. 60 46. 46% 42. 32% 3. 33 4. 80 95. 13% 89. 73% 39. 87% 2. 76% 15. 98% 9. 80% 31% 6. 02% 13

SCM DEMO 14

Outline • Global SCM IT Application – 4 Retail Challenges • Right product, right price, right time & right quantity – Real time supply chain visibility is a must – Wal-Mart warehouse service case study • IT Profession – IT Role & Responsibility – Key Characteristics 15

IT Application Development • Application Analysist – BA/SA • Application Architect – Frame work, design pattern, etc • Database Architect – Data store, modeling, backup, restore, etc. • GUI Designer – User interface, fool proof, online help, etc. • System Engineer – Hardware sizing, performance tuning, etc. • Report Manager – Management report design, access control, etc. • Deployment Manager – QA, QC, configuration management, etc. 16

IT Roles & Responsibilities • From “What business wants IT to do” to “What can IT do for business” • From cost management to investment management • From operation support to business strategy partner • IT play a vital role in business evolution 17

Key IT Profession Characteristics • • • Business Orientation Communication Analytical Flexible Technical 18

Business Orientation • • Industry overview Company competitive advantage Company challenges and weakness Short & long term business focuses 19

Communication • Proactive • Feel the pulse of business life line. • Propose a solution before it is asked • Multidiscipline • • Management view Operation view Technical view IT Business view • Confirm understanding is critical 20

Analytical • Understand history, support today business and ready for tomorrow challenges • Assemble whole picture from segmented inputs • See beyond the surface • Never expect user give you the whole picture 21

Flexible • “Changes” is part of business • Business survive by being able to catch up with the changes. • Business succeed by being able to lead the changes. • Foresee changes, prepare for changes and welcome changes 22

Technical • Timing is critical, schedule is the key • Be as broad as possible • Don’t have to be my way • Fast learner • Think twice before committing any in-house development project 23

To be successful, learn from …. 24