Global SCM IT Application&

IT Profession

Hans ChenTestRite International Inc.May 31, 2007

2

Personal Background

• 6 years in Mechanical Engineering academic training (NTU + Cornell)• 11 years in 3D 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 (TestRite)– Head of MIS (5 year)– Head of SIT business unit (1 year)

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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

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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

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Global Sourcing Evolution

Supplier market researchSupplier identification & qualificationSupplier developmentIdentify saving opportunityProduct Quality InspectionSupplier database developmentExecute biddingLogistics managementProcurement transactionsInvoicing & paymentCategory managementDevelop supplier market strategiesInventory managementProcurement & sourcing training

Fundamentalcapabilities

Transactionalcapabilities

Progressive &sustainingcapabilities

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%*Source: Accenture and CSCC IPO Survey, 2005

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Global Sourcing Obstacles and Risks

Source: March 2006, “Sourcing in Low-Cost Countries” by eyeforprocurement

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Global Logistics Overview

SCMStrategy

SupplyPlanning

ExceptionManagement

Sales forecast management

Supply planning management

Order processing

Shipment Consolidation

Under Forecast Management

Over Forecast Management

Delay Shipment Management

Fulfill-ment

Order Processing

Inspection

Shipment management

Payment Management

Warehousing

Supply Chain Collaboration Platform

DemandPlanning

Logistics Master Plan

Implemen-tation Plan

Definition of Role and Responsibility of all parties

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Asia Buying OfficeHead Office

Asia WarehouseConsolidation Yard

US DC

Store

AsiaFactoryReplenishment

5 Day Lead Time

ASN

Factory PO Factory PO2W Lead Time

Facto

ry PO

Rec

eivi

ng

4W4W6W6W

FactoryOn WaterImportWarehouse

Store

4W

Inventory Production

Global Supply Chain Overview

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Retail System GSS*

Store

DC 3PL

•POS•Store Inventory

•Receiving•DC Inventory•Store Order

•Booking•Shipment•Container Loading•Freight Invoice

•Demand Forecast•Rebuy PO

•Supply Planning•Exception Alert

•PO Acknowledge•Factory Inventory

Asia Factory

Supply SpecialistDemand Specialist

Integration

AsiaHomeland

Supply Chain Visibility & Collaboration

* Global Sourcing Solution

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Complete Supply Chain Visibility

Weekly Store Sales

Monthly Store Sales

Monthly DC Demand

Monthly DC Demand Forecast

Monthly DC Supply

Monthly DC On Hand Qty Day On Hand

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Test Rite Experience

Test Rite Logistics Operation SummaryPeriod: August,05 ~ August,06

8+DC Inventory Yearly Turnover Rate

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Test Rite Experience

5.8

3.4

4.9

1.9

3.9

1.2

0

1

2

3

4

5

6

US Millions

Storage Tool Automotives

Inventory Reduction Management

Before GSS*

After GSS*

Test Rite Logistics Operation SummaryPeriod: August,05 ~ August,06

Store Count 2500 2500 2200

Average

In Stock %97.5% 95.6% 98.5%

Average Turn/Year 10.5 9.6 8.8

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Wal-Mart 2006 Storage Business Performance

2006 2005 Sales: $43.9M $31.4M 39.87% Instock: 95.17% 92.61% 2.76% Retail Turns: 6.49 5.60 15.98% Net Margin %: 46.46% 42.32% 9.80% Avg Lead Time: 3.33 4.80 31% Repl Order Fill Rate: 95.13% 89.73% 6.02%

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SCM DEMO

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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

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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.

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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 stra

tegy partner

• IT play a vital role in business evolution

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Key IT Profession Characteristics

• Business Orientation

• Communication

• Analytical

• Flexible

• Technical

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Business Orientation

• Industry overview

• Company competitive advantage

• Company challenges and weakness

• Short & long term business focuses

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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

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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

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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

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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

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