MMOG/LE Assessments and U.S. Government Regulation of Conflict MineralsDavid Doyle, Senior Solutions ConsultantTerry Onica, Director, AutomotiveKathryn Sepke, Senior Solutions ConsultantSeptember 24, 2013

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The following is intended to outline QAD’s general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, functional capabilities, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functional capabilities described for QAD’s products remains at the sole discretion of QAD.

Safe Harbor Statement

Agenda

• Introduction

- What is MMOG/LE?

- The “real” value of MMOG/LE

• MMOG/LE version 4

• Conflict Minerals

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MMOG/LE Assessments

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What is MMOG/LE?

What it IS…

• Supplier Self-Assessment Tool

• Guidelines for building a solid supply chain strategy

• An evaluation of the Quality of customer service

• An assessment of supply chain performance and capability

• An AIAG/Odette Excel-based document

• Purchased through AIAG or Odette

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What is MMOG/LE?

What it IS NOT…

• Completed by customer

• Step-by-step Instructions for managing supply chain

• An evaluation of Quality of product

• A formal TS16949 Quality certification process

• Owned by the customer

• Free or distributed by customer

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MMOG/LE is Good for YOU

• Let’s talk about why…

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Who Says it is Good for You?• Case studies

- 14+ Tier 1 and 2 suppliers- Located around the world- Supplier executive management

• OEMs- Recognized supplier improvements

• Performance ratings• Proactive risk management

- Increased competitiveness

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Why it is Good for YOU!

• Customer satisfaction

• Inventory

• Planning system

• Sub Supplier Performance

• Increase Revenue

• Employee satisfaction and training

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Customer Satisfaction

• Better understanding customer expectations

-Customer Specific Answers

• Increased customer satisfaction

• Enhanced our relationship with the customer

• Improved customer delivery ratings

“Our customer validated our operations to be a Level A”

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Inventory

• Reduced inventory by 17-50%

• Reduced physical inventory frequency from monthly to annually

• Increased available floor space

• Reduced scrap

• Real time inventory tracking by lot

• More efficient inventory management

“We have confidence in our inventory levels”

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Planning System

• Improved capacity planning process

• Eliminated spreadsheets for tracking and reporting

• Employees are better informed

• Employees are empowered to resolve issues quicker

• Increased visibility of customer requirements“We used to spend all of our time just trying to

get the numbers. Now, we spend our time trying to understand the numbers and correcting the

issues they help us to identify.”

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What About spreadsheets?• Spreadsheets are OK for “analysis” of data

- OK : Truck windows and returnable containers

- Not OK: MRP, capacity planning, supplier scheduling, inventory management, scrap reporting, etc.

• Difficult to share information across departments

• Complex spreadsheet (e.g., macros, linked data) are dependent upon a few people to maintain

• Spreadsheets do not validate data

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Sub Supplier Performance• Reduced inventory by 17% after implementing

EDI/Web• Reduced supplier expediting/premium freight by

18%• Improved communications within the supply

chain- Shared customer forecast- Improved responsiveness and decision making“It helped to bring our suppliers closer to our

expectations”

“100% connected with suppliers in just two weeks on the web”

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Increase Revenue• New capabilities and efficiencies attracted new

customers

“We doubled sales in 3 years without increasing staff”

“We booked business that will double our revenue”

“It gave us confidence to double our business in five years”

“Operating more efficiently has helped us to taken on more business and not have to add employees”

“We were able to grow the business without growing inventory”

“Time gained from efficiencies goes to focusing on new business”

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Employee Satisfaction and Training• Increased employee confidence in managing daily

tasks

• More accurate work instructions that are better aligned to daily operational activity, best practices and customer requirements

• Documenting and mapping processes lead to a 50% reduction in time to train new users on a new product launch

“We now have processes and procedures anyone can follow”

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MMOG/LE Version 4• Work group is engaged in analysis

- VDA (Germany) has formed a MMOG/LE Work Group

• MMOG/LE version 4 includes two groupings for Assessment Questions:

- Full Assessment required by OEMs of Tier 1 Suppliers

- Separate Assessment for Sub-tiered suppliers

• Assessment and Gap analysis tabs are combined into one

• Target completion date December 2013

- AIAG/Odette will announce when v4 is available

- Check OEM bulletins for adoption of v4

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Conflict Minerals

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Conflict Minerals Q&A

• What are conflict minerals? - Currently include gold, tantalum, tin, and

tungsten

• What is the Conflict Minerals Rule? - Mandated by the Dodd-Frank Act- Enacted by the SEC in August 2012

• What does this rule mean?- Determine and disclose whether these raw

materials in the organization’s supply chain originated at mines in the Democratic Republic of the Congo or its nine adjoining countries

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Conflict Minerals Q&A• What if conflict minerals originated in the DRC or

its neighboring countries?- The issuer must determine and disclose whether the

sale of these minerals financed or benefited armed groups.

• What does this Dodd-Frank act hope to accomplish?- Using minerals from “conflict” mines is legal, but human

rights groups hope that the disclosure requirement will cause companies to source from conflict-free mines

• When are the first reports due?- The first Conflict Minerals Reports are due to the SEC on

May 31, 2014, and will report on the 2013 calendar year.

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Conflict Minerals Q&A

• What Functions May Be Impacted?- Corporate executive management- Purchasing- Quality- Engineering- Chemical Management- Materials, Planning and Logistics- Sales- Legal- IT

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Conflict Minerals Q&A• What if I am a privately held company?

- While the organization may not be not required to report to the SEC, your customers, or your customers’ customers may have reporting obligations.

- These entities may require you to conduct similar inquiries and due diligence activities for the purposes of their own conflict minerals obligations.

• How is the data collected and reported?- The EICC/GeSI Reporting Template is used to facilitate the

exchange of data related to due diligence and smelter information between companies in the supply chain

- iPoint developed the iPCMP system, which is a web-based tool (database with reporting mechanism)which is recommended to manage data from the EICC/GeSI Template

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• Available at www.aiag.org

EICC/GeSI Template

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• Located at www.aiag.org, Initiatives, Corporate Responsibility, Conflict Minerals

• Scroll down towards bottom

• Resources/Links/Tools• Documents available to

assist you- AIAG Executive Summary

Post Rule- FAQs- Templates to help gather

information from your suppliers

More Information Available at AIAG

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• Located at www.aiag.org, Initiatives, Corporate Responsibility, Conflict Minerals

• Scroll down to the bottom• Resources/Links/Tools• Documents available to

assist you- EICC GeSI Conflict Minerals

Reporting Template- iPoint Conflict Minerals

Platform

More Information Available at AIAG

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• Located at www.aiag.org, Events

• Scroll down - Industry webcasts

More Information Available at AIAG

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For QAD customers using .Net UI, a ‘temporary’ solution is possible by following a few steps1. Using Configurable screens, Modify the Supplier

Maintenance (SE) and Supplier Data Maintenance (EE) screens.a) Add and re-Label, one of the Logical User Fields to be “Conflict Free”

(Y/N). Make this a required field, with Default = Yes.

b) Add and re-Label a second Logical User Fields to be “ EICC/GeSI Conflict Minerals on File (Y/N)? Make this a required field, with Default = Yes.

2. Attach the supplier answered EICC/GeSi Conflict doc to the vendor’s record.

3. Using the Browse Maintenance Update the Supplier Browse to include these fields, and link the answered doc as part of the browse

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For QAD customers using .Net UI, a ‘temporary’ solution is possible by following a few stepsNext:

1. Using Configurable screens, Modify the Item Master Maintenance screen (SE and EE).a) Add and re-Label, one of the Logical User Fields to be “Conflict Free

Item?” (Y/N). Make this a required field, with Default = Yes.

b) Add and re-Label a Character User Fields to be “Country of Origin”, build a generalized code of acceptable country codes. Make this a required field, with Default = USA.

c) Connect a country code look up to the new CoO field

Next:• Modify the Item Browse to sort on CoO, and or Conflict Item

= Yes, to show the Conflict Minerals

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Supplier Data MaintenanceMidwest User Group

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Supplier Data MaintenanceMidwest User Group

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Supplier BrowseMidwest User Group

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Supplier BrowseMidwest User Group

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Item Master MaintenanceMidwest User Group

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Item BrowseMidwest User Group

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Add fields to Item Browse

Item BrowseMidwest User Group

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Filter for Conflict Free

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• Available on QAD App Store- Automotive Process Maps v2- Easy On Boarding Bundle v2- Customer Schedule Variance

Browse

Additional Updates

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• Dave Doyle: dfd@qad.com• Terry Onica: tjo@qad.com

Questions & Answers

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www.qad.com©QAD Inc. 2013

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