Materials Management What Was Lawson Thinking Presented to

Materials Management: What Was Lawson Thinking? Presented to Rocky Mountain Lawson User Group by Tim Salaver, President Cornerstone Systems Solutions, Inc 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc.

Supply Chain Management n n n n n Forecasting Master Planning Material Requirements Planning Capacity Management and Production Activity Control Inventory Fundamentals Inventory Management Physical Supply/Distribution Quality Management and Purchasing Just-in-Time/Lean Manufacturing 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 2

Basic Supply Chain (Lawson) Provisioner Service Planning and Resource Scheduling Dominant flow of products and services Dominant flow of demand design information 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 3

Physical Supply/Distribution n n Movement of goods from suppliers to the beginning of the service delivery/production process and from the end of the service delivery/production process to consumers Activities q Transportation q Distribution inventory q Warehousing q Packaging q Materials handling q Order entry 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 4

What is Materials Management? n n Coordinating function that balances the conflicting objectives of marketing, production, and finance by managing the flow of Materials. Balancing the Resources of the company with Customer Demand 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 5

Role of Materials Management n n Make the best use of company resources Provide the desired level of customer service (demand) 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 6

Value of Materials Management n n n Manufacturing Planning and Control Physical Supply/Distribution What is Customer Service? q q q 2/12/2004 Right Quality Right Quantity Right Time Right Place Right Price Right Product Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 7

Value of Materials Management Actions Events Resources 2/12/2004 Materials Management adds value by ensuring that these services are provided Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 8

Business Operations n n n n Strategic Plan Marketing Plan Financial Plan Production Plan Master Production Schedule Material Requirements Planning Capacity Requirements Planning 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 9

2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 10

What are Lawson’s Competencies? n n n Distribution Requirements Planning (DRP) Activity Management (AC) Inventory Control and Materials Handling (IC) Requisitioning/ Purchasing/ Receiving (RQ/PO) Warehousing (WH) 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 11

Distribution Requirements Planning (DRP) The function of determining the needs to replenish inventory at branch warehouses. A time-phased order point approach is used where the planned orders at the branch warehouse level are “exploded” via materials requirements planning logic to become gross requirements on the supplying source. APICS Dictionary 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 12

Distribution Requirements Planning n n n Well-suited for organization with central warehouse and customer based local distribution center When under centralized control use forward planning called Time Phased Order Point (TPOP) Use forecast requirement using MRP logic to control TPOP Covers minimum requirements of a reorder point system which tells you when to order but provides MRP logic The objective of setting up DC’s is to provide the required service to customers in an economical way. Every DC operational task should be aimed at meeting those two criteria 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 13

Planning (DRP) Distribution Center B Distribution Center A 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 14

Comparison of DRP and MRP Terms DRP MRP For a warehouse: Forecast In transit Projected on hand Planned shipment receipt date Planned shipment ship date Gross requirements Scheduled receipt Projected available Planned order receipt Planned order release For a central supply facility: Distribution demands Scheduled receipts Projected on hand Master scheduled receipt Master scheduled start 2/12/2004 Gross requirements Scheduled receipts Projected available Planned order receipt Planned order release Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 15

Replenishing the DC n Where is Safety Stock held? q q n n n Economical to hold SS at main warehouse Local SS held at Depots DRP Uses Projected Future Demand based on planned order releases Normal PO Quantity Min/Max multiple rules can automatically apply to order demands Replanning/Rescheduling buyer messages produced 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 16

Savings from DRP n From companies who have implemented DRP the following types of savings are being claimed q q 2/12/2004 Improved customer service from 85% to 97% Distribution inventory reduced by 25% Distribution costs reduced by 15% Obsolescence reduced by 80% Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 17

What is Activity Management? n n Think of it as Project Accounting not Project Scheduling Think of it as Event Tracking and not Event Management Think of it as Knowing the costs horizontally and not vertically Think of it as an excellent method of managing resource costs 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 18

Inventory Control 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 19

What is Inventory? “…Those stocks or items used to support production, …supporting activities, …and customer service…” —APICS Dictionary 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 20

Inventory Control 8. 0. 3 q q q Flowchart Menu Usage Identifier Consignment UPC, UPN, SKU, NDC UNSPSC (Universal Standard Products and Services Classification) q q q Multiple Product Sources Strategic Ledger User Fields B/O & Killed on Pick List Release and Print on Issues Mass Change – added criteria Unit Cost Defaulting on Adjustments 2/12/2004 q q q Issue Account on IC 11 Product Resale & Transfer Report (IC 153) Negative Issues Load UOM (IC 00) Interfaces n n n Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. Barcode / Bin Labeling (IC 588) Manhattan Interface – Pk. MS “Arrival” by Pitney Bowes (Receiving & Delivery Package Tracking) 21

Inventory Control - New Inquiries & Reports n n n n n 2/12/2004 Daily Transaction Summary (IC 37. 1) Inventory Stock Status (IC 44. 1) Inventory Status (IC 46. 1) Ship To Facility Management (IC 33. 1) Manufacturer Relationship Management (IC 34. 1) Inventory Status Report (IC 246) Requesting Location Usage (IC 282) Transactions by Document Type (IC 287) Product Transfer and Resale Report (IC 153) Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 22

2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 23

Requisitions 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 24

What is a Purchase Requisition? “An authorization to the purchasing department to purchase specified materials in specified quantities within a specified time. ” —APICS Dictionary 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 25

Requisitions in 8. 0. 3 n n n Default: Activity, PO Code, Process Level Encumbrance Accounting (set-up in Budget) Control Requesters Override (contract pricing, specials, costs) Address default to requesting location Drop Ship Receiving Option “Punch out” from e-procurement RSS Requisition self-service (formerly e-reqs) One way processing Default Account from Item Master New Reports Enhanced Approval Hierarchy via Process Flow 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 26

Requisition - New Reports n Req Volume Summary Report (RQ 240) n Departmental Procurement Expense Report (MM 280) n Killed Items (Option on WH 130, Pick List Print) 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 27

2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 28

Purchase Order 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 29

Purchase Order in 8. 0. 3 q q q Flowchart Menus Procurement Groups above Company PO Codes n q q q q Delivery AND Put Away Tickets Enhanced Buyer Messages n q q q q Auto Create Return & Credit Memo Enhanced Inspection Process n Mark up and Discounts Define Participants Unit Cost Default Flexibility PO Audit Trails Process Levels PO Worksheet with Filters Higher Logic Service Receiving 2/12/2004 q Multiple numbering structures Price Agreements n q Auto Create Return Auto Decrement Scrap Improved INR (MNR), RNI Processing New Inquiry – PO 54 Easier Vendor Returns Package Tracking (Pitney Bowes) Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 30

Purchase Order - New Inquiries & Reports PO Inquiry (PO 54. 1) n Receipt Inquiry (PO 58. 1) n Receipt Inquiry Report (PO 258) n PO Activity by Source (PO 285) n Departmental Procurement Expense Report (MM 280) n 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 31

2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 33

2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 34

PO Worksheet 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 35

2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 37

2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 38

Vendor Agreements 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 39

Vendor Agreements n Vendor Price Agreement Import (PO 536) – New program that n Percentage change capability across pricing agreement Attachments linked to pricing agreements Tiered Pricing Compliance Tracking Messaging when close to limits allows you to load new vendor price agreements and/or update existing vendor price agreements in Lawson. In addition, the program adds vendor items, items to the item master file, UNSPSC codes and pricing information to the vendor agreement file. n Item Vendor Load (PO 813) – New program that allows you to process a. csv file that contains vendor item information to create Vendor Item (PO 13) records. n n 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 40

PO: Pricing Agreements n Agreements above company level n Pricing Agreements - 5 “Varieties” q q q 2/12/2004 Contract (unique vendor contract) Catalog (e-Procurement type catalog) Blanket (similar to 7. 2) Standing (scheduled releases) Service (no purchase order created, compared to invoice) Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 41

Order Management 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 42

What is Order Management? “The planning, directing, monitoring, and controlling of the processes related to customer orders, manufacturing orders, and purchase orders” —APICS Dictionary 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 43

Order Management in 8. 0. 3 n n n n Order source can be RQ or OE Unreleased Order = Quote Sales Analysis of Budgeted, Booked, Actual data Multi-level Pricing Improved Order Inquiry – OE 80 Improved Customer Returns – OE 30 Analytical and Audit Reports Open Orders by Customers, Operator 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 44

Warehouse Management 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 45

Warehouse Management 8. 0. 3 q q Flowchart Menus “Manhattan” Interface Batch Feedback Interface Parameter Changes n n n 2/12/2004 Batch Allocation Pick List Print Shipment Release Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 46

e. Procurement 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 47

e. Procurement n Direct Connect to Supplier’s Catalogs n Reduces Catalog Maintenance n Improves Order Turn Times 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 48

2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 49

2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 50

2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 51

2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 52

One Stop Shop n Advantages of e. Procurement: q q q q 2/12/2004 Utilize Supplier Configurators Order by Supplier Diagram Vendor Managed Content Real time Availability/Stock Status Reduced Item Master Maintenance Automation resulting in Discounts Reduction of Data Entry errors Improved Invoice Matching Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 53

Lawson Customer Cases n n n n The Sports Authority Boy Scouts of America Genentech Vertical Networks Foxworth-Galbraith Lumbar Company United Rental BMK Safeway Major Video Concepts Expanet Mays Chemical Company CBS Sportsline. com Excite@Home (formerly @Home Network) 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 54

Tim Salaver, President Cornerstone Systems Solutions 4045 South Buffalo Drive, #A 101 -220 Las Vegas, NV 89147 (702) 286 -7464 Mobile (925) 997 -1634 Office 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc.

Our Values Cornerstone System Solutions, Inc. . 4045 South Buffalo Drive, Suite #A 101 -220 Las Vegas, Nevada 89147 (702) 838 -3268 (702) 838 -3269 Fax http: //www. go-css. com To provide our clients with cost effective client- focused, and innovative enterprise management and technology solutions with quality, consistency, and integrity. We provide business relationships with our clients, vendors, suppliers, partners, and our Solutions Architects. All clients are treated with respect, care for their needs, fairness, responsibility, openness, and honesty. Management Consulting • • Our Mission • • We provide experience, knowledge, skills, training, and resources necessary to empower our clients and their employees for the best enterprise solutions in order to grow and prosper in a business-to-business, as well as, business-to-consumer environment. • • • Cornerstone will give our Solutions Architects the tools, information, education, and support to perform their roles with the efficiency and quality that our clients need, and we, ourselves, expect of each other. As such, Cornerstone Systems Solutions is an enterprise management and technology solutions consulting company able to meet the demands of a shifting, diverse, and constantly changing market place. • • Technology Consulting • • Our Promise Our success comes from our ability to understand our clients needs early and build solutions which meet clients’ immediate needs and allow them to grow. We assist clients in aligning their vision and company objectives through concept to cash methodology roadmap. We provide processes and procedures thereby increasing processing efficiencies, thus, reducing costs and waste, and thereby improving productivity throughout the enterprise. Business Strategy Enterprise Resource Alignment Supply Chain Sales Marketing Logistics Warehouse Inventory Control Finance Administration Human Resources Payroll Operations • • • Application Design Program Development and Modifications Implementation of all Lawson Software modules Systems, Unit, and Regression Testing Data Conversions and Interfaces Re-engineering of Operational Functions Business Process Re-engineering

BMK, Inc. Mays Chemical Collision Team of America 2/12/2004 Clarent Hospital Corporation Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 57

2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 58

Our Accomplishments • • Completed conversion of 100, 000 invoices and 7, 000 vendors for The Sports Authority in 14 days. Primary support for the Los Angeles Unified School District budgeting system for four years. Over 25 Lawson Software clients throughout the U. S. First partner to implement Lawson Software Financials, Distribution, and Procurement 8. 02 applications release in the West (3 months for Vertical Networks, Sunnyvale, CA, completed 2002). Designer of inbound and outbound Lawson Conversion (Safeway Corporation, 2002) Fastest Corporate Reorganization of Lawson Financials and Order Entry Systems ( 2 months for Business Objects, San Jose, CA). Designer of Lawson’s Application Documentation Conducting the Fastest Lawson Financials implementations (completed in 2 months for @ Home Networks, Redwood City, CA, completed 1996). 2/12/2004 Materials Contained herein are copyrighted by Lawson Software, APICS, and Cornerstone Systems Solutions, Inc. 59