avnet company confidential lean product fulfillment (lpf) proposal overview september 25, 2007

Avnet Company Confidential

Lean Product Fulfillment (LPF)

Proposal Overview

September 25, 2007


Meeting Agenda

• Review the Key Objectives of the LFM Model

• High level review of the material flow• Open Discussion on the Model

– Initial Thoughts….– Challenges to over come

• Implementation Elements• Next Steps


LPF Program Objectives

• Enhance our current In-Plant store program to:– Provide more inventory available to support

manufacturing– Reduce Micron Inventory Ownership for WIP– Reduce the number of System transactions– Enable flexibility for growth as more production

comes to Micron-Puerto Rico– Enable more focus by on-site resources to manage

material issues– Utilize an e-commerce solution to enhance Quality

and efficiency


High Level Solution Summary

• Line Side Consignment Kan bans owned and managed by Avnet. – (2 Bins – 1 Week worth of inventory Each)

• Bins scanned and replenished by Avnet

• POURS.COM manages all transactions

• Billing of Bin when fully empty

• Material replenished within 24 hours

• Avnet Personnel managing process and transactions


Lean Product Fulfillment Process Flow


LPF Process Flow

1wk 1 wk

1 wk1 wk

Bin 1

Bin 1

Bin 2

Bin 2

Avnet owned Kan Bans

Kan Ban Material is stagedLine side And owned by Avnet.2 (1 Week) kan bans per part

Material is consumed by the manufacturing lineOperators from Kan Ban 1


LPF Process Flow

1wk 1 wk

1 wk1 wk

Bin 1

Bin 1

Bin 2

Bin 2

Avnet owned Kan Bans

Kan Ban Material is stagedLine side And owned by Avnet.2 (1 Week) kan bans per part

Material is consumed by the manufacturing lineOperators from Kan Ban 1

Avnet IPS Mgr routinely goes to Floor Stocking Locations to observeand signal Kan Ban Replenishment for consumed Items.

IPS Mgr. Scans PoursBin Boxes with Bar Code scannerReturns to Avnet IPS and transfers ScanInformation into POURS.COM


LPF Process Flow

IPS

InventoryEDI

Replenishment

Signal

IPS Operator

Processes POURS

Release Trigger

POURS Packing

Slip Prints

Next Day

Delivery

To POU

Line side

Kan Ban

Location

Components

Delivered to the POU

Export of Inventory ReplenishmentTo Micron SAP System

Invoicing against existingBlanket PO

Parts are Pulled

By Warehouse

Operator

Serialization Barcode

Labels applied


Solution Benefits• This model removes the high transaction activity involved in the kitting

process…by 2/3 rds– More productivity from Existing Resources…Avnet and Micron

• Moves Avnet Buffer inventory from our IPS to the Point of Use…..– More flexibility for Manufacturing to keep building

• E-Commerce Solution utilizing POURS to manage all transactions via EDI– More Quality in Data / Faster processing / Higher Efficiency

• Micron Inventory Reduction for WIP and residual inventory…– Reduction in 4-6 Days of Inventory (RM/WIP) $110+K Inventory

Reduction based on Avnet Business Level ($8 Mil/ $22k/Day)

• Reduce and eliminate Material shortages and allow for more up-stream pipeline focus by on-site resources

• Minimal Process Change for Micron


Model Discussions

• What are your initial thoughts? • What changes would you make to the model?• Are there any issues/challenges to over come?

(Yellow Lights…we need to slow down and discuss that you think might inhibit this model?– Labeling requirements– Space requirements– System Transactions / Inventory Information– Other issues we might have note have considered

• What metrics shall we be tracking to insure success?


Finalize Model…Next Steps

• Review Solution proposal with key players in Manufacturing / IT / Purchasing / Materials

• Discuss the value proposition and determine quantified savings jointly with the program

• Obtain Green Light to move forward…

• Establish Implementation Team

• Begin Safe Passage Model Implementation

• Pilot….Refine Process….Expand program


POURS.COM Appendix

About POURS.COM


POURS.comPoint of Use Replenishment System

www.POURS.com


Point Of Use Replenishment System• Web Based - www.pours.com

• Secure access from any Internet connected PC

• No custom software to install or support

• Simple, Intuitive User Interface

• Automate Replenishment Signal to Any Supplier• Scan to trigger electronic orders

• Reduce Administration

• Reduce Inventory / Increase Turns

• Manage Multiple Supply Chain Models• Kanban – Scan to “Pull” replenishment inventory

• Min-Max – Manage QOH within specified parameters

• Consignment/VMI – Automate communications to suppliers

http://www.pours.com/


POURS Features POURS Features (1)(1) Web Based

Secure access from any Internet based PC Share data across multiple facilities, departments or partners in the supply chain

Ease of Use Simple, online, intuitive user interface Minimizes training and support

Configurability Configurable to meet the specific needs of your supply chain model Kanban, VMI or Min/Max models

Security Your data remains secure and confidential in an enterprise-class data center

Multi-Supplier Create consistent processes across all material – regardless of supplier Manage replenishment or consignments from any supplier

EDI Industry standard EDI transactions Automate transactions to & from any EDI capable trading partner No additional software required


POURS Features POURS Features (2)(2) Data

Extensive list of reports and label formats Data exportable to Excel or other applications Integration with MRP/ERP systems

Exception Based Processing Exceptions identified in heads-up area of each screen Can be configured to send email alerts proactively notifying the

appropriate user(s) of exceptions

External Data Linked to Avnet’s database of nearly 3 million part numbers Automatically look-up Avnet’s Inventory, hazmat details,

package quantities, etc.

Advance Ship Notices Integrated ASNs provide online access to tracking information Direct links to FedEx, UPS & DHL


Benefits of POURS.COMBenefits of POURS.COM Reduce the cost of procurement by eliminating non-value-add activities.

Increased inventory turns.

Reduction in inventory frees working capital for re-deployment.

Increased manufacturing flexibility due to part availability.

Replenishment triggered by line-side personnel.

Improved quality through bar code driven processes.

Increased material balance control and visibility.

Quick implementation.

Reduced burden on your IT resources.

Single point of purchasing in multi site engagements.

avnet company confidential lean product fulfillment (lpf) proposal overview september 25, 2007

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