Agenda Welcome Wally Johnson 8:00 - 8:30 VP, Supply - - PowerPoint PPT Presentation

Agenda

• Welcome

Wally Johnson 8:00 - 8:30 VP, Supply Chain Management

• EPIC Strategy

Jochen Lipp 8:30 - 9:00 COO & VP of Operations

• Business Development

Todd Baggett 9:00 - 9:30 VP, Business Development

• Break

9:30 – 10:00

• EPIC Supply Chain

Udo Bechtluft 10:00 – 10:20 Strategy Director, Logistics

Agenda

• IT Developments Marty Bentley

10:20 – 10:35 Director, IT

• Commodity Management Louise Stump

10:35 – 10:50 Director, Purchasing

• Supplier Development Hilario Apodaca 10:50 – 11:05

Director, Quality

• 2006 Supplier of the Year Award Presentation

11:05 – 11:30

• Q & A – from submitted cards/Wrap-up/Survey 11:30 – 12:00
• Lunch

12:00 – 1:00

EPIC Mission and Values Statements

Mission Statement

• Our mission is to exceed our customers expectations as the “Best-In-

Class” provider of full service electronic manufacturing and systems integration.

Quality

• EPIC will provide the highest quality products and services, when and

where our customers need them. Continuous improvement will lead our pursuit of defect-free products and processes.

People

• Fundamental to our way of doing business is integrity and fairness with

customers, employees, suppliers and shareholders. EPIC strongly believes that expanding the skills, capabilities and empowerment of our employees is key to our collective success.

Profitability

• EPIC will manage its business profitably to support our growth and

enhance our shareholder’s value.

Synchronous Flow Manufacturing

At EPIC Technologies, Synchronous Flow Manufacturing means never building product until

• ur customers say they need it, as well as…
• No “Frozen Windows” on Orders
• 1 to 2 Day Order Turn Around Time
• 99% On-Time Delivery to Customer Request
• Incredible Inventory Turns for our Customers

Key EPIC Strategies

• Customer Satisfaction
• Lean Manufacturing
• Synchronous Flow
• Single Minute Exchange Die - SMED
• Visual Techniques
• 6 Sigma Quality
• Continuous Improvement
• MBO Targets are focused on worldwide “Best-in-Class”
• Throughput Mentality
• Customer Focus Teams
• Training Investment
• Elimination of Waste
• Supply Chain Methodologies
• Raw Material KanBan

Flexibility & Responsiveness

5,000 10,000 15,000 20,000 25,000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 50,000 100,000 150,000 200,000 250,000 300,000 Net Rec Cum 20,000 40,000 60,000 80,000 100,000 120,000 140,000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 Net Rec Cum 20,000 40,000 60,000 80,000 100,000 120,000 140,000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 100,000 200,000 300,000 400,000 500,000 600,000 700,000 Net Rec Cum

20,000 40,000 60,000 80,000 100,000 120,000 140,000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 Net Rec Cum

Flexibility & Responsiveness

100 200 300 400 500 600 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 200,000 400,000 600,000 800,000 1,000,000 1,200,000 Net Rec Cum 20,000 40,000 60,000 80,000 100,000 120,000 140,000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 Net Rec Cum 5,000 10,000 15,000 20,000 25,000 30,000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 50,000 100,000 150,000 200,000 250,000 Net Rec Cum 100 200 300 400 500 600 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 200,000 400,000 600,000 800,000 1,000,000 1,200,000 Net Rec Cum

EPIC Supply Model

• EPIC Technologies core value proposition is to be able to deliver

product ‘when and where’ the customer needs it in spite of forecasts being misaligned with actual requirements.

• Flexibility and Responsiveness are fundamental principles of not only
• ur operational execution but also our organizational philosophy.
• The EPIC Supply Chain requires partners who are committed to this

goal to help us work together on strategies and tactics to better enable us to satisfy our mutual end customers:

• “Best in Class” Quality
• Elimination of non-value add (Muda, or ‘waste’)
• Short Cycle Times
• Strategic buffers
• Throughput Mentality

What Material Is Now What Materials Needs to Be

Supply Organization

Wally Johnson VP Supply Chain Mgmt Louise Stump Purchasing Director Lou Nemeth Purchasing Mgr Norwalk Joe Davis Global Supply Mgr Ralph Sperling Purchasing Mgr Plant 1 & 2 Pam Jackson Purchasing Jerome Mettetal Purchasing Mgr Johnson City Udo Bechtluft Logistics Director Lou Nemeth Acting Logistics Mgr Norwalk Dwaine Raper Logistics Mgr Johnson City Sukie Medina Procurement Mgr Plant 1& 2 Martin Chapparo Logistics Mgr Plant 1 & 2 Miguel Barrenada Customs Mgr Plant 1 & 2 Cheryl Randleman Mat'l Analysis Mgr Norwalk

Agenda

• EPIC Strategy

Jochen Lipp 8:30 - 9:00 COO & VP of Operations

EPIC

North American Mfg Locations

El Paso Juarez Plant 1 & 2 Norwalk South Lebanon Johnson City

• Over 500K/Sqft of Mfg
• ISO 9001 :2000 Certified
• ISO/TS-16949 Certified
• ISO-13485 Certified (Juarez

& Norwalk), JoCy Q2 ‘06

• FDA Registered Class II & III
• IPC Class II & III Mfg

“ONE PLATFORM”

All factories equipped with same MFG and Test equipment Currently Evaluating opportunies in Eastern European and Asia

EPIC Corporate Development Update

• Since the completion of the Siemens and Philips

acquisitions in FY’05 our focus has been on the successful integration of three facilities, more than doubling our manufacturing capacity, and adding key operational and managerial talent.

• Now complete, the process went remarkably well,

exceeding the expectations of our stakeholders and customers, particularly in operational performance and conversion to lean S.F.M. practices.

• Corporate focus shifts to developing greater depth in

EPIC’s senior management team and capitalizing on best practices among our operations.

Organization Chart – EPIC Technologies

Acting CEO Randy Haight

Todd Baggett VP Business Development Business Director Wally Johnson VP Supply Chain Mgmt Louise Stump Purchasing Director Ugo Bechtluft Logistics Director Jochen Lipp COO Steve Fraser U.S. Mfg Director Mike Washington U.S. Program Mgmt Mgr Norwalk Johnson City Ohio Valley Chris Munroe Engineering Director Hilario Apodaca Quality Director Marty Bentley IT Director Uwe Steudle Mexico Mfg Director Fabian Herrera Mexico Program Mgmt Mgr Mexico Plant 1 Mexico Plant 2 Steve Fries CFO Mike Goryl HR Director

EPIC Corporate Development Update

• John Sammut’s request for leave of absence to devote full

attention to his son’s critical illness was unanimously supported by our B.O.D.

• To accommodate John’s personal needs, Randy Haight, a

member of EPIC’s B.O.D. for the past three years, and a 13- year veteran of the EMS industry agreed to serve as acting President and CEO.

• Randy works closely with Jochen Lipp to provide strategic

direction to the company for the foreseeable future. This transition was transparent to our customers. Randy’s experience in a high growth environment adds a valued perspective to EPIC’s immediate future.

Synchronous Flow Manufacturing

At EPIC Technologies, Synchronous Flow Manufacturing means never building product until

• ur customers say they need it, as well as…
• No “Frozen Windows” on Orders
• 1 to 2 Day Order Turn Around Time
• 99% On-Time Delivery to Customer Request
• Incredible Inventory Turns for our Customers

EPIC's Synchronous Flow Principal

• Motivated employees, which are flexible and well-trained

in multiple operations

• Cellular-based layout designed to improve capacity

utilization and increase equipment / process flexibility

• Components at point-of-use; no raw material warehouse in

manufacturing plants

• Flexible suppliers that can react quickly to pulls,

supporting EPIC with bonded and consignment inventories

• Significantly reduced set-up / change-over times enabling

multiple product change-over's per shift and very small transfer quantities – greater flexibility for actual customer demand

EPIC's Synchronous Flow Principal

• Close to no WIP, elimination of waste
• High First-pass yield at ICT and Functional Test through

small transfer quantities and “Lean System”

• Average production cycle times 1-2 days, in a lot of cases

less than 1 shift in a high-mix environment (e.g. producing 25-50 assemblies simultaneously in each work cell)

• This enables rapid respond to customers’ daily pull signals

with very high OTD, shipping products from “finished goods leveling system” triggering rapid replenishment

Finished Goods @ Customer @ EPIC Production Plan

• Represents the total allowable ‘universe’ of finished goods split

into three groups

• Finished Goods at the Customer (and in-transit)
• Finished Goods at EPIC
• Future Production Plan
• WIP cards (Green, Yellow, Red)
• ‘Unscheduled’ (Grey)

Steering Wheel

Operations Line Scheduling

System requires no Production Scheduler:

• Operators empowered to prioritize production sequence for

each line based upon color coded pull signals

• System drives significant reduction in WIP (based completely
• n demand flow)
• Fast Reaction time for Customer needs / high

flexibility as required (lines can be changed immediately to respond to demand)

EPIC Global Footprint Development

• EPIC management firmly believes the low-to-medium volume, medium-mix

/ complexity EMS niche we serve exists on a global basis. We believe that in order to solidify our market position, we will continue to pursue the development of a global footprint to serve this segment.

• We feel the best long-term strategy in the EMS industry will be to support

customer demand in N. America from Mexico, in Europe from Eastern Europe and in Asia from China.

• EPIC has enjoyed great success in leveraging the low labor costs in

Mexico for our US-based customers. However, where our customers require a presence in other low cost regions, EPIC is committed to further expanding our footprint throughout the world.

• We are very close to finalizing a transaction in Romania and Germany for

additional manufacturing capability.

• EPIC is in process now with a potential partner in China to open an

International Purchasing Office (IPO).

Agenda

• Business Development

Todd Baggett 9:00 - 9:30 VP, Business Development

EPIC

EPIC Technologies at a Glance…..

• Mid-Tier EMS provider with 2800 Employees in North America in 5

manufacturing facilities

• Focused on the higher mix, medium volume segment of the

Electronic Manufacturing Services (EMS) industry.

• Full Service Offering including product design & engineering, test

development, prototype to volume PCB assembly, systems build, direct fulfillment/logistics and repair depot services.

• Strong Quality Disciplines and a drive toward Continuous

Improvement (TS16949, FDA registered, ISO13485, and (QSR) 21 CFR Part 820 compliant in all facilities)

• A Lean Manufacturing Model unlike any other in the EMS industry.

All manufacturing activities are tied directly to our customer’s consumption and we deliver to customer pull signals very rapidly.

• Targeted Market Segments: Medical, Industrial Controls, Military /

Aerospace

Business Development Objectives

• Develop a Sales and Account Management team capable of

generating $500M revenue run rate over next 3 years

• Target throughput margins of 35% on average
• Identify 10 new customers with revenue of $10M to $50M

per year

• Grow the size and scope of relationships with existing

customers who :

• value the EPIC model (“lean”)
• understand total program cost versus piece price
• have a TAM > $ 10M and up to ~$50M
• End goal: 20 – 30 total customers with average revenue per

customer of $ 15M. No single customer > 25% of revenue.

Recent Sales and Marketing Initiatives

• Recent articles on EPIC in Industry Publications:
• Medical Product Outsourcing magazine (December 2005) “Adapting Lean in

Medical Manufacturing”

• Assembly magazine (Jan 2006) - “Optimizing Lean Manufacturing in an EMS

Environment”

• Quality Digest magazine (March 2006) – “Integrating Best Practices from an

Acquired Facility”

• SMT Magazine (August 2006) – “Solving the Mystery of Failed Components” JoCy

FA lab article.

• AME Presentation – “Improving Factory Floor Flexibility” (May 15, 2006) – Greensboro,

SC

• SMTA Medical Conference Presentation – “Implementing Lean Manufacturing in EMS”

(May 16, 2006) – Minneapolis, MN

• Received Vision Award (SMT Magazine) and Service Excellence Award (Circuits

Assembly) at 2006 APEX

• Received Ernst & Young Entrepreneurial Company of the Year for Technology in June,

2006

• SMTA presentation in Chicago on September 29th – “Integrating Lean Systems in an

Acquired Facility”

Agenda

• Break

9:30 - 10:00

EPIC

Agenda

• EPIC Supply Chain Strategy

Udo Bechtluft 10:00 - 10:20 Director, Logistics

EPIC

Consignment GYR Rating

PartNumber 10/23/06 10/30/06 11/6/06 11/13/06 11/20/06 11/27/06 12/4/06 1019342S 6,000 15,000 12,000 24,000 1020471S 30,000 52,500 55,000 52,500 92,500 1020507S 36,000 220,000 224,000 364,000 1020512S 51,000 102,000 105,000 105,000 174,000 1020617S 22,500 22,500 22,500 25,000 22,500 37,500 1020620S 42,000 333,000 333,000 336,000 336,000 336,000 588,000 1021611S 65,000 1021694S 3,000 14,000 13,000 14,000 13,000 14,000 23,000 1021695S 4,000 12,000 12,000 19,000 1022779S 7,500 1023930S 12,000 39,000 DueDate

Logistics Functions at EPIC

There are several teams in the Logistics world at EPIC

• Internal for material movements between warehouse and

lines and especially for El Paso/JZ for material transfer between the ELP warehouse and the JZ facilities

• External like customer service / inside sales and material

analysts/planners.

• Inside Sales is the interface to our customers and the

responsibilities are to assure on time delivery. The biggest contributor is to maintain a good forecast over at least 6 months.

• Material Analysts/planners are the interface to the supply

base and responsible for having the parts we need for our production in our hands.

EPIC Logistics Organization

Udo Bechtluft Logistics Director Dwaine Raper Logistics Mgr Johnson City

• D. Cox, Buyer
• J. Crowe, Buyer
• R. Krekelberg, Mt'l Sup
• K. Oertling, Buyer
• A. Sheehan, Buyer
• J. Smith, Shipping Sup
• C. Wheelock, Sr Mtl/Log
• S. Wilson, Sr Mtl/Log

Sukie Medina Procurement Mgr Plant 1& 2

• J. Portillo, Planner Buyer,
• J. Molina, Planner Buyer

Open, Planner Buyer

• P. Rojo, Planner Buyer
• M. Sarmiento, Planner Buyer
• U. Felix, Planner Buyer
• F. Fierro, Planner Buye
• O. Rosales, Planner Buyer
• E. Miramontes, Planner Buyer

Martin Chapparo Logistics Mgr Plant 1 & 2

• C. Morales, Logistics Sup
• H. Guterrez, Cycle Cts Mat'ls
• J. Garcia, Cycle Cts Mat'ls
• J. Jacobo, Logistics Sup
• O. Aguirre, Mat'l Sup
• C. Jimenez, Matl Sup

Miguel Barrenada Customs Mgr Plant 1 & 2

• F. Garcia, Customs

Lou Nemeth Norwalk

• M. Strande, Sr Mat'l Analyst
• A. Taylor, Mat'l Analyst
• B. Weisenberg, Mat'l Analyst
• C. Snyder, Mat'l Analyst

Logistics Mgr Acting

KanBan for ‘Dummies’

• Two Bin System
• Active Bin – Currently in Use
• Reserve Bin – Will support requirements until empty

bin can be replenished

• Both Bins Empty – Is ALWAYS a Bad Thing

KanBan Card Scanning System

PLANT FLOOR

Bin 1 is Consumed by Production Card is Scanned Near Point of Use Only Exceptions go to Analyst

PURCHASING

Most parts go directly To EDI Queue

EDI 850 SUPPLIER

Sends next “Pull” Qty Per release

EDI 855

Supplier Acknowledges Order via 855 Not EDI No Blanket Setup Error Not Autorel 2BE MANUAL INTERVENTION

• BAD 855
• NO REPLY AFTER 2 DAYS

Inventory Cycle

Customer places order with EPIC EPIC ships material from designated finish goods zone All empty bin cards go to the 1st process master bin for replenishment Operator pulls parts from bin for production All empty raw material cards are placed in master bin Cards are collected & scanned Parts are received from suppliers Parts are taken to KanBan bins With cards

Operations Line Scheduling

System requires no Production Scheduler:

• Operators empowered to prioritize production sequence for

each line based upon color coded pull signals

• System drives significant reduction in WIP (based completely
• n demand flow)
• Fast Reaction time for Customer needs / high

flexibility as required (lines can be changed immediately to respond to demand)

Bond/ATP Grading

• Determine Part Type and Lead Time
• Calculate Average Weekly Usage (AWU)
• From the Forecast Over the Part Lead-time
• Targeted Bond Level =
• If the Material Code is ‘”CB” (Common Bond)
• Targeted Bond = 4 weeks of AWU
• If the Material Code is “UNQ” or “NCNR”
• Targeted Bond = 4 Weeks + 1 Week for every additional Four Weeks of Lead Time (at the

AWU)

• ROUND UP!
• Pipeline (GYR) Risk Rating for Each Part……
• “R” – Estimated Available to Promise (ATP) Inventory <= 0 at some point within the lead-time

window

• “Y” – Est. ATP Inventory is less than Targeted Bond Qty at some point within the lead-time window

(but always > 0)

• “G” – Est. ATP Inventory is always greater than the Targeted Bond quantity

Lead Time 4 5 6 7 8 9 10 11 12 Total AWU Weeks Required 4 5 5 5 5 6 6 6 6

KanBan “Zones” are determined by expected Customer demand. The “Zones” are initially filled. The Customer Pulls a “Normal” quantity Parts are shipped starting from the “Red” Zone Parts are rotated from Yellow to Red then Green to Yellow The Empty Zone “Green” Card is pulled

Finished Goods – KanBan Pull - Normal Pull

**CARDS ARE THEN TAKEN TO THE 1ST PROCESS MASTER BIN

Finished Goods – KanBan Pull - Larger Pull

KanBan “Zones” are initially filled The Customer Pulls a larger than normal quantity Parts are shipped starting from the “Red” Zone Parts are rotated from Green to Red The Empty Zone “Green” & Yellow Cards are pulled

**CARDS ARE THEN TAKEN TO THE 1ST PROCESS MASTER BIN

Graphical Part Examples

(5)

• 5

10 15 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Targeted Bond Quantity Estimated Available to Promise

(5)

• 5

10 15 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Targeted Bond Quantity Estimated Available to Promise

G Y

(5)

• 5

10 15 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Targeted Bond Quantity Estimated Available to Promise

R

Example of Bond Report

E P IC P a rt N u m b e r P a rt T y p e L e a d T im e A vg W k ly U s a g e T a rg e d B

• n

d W e e k s T a rg e te d B

• n

d Q u a n tity 1 /2 3 /0 6 1 /3 /0 6 1 1 /6 /0 6 1 /2 9 /0 7 2 /5 /0 7 2 /1 2 /0 7 P a rt R a tin g M fr M fg P N 5 1 4 9 C B 6 2 1 4 8 4 2 ,0 2 ,0 1 ,4 4 (8 ) (8 ) (1 ,3 6 ) R T Y C O 3

• 4

3 5 6 4

• 9

5 1 1 6 C B 1 2 6 3 4 1 ,0 5 5 ,0 4 ,4 4 ,4 2 ,0 8 8 Y G R A Y H IL L 9 4 H E B 8 W R T 5 5 2 6 C B 2 1 2 5 4 5 3 ,0 3 ,0 3 ,0 2 ,0 1 ,0 1 ,0 G A L L E G R OA 3 5 1 5 E U A 5 5 2 7 C B 1 1 2 5 4 5 2 ,5 1 ,5 1 ,5 1 ,5 5 5 G H O N E Y W E S C C 1 5 D 5 5 1 4 8 S C B 1 1 6 ,1 2 5 4 6 4 ,5 1 2 ,0 1 2 ,0 9 ,0 1 8 ,0 8 4 ,0 6 6 ,0 G T Y C O 6 4 4 4 5 2 5 8 1 1 1 2 S C B 6 3 7 5 4 1 ,5 7 ,5 7 ,5 7 ,5 4 ,5 4 ,5 2 ,0 G P H IL IP S P M B D 9 1 4 T R 5 8 1 1 3 4 S C B 1 3 1 3 4 1 ,2 5 6 ,0 6 ,0 3 ,5 1 ,0 1 ,0 1 ,0 Y T E X A S IN S L M 2 9 2 D R 5 8 1 5 9 1 S U N Q 1 2 9 3 8 6 5 ,6 2 5 4 ,0 4 ,0 4 ,0 (8 ,5 ) (1 1 ,0 ) (1 1 ,0 ) R L IN E A R T E L T 1 1 1 4 S 1 4 # 2 2 3 8 V P E P IC 6 1 1 1 9 S U N Q 1 3 1 3 6 1 ,8 7 5 2 ,0 2 ,0 2 ,0 1 5 ,0 1 5 ,0 1 5 ,0 G K O A R K 7 3 H 2 A T T D 2 4 9 3 F 6 1 1 3 8 S U N Q 8 1 ,0 5 5 ,0 1 5 ,0 1 5 ,0 1 5 ,0 7 ,0 1 ,0 1 ,0 G M U R A T A G R M 2 1 6 R 7 1 H 4 7 2 K A 1 D 6 2 1 8 S U N Q 2 2 ,9 6 9 8 2 3 ,7 5 5 ,0 4 7 ,5 4 5 ,0 1 ,0 5 ,0 2 ,5 Y O N S E M I L M 3 2 4 D R 2 G 6 2 1 2 4 5 S N C N R 1 2 1 5 6 6 9 3 8 5 ,0 5 ,0 5 ,0 2 ,5 2 ,5 2 ,5 G N A T S E M IL M 4 8 6 1 M X 6 8 1 2 6 S N C N R 6 8 7 5 5 4 ,3 7 5 2 ,0 2 ,0 1 8 ,0 8 ,0 6 ,0 6 ,0 G M U R A T A L Q H 3 1 C N 2 2 K 3 L 6 8 1 4 9 S N C N R 8 3 ,7 5 5 1 8 ,7 5 5 ,0 5 ,0 5 ,0 4 ,0 2 8 ,0 2 8 ,0 G M U R A T A G R M 4 X 7 R 1 3 M 5 A L 6 8 1 5 2 S N C N R 1 5 ,0 6 3 ,0 4 ,0 4 ,0 4 ,0 (2 4 ,0 ) (3 2 ,0 ) (4 ,0 ) R M U R A T A G R M 2 1 A R 7 2 E 2 2 2 JW 1 D A va ila b le to P ro m is e

GYR based on Available to Promise (ATP)

Part Number XXXX YYYY Bin Size 2,000 Lead Time 6 weeks Weekly Bucket 04-Nov 11-Nov 18-Nov 25-Nov 02-Dec 09-Dec 16-Dec Beginning Inventory 2,000 2,000 4,000 4,000 4,000 4,000 2,000 Expected Shipments to EPIC 2,000

• 2,000

2,000

• 2,000
• Production Completions to FG

2,000 2,000 2,000 2,000

• 2,000

Ending Inventory * 2,000 4,000 4,000 4,000 4,000 2,000 4,000 Part Rating G Part Number XXXX YYYY Bin Size 2,000 Lead Time 6 weeks Weekly Bucket 04-Nov 11-Nov 18-Nov 25-Nov 02-Dec 09-Dec 16-Dec Beginning Inventory 2,000 2,000 1,000 1,000 1,000 2,000 1,000 Expected Shipments to EPIC 2,000 2,000 2,000 2,000

• 2,000
• Production Completions to FG

2,000 1,000 2,000 2,000 1,000 1,000 2,000 Ending Inventory * 2,000 1,000 1,000 1,000 2,000 1,000 3,000 Part Rating Y Part Number XXXX YYYY Bin Size 2,000 Lead Time 6 weeks Weekly Bucket 04-Nov 11-Nov 18-Nov 25-Nov 02-Dec 09-Dec 16-Dec Beginning Inventory 2,000 2,000 1,000 1,000 1,000

• (1,000)

Expected Shipments to EPIC 2,000 2,000 2,000 2,000 2,000 2,000

• Production Completions to FG

2,000 1,000 2,000 2,000 1,000 1,000 2,000 Ending Inventory * 2,000 1,000 1,000 1,000

• (1,000)

1,000 Part Rating R Ending Inventory = Available To Promise (ATP) Rating Criteria G ATP never falls below one bin over part lead time Y ATP falls below one bin R ATP falls to zero or less

EPIC Pipeline Management Improvement

• The EPIC Bond Report process is ‘best in class’ in terms of its potential

to assist us to identify, avoid or at least minimize the impact supply issues.

• Lately it has broken down due to a lack of discipline, communication

and focus from both internally and the supply base.

• Starting in the 3Q 2006, all suppliers will receive weekly demerits for

each part that is ‘Red’ and is not due to a significant ‘spike’ in demand inside of the lead time (Bond “Reds”).

• A significant ‘spike’ is defined as a pull-in of demand that is larger than

the targeted bond quantity inside of the lead-time.

• Consignment parts will be treated in the same manner with additional

demerits for any parts having soft orders showing up in the current or following weeks, not owing to a significant ‘spike’ in demand inside of the lead time (Consignment “Reds”).

EPIC Pipeline Management Improvement

• The bond report format will be reduced to a set of mandatory data and

calculated fields. To satisfy requirements as an EPIC KanBan ‘partner’ suppliers must supply the report in our exact format. EPIC will provide the ability to upload raw data and perform the required calculations to suppliers unable to get full support from their IT department.

• The 2BE process will receive an renewed focus to alert us to line down

parts before they impact the plant. The two highest ranked causes for 2BE will be the primary focus for EPIC KanBan continuous improvement actions.

• All parts that cause us to be graded as ‘late’ to our customers’ need

date will undergo an 8D analysis led by each responsible material analysts with supervision of the local Commodity, Logistics and Purchasing managers for the location.

Bond Report – New Format

• EPIC Part Number
• EPIC Part Type
• “NCNR”, “CB” (Common Bond), “UNQ”
• Current Lead Time (in Weeks)
• Average Weekly Usage – Calculated from Part Type, AWU and Lead Time
• Targeted Bond Level (based on EPIC Formula) number of weeks
• Targeted Bond Quantity
• Available to Promise Quantity by week - Actual or Expected inventory quantity at Supplier

Warehouse (including in-transit to EPIC) in weekly buckets through the lead time of the part, or 16 weeks, whichever is less

• Part Rating – “GYR”
• Manufacturer Part Number
• Manufacturer
• Containment Plan – Text describing plan to expedite/contain issues on ‘Red’ parts (that can wait for

the meeting)

• RoHS/PbFree
• Color Code
• Mandatory
• Optional
• Can wait for the day of the meeting

EPIC Part# Part Type Lead Time Avg Wkly Target Bond Target Bond Qty Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Week 13 Week 14 Week 15 Week 16 GY R Manufacturer Manufacturer's PN RoHS/Pb Free Comments Qty Qty Qty Qty Qty Qty Qty Qty Qty Qty Qty Qty Qty Qty Qty Qty

Agenda

• IT Developments Marty Bentley 10:20 – 10:35

Director, IT

EPIC

IT Developments

• The two primary systems that EPIC Technologies uses to

drive material are:

• MDSS – Manufacturing Decision Support System. It is

your typical, basic APIC standard MRP type business system.

• EPICs CardTool. It is an in-house written client/server

application based upon EPIC Technologies’ lean model.

• As of October 2006, all of EPIC Technologies’ main

production plants are running these systems.

IT Developments

• EPIC Technologies relies heavily on EDI as the method to

communicate demand to our suppliers.

• We provide two types of EDI:
• Standard ANSI X12 transaction sets
• Flat file data via email
• As of September 2006, all ANSI X12 EDI is being sent via a

new value-added network – DICentral.

IT Developments

• Plans for the rest of 2006 and 2007:
• Standardizing on ANSI 4010 specifications for the 830,

850, and 855 transaction sets

• Improving the bond reporting by:
• Publishing the standard electronic format to the

Intranet

• Providing a process for the completed reports to be

uploaded to EPIC within the scheduled time

IT Developments

• Plans for the rest of 2006 and 2007 (continued):
• Reducing the 30% of EDI releases that generate an

exception

• Expanding the use of the Internet as a communications

medium by:

• Establishing secure logins by vendor
• Establishing secure upload/download of standard

data formats by vendor

EDI Performance (Jan - Sep)

SUPPLIER 850s 855s OK Pct OK Missing Late Avg Resp Time ALLAME01 579 545 84 15% 34 115 1.52 ARROWE01 7,813 7,213 5,923 76% 600 1,290 1.59 CAMRPC 202 194 84 42% 8 29 1.21 DIGIKE01 1,767 1,616 997 56% 151 389 1.66 FUTURE01 3,466 3,278 2,939 85% 188 334 1.62 HAMILT01 6,997 6,645 4,654 67% 352 1,200 1.88 SAGERE01 1,637 1,578 1,072 65% 59 255 1.43 TTI01 9,601 9,241 7,010 73% 360 1,314 1.08 Total 32,062 30,310 22,763 71% 1,752 4,926 1.52

A B C D E F G H

Agenda

• Commodity Management Louise Stump 10:35 – 10:50

Director, Purchasing

EPIC

EPIC Commodity Management

• July 06 - Organization
• Aug 06 - Strategic Supplier Role Model Definition
• Sep 06 - Strategic Suppliers Identification
• Oct 06 - Executive Level Communication
• Nov 06 (Beginning)
• Communication of Continuity of Supply, Partnerships,

Performance

• Meeting at any of the EPIC facilities
• Material Planning Manager, Inside Sales, Partnership

Authority

• Jan 07 (Quarterly) – EPIC scorecard performance feedback

EPIC Commodity Management

EPIC Commodity Management

• The Supply Chain Council (SCC) develops and

communicates the strategic direction of EPIC’s Purchasing

• rganization. Participants include:
• Supply Chain Executive Management
• Supply Chain Senior Management and Staff
• Commodity Team Leaders
• Global Supply Manager
• Purchasing Managers
• Materials Quoting Manager

EPIC Commodity Management

• Commodity Teams select and develop future company-

wide EPIC strategic suppliers:

• Build-to-Print Jerome Mettetal
• IP&E Ralph Sperling
• PCB Jerome Mettetal
• Semiconductor Lou Nemeth
• The Global Supply Manager (Joe Davis) reaches

documented agreement with strategic suppliers that include all aspects of the EPIC Model supply chain

• requirements. This includes International Purchasing

Offices.

EPIC Commodity Management

• Purchasing Managers lead site-specific sourcing and

interfaces with EPIC Logistics:

• El Paso/Juarez MX Ralph Sperling
• Johnson City, TN Jerome Mettetal
• Norwalk, OH Lou Nemeth
• Commodity Buyers are experts in their respective fields

who are actively involved in commodity teams and placing initial sourcing purchase orders.

EPIC Commodity Management

Louise Stump Purchasing Director Jerome Mettetal Purchasing Mgr Johnson City

• D. Cox, Sr Comm Buyer
• T. Hensley, Sr Comm Buyer
• M. Hill, Sr Comm Buyer
• D. Overbay, Sr Comm Buyer

Joe Davis Global Supply Mgr Lou Nemeth Purchasing Mgr Norwalk

• B. Pachasa, Comm Buyer
• L. McHenry, Comm Buyer

Pam Jackson Purchasing Ralph Sperling Purchasing Mgr Plant 1 & 2

• S. Balderrama, Comm Buyer
• P. Muniz, Comm Buyer
• S. Nevarez, Comm Buyer
• M. Torres, Comm Buyer
• I. Osuna, Comm Buyer

S Loudy, Comm Buyer

EPIC Strategic Supplier Role Model

• Strategic Suppliers provide goods and/or services that have a significant effect on

EPIC’s ability to meet business objectives. These partners demonstrate ownership

• f the supply chain evidenced by accountability for assuring goods and/or

services are available when needed.

• Strategic Suppliers include both production and non-production goods and/or

services.

• Strategic Suppliers are described by the following:
• a. Commitment to the EPIC Supply Model
• b. Engagement in an EPIC Supply Partner Agreement
• c. Support of Consignment or other VMI model
• d. Commitment to Continuous Cost Reduction and Process Improvements
• Strategic Suppliers have EPIC’s commitment to:
• a. Consolidate Purchases
• b. Provide Strategic Insight and Direction
• c. Proactively Encourage Customers to Engage with

them as a Provider

EPIC Strategic Suppliers

Analog Devices ICE Components NEC Electronics Arrow International Rectifier ON Semi Avnet ITL Circuits Philips Semiconductor AVX JF Kilfoil Company PhotoCircuits Bare Board Group KCE Electronics Samtec USA CML Kemet Electronics ST Microelectronics DHL KOA Speer Electronics Texas Instruments Digi-Key Corp Linear Technologies The DAC Group EIS Maxim Thomas Engineering EPCOS Microchip TTI Fairchild Millenium Plastics TTM – Time to Market Freescale Molex Tyco Electronics Future Electronics National Semiconductor Vishay Honeywell

EPIC Commodity Management

• July 06 - Organization
• Aug 06 - Strategic Supplier Role Model Definition
• Sep 06 - Strategic Suppliers Identification
• Oct 06 - Executive Level Communication
• Nov 06 (Beginning)
• EPIC Supply Model Partnership, Performance
• Meeting at any of the EPIC facilities
• Material Planning Manager, Inside Sales, Partnership

Authority

• Jan 07 (Quarterly) – EPIC scorecard performance feedback

EPIC Commodity Management

EPIC Supply Model Partnership

• Meetings with Key Supplier Managers
• Material Planning
• Inside Sales
• Decision Manager for Partnership agreement
• Quarterly Business Reviews
• Consolidation of pull, consignment, pricing agreements
• Single EPIC point-of-contact for company-wide agreement
• 3-year term

EPIC Commodity Management

Performance - EPIC Scorecard

• Delivery <1>/+0 to EPIC’s request date
• Quality
• PPM
• 8D’s (corrective actions) open <30 days
• ISO or QS certification
• Red-card Log – Non-value added issues caused by supplier
• Responsiveness – quoting and operational
• Logistics
• Consistent communication through a bond report
• Number of “reds & yellows” on a bond report
• EDI partnership
• Supplier-paid freight
• VMI, consignment or in-plant program

Agenda

• Supplier Development

Hilario Apodaca 10:50 - 11:05 Director, Quality

EPIC

EPIC Quality Management System

• Essential to our Lean / Synchronous Flow model, is a QMS that

drives continuous improvements throughout the system while satisfying the most stringent customer and standard

• requirements. The diversity of segments we serve is tough.
• Our Market requires Third Party registrar certifications and

compliance to customer and regulatory requirements.

• EPIC’s Model requires the flexibility to have the product run

when and where the customer needs it with the highest quality level.

• We know that this is not easy. In EPIC, our QMS approach is to

make it simple and profitable by understanding customer requirements and supporting a culture of continuous improvements based on the philosophy of the 8- Principles of ISO–TS 16949: 2002 and ISO 13485:2003.

Basic QMS Model with Process Approach

Current Certification Models / Requirements

• ISO / TS 16949:2002 - our strongest cultural base for automotive market

and continuous improvement

• PPAP Level III Submission using standard AIAG core tool on all Make-to-

print parts and Customer specific shelf items.

• IMDS Component approval # for all BOM parts
• 100% OTD performance
• Systematic approach for Corrective action, NOT symptomatic
• Supplier certification to ISO 9001:2002 as a minimum; target is

ISO / TS 16949:2002

• ISO-13485:2003 - our Medical industry standard approach
• PPAP Level III submission or IQ/OQ/PQ validation process
• Certificate of Compliance on customer-identified parts
• ISO-9001:2000 as the basis for the above
• Industry Standard requirements, e.g. C of C’s for UL / CSA / VDE

Mutually Beneficial Supplier Relationship

Our Quality Concept:

• We need strong supplier compliance to requirements. Do not

wait for us to push you; it is against our model. Be proactive, get involved with us. Our process approach and people involvement philosophy is our main driver.

• You must continuously drive for quality / service improvement.

We will help you to be successful. EPIC is only as strong as you.

• Nothing works better than two hands committed to the same
• goal. Our preference is for our suppliers to be part of the team.
• We will soon announce our new Supplier Development Model.

We are strongly pursuing working with you to drive dock-to- stock along with EPIC’s Lean and Synchronous Flow model.

Agenda

• 2006 Supplier of the Year Award Presentation 11:05 – 11:30

Ralph Sperling, Purchasing Manager, El Paso/Juarez Jerome Mettetal, Purchasing Manager, Johnson City Lou Nemeth, Purchasing Manager, Norwalk Wally Johnson, VP, Supply Chain Management Udo Bechtluft, Director, Logistics Louise Stump, Director, Purchasing

EPIC

EPIC 2006 Supplier of the Year Award

• On Time Delivery
• Resolutions to Issues (RMA etc.)
• Responsiveness
• EDI
• Bond reports/ATP
• Reds/Yellow
• Supplier Certifications
• Terms
• VMI/Consignment
• Cost improvements

EPIC

Recognizes

ICE COMPONENTS INC.

as SUPPLIER OF THE YEAR 2006

Agenda

• Q & A – from submitted cards All 11:30 - 12:00
• Wrap-up
• Survey

EPIC

Thank You !

Agenda

• Lunch

All 12:00 - 1:00

EPIC

Let’s Eat !