[PPT] - LEAN INTO CHANGE AND INNOVATION: HIGH RISK, HIGHER REWARD Wednesday PowerPoint Presentation

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LEAN INTO CHANGE AND INNOVATION: HIGH RISK, HIGHER REWARD

Wednesday October 23 2019

MIDDLE MARKET MANUFACTURING OUTLOOK

An independent member of UHY International

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Lack of Proprietary Products

MIDDLE MARKET MANUFACTURING

Globalization / Competition Industry 4.0 Technology Jobs Factor Economy / Political Environment

What have we been dealing with:

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MIDDLE MARKET MANUFACTURING

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MIDDLE MARKET MANUFACTURING

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MIDDLE MARKET MANUFACTURING

Level of Technology Innovation

PATH TO INNOVATION

Customer Experience Level of Market Innovation LOW HIGH HIGH

HIGH RISK / HIGH REWARD

Sustaining

Disruptive to the Organization

Expansion

Cost Reduction Focus Breakthrough Product/Process External & Internal Investment (Industry 4.0)

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MIDDLE MARKET MANUFACTURING

ROADMAP FOR INNOVATION AND DISRUPTION

Are you an innovator and market disruptor?

What should you consider?

NO? YES!

1) Do I have the right team and/or process? 2) What internal investments need to be made to our infrastructure (e.g. IT)? 3) What product / service / process could be disruptive? 4) Do we have the “scale” to be able to fund innovation or do we “buy” innovation? 5) Are we STUCK and a target for consolidation?

You may exit the program now…

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CONTACT INFORMATION

Thomas Alongi National manufacturing partner UHY LLP talongi@uhy-us.com 586 843 2581 @TAlongiCPA #AMO2020

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TARIFFS, TRADE AND NAVIGATING MARKET RISK FOR MANUFACTURING BUSINESS GROWTH

David Sowerby, CFA Managing Director, Portfolio Manager Ancora

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TARIFFS AND TRADE

Assessing the Risk

$10.58 $49.87 $55.35 $308.70 $120.80 $(72.10) $(100) $(50) $- $50 $100 $150 $200 $250 $300 $350 CY 2018 CY 2019 (Est) CY 2020 (F) Incremental US Enacted & Proposed Tariffs On China Vs. Incremental Stimulus ($Bn) Incremental US Imposed Tariffs On Chinese Imports Incremental Stimulus From Tax Cuts & Federal Spending

Source: Chart provided by Strategas

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TARIFF IMPACT

U.S. Manufacturing

Chart provided by Empirical Research Partners. 01/01/2016 – 07/31/2019 Source: Bureau of Labor Statistics, Empirical Research Partners Analysis

(1.0) (0.5) 0.0 0.5 1.0 1.5 2.0 2.5 3.0 Jan 16 May 16 Sep 16 Jan 17 May 17 Sep 17 Jan 18 May 18 Sep 18 Jan 19 May 19 U.S. Manufacturing Aggregate Weekly Hours of All Employees Year-over-Year Growth Rates %

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LIMITS ON REGULATION

Equivalent of Indirect Tax Cut

Source: Office of the Federal Register

10,000

20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 Number of Pages Federal Register Pages Published Annually 1970 to 2018

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AUTOS STILL POSITIVE

1.0
0.8
0.6
0.4
0.2

0.0 0.2 0.4 0.6 0.8 1.0 2015 2016 2017 2018 2019 U.S. Vehicle Production – Impact on Quarterly GDP (percent)

Chart provided by Seaport Global Securities LLC Source: BEA, Ward’s Automotive, Seaport Global Securities

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AUTO STOCK FINANCIALS

Weaker Stock Prices, but Profitability Holding Up Well

Source: FactSet

Name 12mo Price Change 12mo Sales Growth Trailing 12 ROE Trailing 12 ROIC Average (Auto Producers + Suppliers*)

17.4%

3.7% 17.9% 8.7% Median (Auto Producers + Suppliers*)

13.9%

2.2% 16.3% 8.9% S&P 500 Index 6.0% 7.8% 17.2% 9.3% S&P 400 Index

1.8%

7.4% 11.3% 5.8%

*16 major U.S. auto producers and suppliers

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SCORECARD: MICHIGAN VS U.S.

Fall 2017 Factor Michigan U.S.

Stock Prices* + 21% + 13% Dividend Growth + 10% + 7% Sales Growth + 7% + 5% Home Prices + 7.6% + 5.6% Personal Income + 4.4% + 3.7% Employment + 2.4% + 1.5% Prosperity (Income + Employment) + 6.8% + 5.2%

Source: FactSet, Senate Fiscal Agency, Case Shiller *Median price change 06/30/2016 – 06/30/2017.

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SCORECARD: MICHIGAN VS U.S.

Fall 2019 Factor Michigan U.S.

Stock Prices*

5%

+ 7% Dividend Growth + 6% + 8% Sales Growth + 5% + 8% Home Prices + 4.2% + 3.1% Personal Income + 3.0% + 3.8% Employment + 0.4% + 1.5% Prosperity (Income + Employment) + 3.4% + 5.3%

Presenting most recent data available. Source: FactSet, BEA, Case Shiller *Median price change 06/30/2018 – 06/30/2019.

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SURVEY OF COMPETITIVENESS

Michigan

Tax Foundation

(State Business Climate Index)

13th Michigan Economic Competitiveness Study

(Northwood Institute / State Chamber)

8th Rich States / Poor States

(Laffer and Moore)

12th Top States for Business

(CNBC Americas)

11th

Source: The Tax Foundation

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RETURNS SINCE TARIFF ESCALATION

Michigan Index Cumulative Return 3/22/18 – 10/14/19

Median S&P 500 Stock + 8.2% Median S&P 1500 Stock

0.4%

10-Year U.S. Treasury + 13.8%

Source: Bloomberg

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SCORECARD: BEAR MARKET SIGNALS

Indicator Signal

Excessive Investor Optimism Inverted Yield Curve Excessive Momentum Chasing Poor Corporate Spending Behavior FED Tightening Questionable Fiscal Policy High Yield Bond Market

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BOND INVESTORS

Limited Expectations

1.2 1.6 2.0 2.4 2.8 3.2 3.6 4.0 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 Yield 10 Year Treasury Bond Yield

Chart provided by Strategas. 01/01/2010 – 09/12/2019 *Source: Bloomberg

Barclays U.S. Aggregate Bond Index Annualized Returns* 6/30/12 – 9/12/19 6/30/16 – 9/12/19 +2.8% + 2.7%

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CONTACT INFORMATION

David Sowerby, CFA Managing Director, Portfolio Manager Ancora dsowerby@ancora.net 216-593-5032

Ancora Holdings Inc. is the parent company of three registered investment advisers with the United States Securities and Exchange Commission; Ancora Advisors, LLC, Ancora Family Wealth Advisors, LLC and Ancora Retirement Plan Advisors, Inc. In addition it owns Inverness Securities LLC, a FINRA & SIPC member broker dealer. A more detailed description of Ancora, its RIAs, management team and practices are contained in the firm brochure, Form ADV Part 2a. Qualified prospective investors may obtain the ADV Part 2a by contacting the company at: 6060 Parkland Boulevard, Suite 200, Cleveland, Ohio 44124, Phone: 216-825-4000, or by going to www.ancora.net. This document does not constitute the recommendation of Ancora to meet the investment needs of any individual client. It does not take into account any specific investment

bjectives, financial situations, or particular needs of any specific person who may receive this report. This report is not to be considered investment advice or a

recommendation of any particular security, nor is it intended to provide personal investment advice. Investors should seek financial advice regarding the appropriateness of investing in any securities and other investments or investment strategies discussed in this report. The information provided in this report is for informational purposes only and is not an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction. Investors should note that income from such securities or other investments, if any, may fluctuate and that price or value of such securities and investments may rise or fall. Investments are not insured by the FDIC and are not guaranteed by Ancora. Ancora’s investment advisory fees are described in Part 2A of its Form ADV. This material may not be reproduced, redistributed, retransmitted or disclosed, or referred to in any publication, in whole or in part, or in any form or manner, without the express written consent of Ancora. Any unauthorized use or disclosure is prohibited. Receipt and review

f this report constitutes your agreement not to redistribute, retransmit, or disclose to others the contents, opinions, conclusion, or information contained in this report. Past

performance does not guarantee future results.

SLIDE 22 IN COLLABORATION WITH

Middle Market Manufacturing

How to Thrive in a Changing Environment

Thomas A. Stewart, Executive Director | The National Center for the Middle Market October 23, 2019

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How would you predict the future?

Source: 2Q’17, 18, 19 Middle Market Indicator Reports

3Q Middle Market Indicator Headlines Compared to 2Q

Confidence in U.S. economy 82%  76% Short-term index 69  49 Revenue growth 8.5%  5.8% Employment growth 6.4%  4.1%

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3Q’19 MMI: Revenue Growth

6.0%
4.0%
2.0%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% U.S. MIDDLE MARKET S&P 500 MANUFACTURERS PAST 12 MONTHS

5.8%

U.S. MIDDLE MARKET

7.1%

MANUFACTURERS

2.1%

S&P 500* Source: 3Q’19 Middle Market Indicator Report

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Middle Market Manufacturing Growth Trend

Source: 3Q’19 Middle Market Indicator Report

Revenue Employment

9.8 7.2 6.2 6.8 4.1 5.5 4.4 5.1 5.3 7.2 7.5 7.3 8.7 6.9 5.2 5.2 6.6 6.3 4.6 7.0 10.2 7.1 6.7 7.1 7.7 8.8 9.2 10.2 8.9 10.1 7.1 6.5 5.4 4.1 4.1 4.3 4.8 4.2 4.6 4.6 7.2 5.4 6.7 5.3 6.2 3.9 4.6 4.4 4.2 6.6 6.6 7.9 6.4 6.1 6.8 7.2 7.2 6.2 5.2 4.9 6.3 6.6 0% 5% 10% 15%

Actual Revenue Growth Projected Revenue Growth

3.4 2.6 2.7 1.7 1.4 3.0 2.0 2.2 2.4 3.1 2.4 4.4 5.4 4.0 3.3 2.8 2.4 5.2 3.8 4.2 8.3 4.5 4.8 3.9 5.9 6.5 6.1 5.0 6.4 5.6 5.7 1.5 1.4 2.1 1.2 2.2 1.6 2.3 2.3 3.7 2.9 4.3 4.0 3.4 2.1 1.9 2.2 2.5 3.0 4.0 6.5 3.4 4.7 3.9 4.7 5.3 4.4 2.8 3.9 5.6 4.0 0% 5% 10% 15% 2012 1Q 2012 2Q 2012 3Q 2012 4Q 2013 1Q 2013 2Q 2013 3Q 2013 4Q 2014 1Q 2014 2Q 2014 3Q 2014 4Q 2015 1Q 2015 2Q 2015 3Q 2015 4Q 2016 1Q 2016 2Q 2016 3Q 2016 4Q 2017 1Q 2017 2Q 2017 3Q 2017 4Q 2018 1Q 2018 2Q 2018 3Q 2018 4Q 2019 1Q 2019 2Q 2019 3Q 2019 4Q 2020 1Q 2020 2Q 2020 3Q

Actual Employment Growth Projected Employment Growth

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Most Companies Are Growing but Signs of Weakness Are Emerging

Source: 3Q’19 Middle Market Indicator Report

9% 13% 14% 16% 16% 18% 24% 25% 38% 28% 10%+ 1% to 4% Revenue Decreased Revenue Increased 5% to 9% No change

Past Year Revenue Growth

3Q ‘19 71% 2Q ‘19 77% 76% 83% 3Q ‘19

2Q ‘19 Total Middle Market Manufacturing

3% 6% 14% 17%

17% 15% 24% 25% 42% 36%

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3Q’19 MMI: Winners and Losers

2Q 2019 3Q 2019 Performance improved

68% 60%

Performance unchanged

26% 34%

Performance deteriorated

6% 7%

Source: 3Q’19 Middle Market Indicator Report

2Q 2019 3Q 2019 Performance improved

74% 72%

Performance unchanged

22% 25%

Performance deteriorated

4% 3%

Total Middle Market Manufacturers

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3Q’19 MMI: Economic Confidence Has Fallen

20% 30% 40% 50% 60% 70% 80% 90% 100% 1Q '13 2Q '13 3Q '13 4Q '13 1Q '14 2Q '14 3Q '14 4Q '14 1Q '15 2Q '15 3Q '15 4Q '15 1Q '16 2Q '16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q'19 GLOBAL ECONOMY NATIONAL ECONOMY LOCAL ECONOMY U.S. ECONOMY

76%

81% MANUFACTURING LOCAL ECONOMY

85%

87% MANUFACTURING GLOBAL ECONOMY

55%

58% MANUFACTURING Source: 3Q’19 Middle Market Indicator Report

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3Q’19 MMI: A Growing Desire to Save Cash

27 17 13 8 3 11 8 11 1 Save It-Hold as Cash Save It--for Making Investments CapEx--Plant & Equipment CapEx--Facilities Acquisitions Add to HR--More Personnel Add to HR--Training & Development IT Other 18 12 37 7 3 15 9 6

U.S. MIDDLE MARKET MANUFACTURING

WHAT WOULD YOU DO WITH AN EXTRA DOLLAR TO INVEST?

Source: 3Q’19 Middle Market Indicator Report

44% 30%

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Total Middle Market

4Q2018 1Q2019 2Q2019 3Q2019

3Q’19 MMI: Investment Appetites Begin to Wane

Source: 3Q’19 Middle Market Indicator Report 10 20 30 40 50 60

Manufacturing Expansion Planned Next 12 Months

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Manufacturers Face Five Major, Interrelated Challenges

Competition Supply chain relationships Changing product /service mix Changing manufacturing technology Talent

New risks and exposures New ways to win

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CHALLENGE #1

Intensifying, Increasingly Global Competition

20% 17% 15% 14% 12% 11% 11% 16% 16% 13% 10% 24% 9% 12% Globalization Consolidation of customers Businesses from other industries starting to encroach on your business Consolidation of firms like yours Businesses like yours expanding into other adjacent industries Consolidation of suppliers Disruptive entrants into the marketplace

ALL MANUFACTURERS FASTEST GROWING

f middle market manufacturers say the business environment has grown much more competitive

in the last five years (top 2 of 5 boxes)

86%

Expansion into adjacent industries

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CHALLENGE #1

Tariffs Are Making Global Competition Harder

Source: NCMM, Middle Market Manufacturing, 2018; Middle Market Indicator Report 3Q 2018 8% 17% 24% 24% 22% 19% 9% 18% 29% 41% 42% 48% 51% 56% 66% 55% 62% 41% 34% 29% 27% 26% 26% 27% WHOLESALE TRADE RETAIL TRADE CONSTRUCTION MANUFACTURING HEALTHCARE OTHER SERVICES (BUS., PROF., TECHNOLOGY) FINANCIAL SERVICES,

INS. RE

Positive No change Negative

Impact of Increased Tariffs (by industry)

SLIDE 34 Source: NCMM, Middle Market Indicator Report 3Q 2018 0% 20% 40% 60% 80% 100% Prices Costs Margins

Financial Impact

Increase No Change Decrease 0% 20% 40% 60% 80% 100% Supplier Base Customer Base

Business Relationship Impact

Will explore new No change Will renegotiate

CHALLENGE #1

Tariffs Affect Manufacturers’ Costs and Relationships

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CHALLENGE #2:

More Demanding Supply-chain Relationships

Source: NCMM, Middle Market Manufacturing, 2018

Role of Company in Supply Chain Over Past 5 Years

Speed, inventory

policies, and transparency have driven increased collaboration – upstream and downstream

Increased integration

brings about additional requirements, services, and responsibility

SLIDE 36 36% 28% 20% 14% 23% 12% 81% 79% 69% 65% 60% 58% Our customers expect faster cycle times than they have in the past We expect faster cycle times from our suppliers than we have in the past Regulations make supply chain management more complicated Digitization has made supply chain management simpler Import tariffs would likely have a major negative impact on my supply chain Digitization of the supply chain has resulted in shorter timelines 47% 36% 18% 22% 30% 12% 90% 90% 76% 76% 63% 66% Top 2 Box Agree completely Agree somewhat ALL MIDDLE MARKET MANUFACTURERS MM MANUFACTURERS GROWING 10% +

CHALLENGE #2:

Speed and Digitalization Are Reshaping Supply Chains

Source: NCMM, Middle Market Manufacturing, 2018

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CHALLENGE #3:

Changing the Mix: Value-Added Services

Source: NCMM, Middle Market Manufacturing, 2018 68% 64% 71% 79%%

Total CPM OEM Growing 10%+

8% 8% 8% 12% VALUE-ADDED SERVICES

HAVE BEGUN OR INCREASED

AVE. REVENUE GAIN

SLIDE 38 Source: NCMM, Middle Market Manufacturing, 2018 41% 42% 37% 32% 18% 23% 4% 3%

PROPORTION O OF PRODUCTS M MADE T E THAT ARE ”SMART RT P PRO RODU DUCTS” ( (IOT)

ALL MIDDLE MARKET MANUFACTURERS MM MANUFACTURERS GROWING 10% +

CHALLENGE #3:

Changing the Mix: Smart Products

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CHALLENGE #4:

Rapid Technology Change on the Factory Floor

18% 19% 18% 19% 13% 10% 3%

Cybersecurity New Materials or Composites Advanced Process Control Robotics and Other Advanced Automation Additive Manufacturing and Rapid Prototyping Embedded Sensor Technology (The Internet of Things) Other Technology Not Mentioned TECHNOLOGY SPENDING LAST YEAR

SLIDE 40 30% 21% 19% 13% 17% 13% 66% 61% 52% 48% 45% 37% 31% 21% 21% 14% 20% 18% 70% 72% 59% 54% 43% 37% ALL 10%+ GROWTH

IMPORTANCE OF TECHNOLOGY ISSUES: NEXT YEAR

Cybersecurity Advanced process control New materials or composites Additive manufacturing / rapid prototyping Robotics and other advanced automation Embedded sensor technology (the internet of things)

Extremely Important Very Important Top 2 Box

CHALLENGE #4:

Technology Trends

Source: NCMM, Middle Market Manufacturing, 2018

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CHALLENGE #5:

Talent, Talent, Talent

Source: NCMM, Middle Market Manufacturing, 2018 20% 13% 7% 11% 12% 6% 4% 64% 46% 40% 39% 37% 37% 22% Finding workers with the technical skills needed Selecting and implementing health coverage for workers Implementing automation in the manufacturing process Finding workers with basic vocational skills Finding workers who meet basic requirements (e.g. drug free, physically able to do the job) Dealing with an aging workforce Fostering a safe work environment 23% 13% 9% 12% 22% 7% 6% 76% 51% 42% 45% 52% 44% 23% ALL 10%+ GROWTH Extremely / Very Challenging

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Low Medium High Jobs created in the United States between 2010-2016, by digital score Only 1/3 of U.S. jobs created since 2010 are attainable for workers with low digital skills

CHALLENGE #5:

Digital Skills Are in Highest Demand

Source: Brookings

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The Impact of Technology Is Overwhelmingly Positive

Lower Productivity Higher Productivity Less Customization More Customization Less Need for Capital Greater Need for Capital Less Security Risks Higher Security Risks Manufacture Smaller Batches Manufacture Larger Batches Smaller Factories Larger Factories Smaller Workforce Larger Workforce

4% 10% 12% 22% 22% 14% 27% 76% 55% 50% 46% 42% 32% 28% Source: NCMM, Middle Market Manufacturing, 2018

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Manufacturers Are Exposed to a Wider Variety of Risks

Playing a more important role in the supply chain leads

to greater responsibility

The geopolitical climate is increasingly important
Digitization opens new doors
Adding new services leads to continuing responsibility
IT and operations systems must become more

integrated

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What High-Growth Manufacturers Are Doing

Achieving an ideal mix of international vs. domestic sales (less than 25% of revenue

international)

Incorporating strong relationship management mindsets and tools across the organization
Offering higher levels of value-added services; these companies experience 9.7% average

revenue growth vs. 7.7% for the entire sample – services component of these businesses growing at 17% of annual sales

Implementing a variety of technology and advanced manufacturing – cybersecurity, APC,

robotics, additive manufacturing, and IOT devices/wearables

Tackling the workforce challenges with stronger employer brands and value propositions,

stronger HR and recruiting capabilities, and leveraging public-private systems

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middlemarketcenter.org

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REFRESHMENT BREAK

We will reconvene in 15 minutes

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TECHNOLOGY TRENDS IN MANUFACTURING

Jerry Foster Chief Technology Officer Plex Systems Anurag Garg VP, Analytics & IoT Plex Systems

SLIDE 49

WHY ARE WE HERE?

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THE INDUSTRIAL REVOLUTION

4th

Cyber-Physical

3rd

Automation

2nd

Electricity

1st

Steam

People Machines Products Algorithms Software Technology

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INDUSTRY 4.0

We Make Stuff!

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Jerry, I don’t care what you do, but you better not bring down that press. If it’s not going up and down, if we’re not making parts, we’ll go out of business.”

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INDUSTRY 4.0

Ubiquitous Connectivity Analytics Big Data Additive Printing Augmented Reality Robotic Process Automation (RPA) Industrial Internet

f Things

Cloud Generative Design Automation & Robotics Cognitive Computing Artificial Intelligence Blockchain

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CONVERGENCE OF CLOUD, DATA, AND COMPUTE.

WHY IS INDUSTRY 4.0 A THING NOW?

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INDUSTRY 4.0

Ubiquitous Connectivity Analytics Big Data Additive Printing Augmented Reality Robotic Process Automation (RPA) Industrial Internet

f Things

Cloud Generative Design Automation & Robotics Cognitive Computing Artificial Intelligence Blockchain

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ALWAYS THINK IN TERMS OF “BUSINESS VALUE”

VALUE DRIVERS

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FOUR BROAD TECHNOLOGY TRENDS IN MANUFACTURING

Automation / Robotics Connecting More Things Leveraging Data Additive Manufacturing

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Maybe the problem with all this new technology emerging on the scene is that there is too much: too much data, too many decisions to make, too many vendors to choose from, too many case studies to read. And there’s never enough time.

- John Hitch, IndustryWeek

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NOW THAT WE UNDERSTAND THE TECHNOLOGY TRENDS… … HOW DO WE LEVERAGE TECHNOLOGY TO SUCCEED?

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BACK TO THE BASICS

PEOPLE PROCESS TECHNOLOGY

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ON TECHNOLOGY:

START SMALL. PICK ONE PROBLEM. ITERATE. FAIL FAST

Predict and pre-empt downtime Accurately record production Provide detailed genealogy for customers Monitor suppliers for disruptions Correlate quality w/ causality Piece-level quality monitoring Timely, accurate data for decision-making Supply Chain traceability

SLIDE 68 Establish infrastructure for data collection Actively collect and analyze performance data Use data to guide design and functionality

MAKING A SMART MACHINE

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ON PEOPLE:

RECOGNIZE THE EVOLVING DEMOGRAPHICS

40% of the manufacturing workforce will retire in the next 10 years

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Manufacturing’s Challenge with Millennials

Reasons that people wouldn’t encourage a child to pursue a career in manufacturing Industry preference among people ages 19 – 33 if they were starting their careers today Millennials who said a sense of purpose is Part of the reason they chose their current employer

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(Except for Manufacturing)

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Solving the “People” Problem

The challenges of IIoT are NOT TECHNOLOGICAL. They are BEHAVIORAL. Getting manufacturers and heavy industry to the ideal state of smart manufacturing is a problem to be overcome through HABITS; encouraged by GOOD DESIGN, INCREMENTALISM, and TRAINING.

SLIDE 74

ON PROCESS: BUILD THE RIGHT HABITS!

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CASE STUDY: WHEN THE HABITS DON’T EXIST

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When performance is measured, performance

improves. When performance is

measured and reported back, the rate of improvement accelerates.

- Pearson’s Law

SLIDE 77 100 200 300 400 500 600 700 5/21/2017 5/23/2017 5/25/2017 5/27/2017 5/29/2017 5/31/2017 6/2/2017 6/4/2017 6/6/2017 6/8/2017 6/10/2017

Speed [rpm] Date

Spindle Speed

Average Max Speed = 400 rpm Speed exceeded 150% of max limit 50 100 150 200 250 5/21/2017 5/23/2017 5/25/2017 5/27/2017 5/29/2017 5/31/2017 6/2/2017 6/4/2017 6/6/2017 6/8/2017 6/10/2017

Load [%] Date

Spindle Load

Max Load = 100% 10 times load exceeded 100%

CASE STUDY: TRIGGERS, ROUTINES, AND REWARDS

SLIDE 78

WHEN IT ALL COMES TOGETHER Lessons from other industries

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CONTACT INFORMATION

Jerry Foster Chief Technology Officer Plex Systems jfos@plex.com Anurag Garg VP, Analytics & IoT Plex Systems agarg@plex.com

SLIDE 83

TAKING INNOVATION TO THE NEXT LEVEL

Jeff Simek General manager operations RCO Engineering and RCO Aerospace jeff.simek@rcoeng.com Eric Haiss Executive vice president Continental Structural Plastics Eric.Haiss@cspplastics.com

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TAKING INNOVATION TO THE NEXT LEVEL

Jeff Simek General manager operations RCO Engineering and RCO Aerospace jeff.simek@rcoeng.com Eric Haiss Executive vice president Continental Structural Plastics Eric.Haiss@cspplastics.com

SLIDE 86 UHY Innovation Conference October 23, 2019

Operational excellence secures the present – Innovation excellence secures the future

Robert Niemiec Managing Partner, Twisthink

SLIDE 87 UHY Innovation Conference October 23, 2019

Chapter 3

Digital Opportunity

Chapter 4

Take Action

Chapter 2

A Proven Process

Chapter 1

Why Innovate

SLIDE 88 UHY Innovation Conference October 23, 2019

Chapter 1

Why Innovate

SLIDE 89 UHY Innovation Conference October 23, 2019

Operational excellence secures the present – Innovation excellence secures the future.

Roger Milliken

“ ”

SLIDE 90 UHY Innovation Conference October 23, 2019

Only 9% of all US public and private companies are doing any kind of serious innovation.

Harvard Business Review

Innovation Opportunity

INNOVATION

Embrace Difficult

9%

COMMODITY

Fear Easy

SLIDE 91 UHY Innovation Conference October 23, 2019

Chapter 2

A Proven Process

SLIDE 92 UHY Innovation Conference October 23, 2019

To build a customer driven product sequence in a predictable and stable manner at the lowest total cost, highest quality, and the shortest lead time with the best safety. START TOOLS/METHODS (100+) PHILOSOPHY

STABLE & STANDARD PROCESSES INSTATION QUALITY WASTE REDUCTION CONTINUOUS IMPROVEMENT Standardized Work Level Production Flow Quick Changeover Error Proofing Pull System In Station Quality Problem Solving Go-and-see Visual Factory

Lean Manufacturing Process

SLIDE 93 UHY Innovation Conference October 23, 2019

Human-Centered Design (HCD) is a mindset and a strategic process for problem solving that places the users at the heart of the development efforts. START TOOLS/METHODS (100+) PHILOSOPHY

DISCOVER ANALYZE CREATE DEVELOP

Human-Centered Design Process

Framing workshop Knowledge transfer Contextual site tours Visual research tool Journey maps Era mapping 2D/3D visualization End user co-creation Business model canvas Models/prototypes Stakeholder evaluation Initial business plan

SLIDE 94 UHY Innovation Conference October 23, 2019 DISCOVER INNOVATION PRODUCT DEVELOPMENT CREATE DESIGN VALIDATE ANALYZE DEVELOP REFINE LAUNCH

Innovation and Product Development Process

SLIDE 95 UHY Innovation Conference October 23, 2019

The How

User Experience Delivery Method

2 TECHNICAL FEASIBILITY

The Value

User Experience Value

The What

User Experience Design

3 Lenses of HCD 1 USER DESIRABILITY 3 BUSINESS VIABILITY

SLIDE 96 UHY Innovation Conference October 23, 2019 Technical Feasibility Business Viability Usability + Desirability

Innovation Sweet Spot

STARTUP COMPANIES ESTABLISHED COMPANIES SMART COMPANIES

Understand their customers and their needs, then align new technology to support those needs, while creating a new business model. Intellectual property tends to get all the attention. “Hammer looking for a nail” scenario. Business viability is the dominate force.

SLIDE 97 UHY Innovation Conference October 23, 2019

Design centric companies show a 211% return

ver the S&P 500.

Design Management Institute

“ ”

211% S&P

SLIDE 98 UHY Innovation Conference October 23, 2019

Chapter 3

Digital Opportunity

SLIDE 99 UHY Innovation Conference October 23, 2019

The global number

f IoT-connected devices

is projected to reach 43 BILLION BY 2023, 3x the amount from 2018.

McKinsey

“ ”

The global number

f connected devices is

projected to reach

43 BILLION BY 2023,

3x the amount from 2018.

McKinsey

“ ”

SLIDE 100 UHY Innovation Conference October 23, 2019

IoT Overview

The internet of things (IoT) is a system of physical objects embedded with technology for the purpose of gathering insights to enhance user experiences. USER EXPERIENCE

Dashboards
Controls
Alerts

THE CLOUD

Database
Scalable
Storage
Security
API

EDGE DEVICES

Analytics at the Edge

Sensor
Analytic
Micro Insight

SLIDE 101 UHY Innovation Conference October 23, 2019

Flexco understood the primary concern of their customers is to prevent belt conveyer failure or unexpected downtime at their mining facilities. THE OPPORTUNITY They saw an opportunity using IOT to shift from reactive maintenance to predictive maintenance, and needed a team of technology partners to help them do it.

Case Study

SLIDE 102 UHY Innovation Conference October 23, 2019

Discover + Analyze

SLIDE 103 UHY Innovation Conference October 23, 2019

Discover + Analyze

SLIDE 104 UHY Innovation Conference October 23, 2019

Discover + Analyze

SALES ENGINEERING SERVICE TEAM MAINTENANCE CREW OPERATIONS MAINTENANCE CREW SAFETY INSPECTOR SALES CUSTOMER SUPPORT MAINTENANCE CREW FLEXCO DISTRIBUTOR MINING COMPANY

SLIDE 105 UHY Innovation Conference October 23, 2019 USER EXPERIENCE CLOUD EDGE DEVICE

Create + Develop

SLIDE 106 UHY Innovation Conference October 23, 2019

Chapter 4

Take Action

SLIDE 107 UHY Innovation Conference October 23, 2019

A vibrant, growing company makes discoveries that help it get into new businesses or markets, or help it stay ahead of competitors; it continually reinvents itself.

Roger Martin, The Design of Business

“ ”

SLIDE 108 UHY Innovation Conference October 23, 2019

SLIDE 109 UHY Innovation Conference October 23, 2019

Download

Download our innovation guide to learn more about HCD and Digital Transformation. twisthink.com/UHY

Visit

Come to Twisthink to see what innovations

ur team is exploring.

Contact

Schedule a call to talk with our team about “what’s next” for your business. Email: robert@twisthink.com

SLIDE 110 UHY Innovation Conference October 23, 2019

Thank you

Thank you.

CONNECT WITH US AT TWISTHINK.COM

SLIDE 111

ATTENDEE CHECKLIST

 CPE materials  Questions  Keep a look out for a post-event email

Download a copy of the presentation
Link to view the video
Feedback

 Pre-register for 2020

SLIDE 112

CONCLUDING THOUGHTS

Thank you!