November 17, 2010

Session Agenda

Introductions

Is the OEM really the OEM? Jeff Hansen

Sourcing Options Jeff Hansen

What has gone wrong? Jeff Hansen

Making inventory work for you. Jeff Hansen

Partnering Solutions Jeff Hansen

Industry Challenges Ray Melleady

VMI as a Solution Ray Melleady

Supply Chain Silos Ray Melleady

The Real Cost of Inventory Ray Melleady

Open Forum – Questions & Discussion All

Uni-Select By the Numbers

An Industry Leader…40+ Years of Continuous Growth

• 2009 Sales $1,410M

• 40 Distribution Centers

• 250 Company Stores

• 3,500 Customer Locations

• $400M Available Inventory

• 350,000 products

• 4,800 Employees

Is The OEM truly the OEM

Parts Strategy: OEM and Aftermarket…Same or Different?

• Auto, Truck & Bus Manufacturers Core Competence

• Who are the Manufacturers…

• If this is True….

• What Drives customers back to OEM?

• Selecting the proper Products & Distribution

• Opportunity for Savings

Sourcing...You Have Options

Sourcing Parts: You Have Options…

• What are your Objectives & Expectations

• Advantages & Disadvantages of:

– Single Source Supplier

– Multitude of Suppliers

– Buying on Price

– Buying on Delivery

• What’s the Best Choice?

Inventory Management

• What Goes Wrong & Why

– Application Platforms

– Inventory Obscurity

– Inventory Obsolescence

– Part Proliferation

– Complex Cataloging

– Supplier Overload

– Systems Integration

Inventory Management

• Vehicle Tailored Parts Management

• Vendor Provided Inventory

• Parts Operation Outsourcing

– Controlled Operating Expenses

– Eliminate Inventory Burden & Responsibility

– Reduced Admin. & Transaction Expenses

– Controlled Personnel Costs

– Accountability & Efficiency

– Improved Facility & Tech. Productivity

– Systems Integration

Industry Challenges

Economic

Lead Times

Obsolete

Parts

Buses Down

Parts Availability

MoreInventory

More Risk

More Spares

More Space

Delivery lead times

Inventory levels

Value

SKU’s

Warehouse

Space

Obsolescence

Spare ratios

Availability

Bus down

Non productive

tech time

Symptom or Cause?

Inventory Optimization

Ordering Costs

Holding

Costs

Qeoq Order Quantity (Q)

Total Cost

Holding + ordering costs = total cost curve.

Find Qeoq inventory order point to minimize total costs.

Cost

Supply Chain Silos

Suppliers Warehouse –

Logistics

Tra

nsit S

tockro

om

Sub-

Assembly

DEMAND INFORMATION

DIRECT SUPPLY FROM SOURCE

Assembly

Why Vendor Managed

Inventory?

Just in Time or Just in

Case

Maximize Availability

Minimize Inventory

Availability SavingsRisk

ManagementInventory Reduction

A well structured VMI Program can mitigate Conflicting Objectives

Supply Chain Evolution

Transit relied on

suppliers who

increasingly failed to

keep sufficient stock

To improve availability

transits purchased deep

inventories “just in

case”

Neopart technology and

sourcing expertise

enables efficient access

to the best suppliers

Need Generated

Production

Large inventory Costs

Long Lead Times High Obsolescence Costs Result Less Inventory

Many Buses Down WFP Still large number of

buses down WFP

Better Bus Availability

Large amounts of Idle

Capital

Reduced Overall Costs

Supplier/ Bus OEM-Dependent

Era

“Just in Case”

Era

Supply Chain Era

Measuring Cost & Savings

Cost as a % of Total Inventory

Warehouse Expense 1-3%

Physical Handling 1-3%

Administration 3-6%

Cost of Money 4-6%

Obsolescence 6-12%

Cost of Parts 6-8%

Capital Utilization Rate 1-3%

Total Cost 22 – 41%

Source of Savings for VMI Programs

Warehouse Expense 1%

Physical Handling 1%

Administration 3%

Cost of Money 5%

Obsolescence 6%

Cost of Parts 6%

Capital Utilization Rate 1%

Savings Potential 23%

Estimated $ Savings with 5 million inventory

Warehouse Expense $50,000

Physical Handling $50,000

Administration $150,000

Cost of Money $250,000

Obsolescence $300,000

Cost of Parts $300,000

Capital Utilization Rate $50,000

Savings Potential $1,150,000

“For every dollar

of material we

consume, our

internal handling

costs amount to

an additional 18

cents.” –

NYMTA Jan.

2010

Organizational Overview

• NEOPART is a long established parts provider to the transit industry

• Management team with more than 100 years of experience

• Providing parts to more than 90% of US transit systems

• Superior knowledge of bus parts supply chain

• Global Sourcing on axle parts, disc brakes, slack adjusters

November 17, 2010