THE APPAREL LOGISTICS GROUP, LTD

OPERATIONS EXCELLENCE

October

2014

2

AGENDA

• Definition of Operations Excellence

• Principles of Operations Excellence

• Achievement of Operations Excellence

• Benefits of Operations Excellence

• Questions & Answers

Sustainable profitable

growth

World class operating systems and procedures

Margin target

Performance based culture The best people

The right customers and suppliers

To create common world class operating systems and procedures, facilitating sustainable, profitable growth

To create a performance based culture managed by a measurement structure that will enable continuous improvement

To create a development program that provides opportunity for our associates and attracts the people that we need for the future

To become the supplier of choice to our chosen customers and customer of choice for our chosen suppliers

Definition of Operations Excellence

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Operations Excellence is the application across the entire company of principles, systems and tools that drive continuous improvement that is sustainable in key performance metrics. Everyone “gets”it!

Definition of Operations Excellence(12) focus areas encompassing the full business spectrum that go beyond the traditional event-based model of improvement toward long-term change in the

organizational culture, whereby each associate sees the value to the customer. When associates see it, then senior management can focus on top line growth. Ops Excellence is not simply about cost reduction, but perpetual business growth.

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• Respect for all

• Lead with humility

• Pursue improvement

• Assure quality at the source

• Flow value

Principles of Operations Excellence

• Embrace strategy & systems

• Focus on process & metrics

• Think systemically

• Create constancy & consistency of purpose

• Create value

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Operations excellence helps to serve customers better by blending the core principles of other “failed” toolkits:

LEAN: systemic thinking

Six Sigma: constancy / consistency

Total Quality Management: quality

Business Process Reengineering: process

Kaizen: flow

Value Engineering: value

Principles of Operations Excellence

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• Define ideal principle based behaviors for everyone within the organization to follow

• Build commitment to those behaviors throughout the organization on a consistent basis

• Align & reward individual behaviors to permanently shape corporate culture

• Design systems to drive ideal behaviors

• Develop best tools to enable systems

• Ensure all associates actively deploy those tools to achieve continuous improvement in the scope of their daily work

Achievement of Operations Excellence

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Achievement of Operations Excellence

• It requires Great Leaders / Smart Managers / Empowered Associates who buy into the platform of Ops Excellence

• It requires anchoring the company’s mission, vision and values on the principles of Ops Excellence

• It requires a transformed culture whereby every single associate is engaged in the practice of Ops Excellence

• It requires an enterprise-wide practice of ideal behaviors based upon the correct principles of Ops Excellence

• It requires the coexistence of (3) three dimensions of Ops Excellence: principles (meaning) / systems (order) / tools (enabler)

• Drives Best Practices across enterprise

• Facilitates improvement initiatives already in progress

• Delivers improvement through efficiency and effectiveness• Efficiency is doing the thing right• Effectiveness is doing the right thing

• Establishes a culture of continuous improvement

• Attracts talented, highly-skilled people

• Great brand and strong market position

• Financial strength for investment & acquisition

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Benefits of Operations Excellence

10

Beyond margin improvement

• Integrating sustainability into all business practices

• Ensuring long-term business continuity

• Investing in people development

• Improving risk management / Reducing risk through controls & testing

• Achieving health and safety goals

• Becoming the employer of choice

Changing to a performance-based culture

Benefits of Operations Excellence

11

Benefits of Operations Excellence

12

Q & A

• Examples of US Operationally Excellent Companies: GM / Chevron / Koch Industries

• QUESTIONS / COMMENTS – related to the presentation

• FEEDBACK