The document presents Tavant Technologies' approach to supplier cost recovery, focusing on key aspects like supply agreements, recovery logistics, and a communication strategy for effective claims processing. It emphasizes the importance of robust contractual obligations and outlines a systematic recovery process that incorporates technology for tracking and improvement. Key takeaways include the necessity of strong supply agreements and the benefits of a packaged warranty system for managing logistics.

1. > Supplier Cost Recovery
Presented By Tavant Technologies at The
Warranty Chain Management Conference 2013
PEOPLE. PASSION. EXCELLENCE.

2. Supplier Cost Recovery Topics
> Overview of Products and Purchased Parts
> Supply Agreements
> Logistics of the Recovery Process
> Communication Strategy
> Continuous Improvement/Issues Resolution
> Recovery Application, Process and Road Map
> Lessons Learned
Tavant Proprietary & Confidential

3. Ingersoll-Rand Products
> Air Compressors (3.7HP – 2,500HP)
— Small Reciprocating
— Rotary Oil-free & Contact-Cooled
— Centrifugal
— PET Blow Molding
— Controls and Automation
Tavant Proprietary & Confidential

4. Ingersoll-Rand Purchased Parts
> Controllers
> Coolers
> Drives
> Fans
> Hoses and Piping
> Motors
> Pressure Vessels and Tanks
> Relays
> Starters
> Transducers
> Transformers
Tavant Proprietary & Confidential

5. Supply Agreements/Contracts
> Most Critical Component of Cost Recovery
— Recovery is limited to contractual obligations
— Partnership with Commodities Management
• “Price is King”
• Warranty Cost Recovery T&C’s must be “Queen”
• Robust “Boiler Plate” Supplier Cost Recovery T&C’s
– Part Cost
– Labor Costs
– Travel Costs
– Freight and Shipping Costs
– Other Incidentals Costs
• A $10 part can create $100K’s in annual warranty costs
– Minimal Recovery if only Part Cost is Covered
Tavant Proprietary & Confidential

6. Recovery Process Logistics
> Requesting Return of Parts from Customers
— Tracking of incoming shipments
> Accepting or Rejecting Returned Parts
> Associating Parts and Generating a Claim
— A part may have multiple suppliers
— A Supplier may have multiple contracts
> Obtaining Supplier RGA’s
— Tracking Shipments to Suppliers
> Supplier Approval or Denial of claims
> Payment/Crediting of Claims
> Closure of Claims
Tavant Proprietary & Confidential

7. Communication Strategy
> Conference Calls with Top 20 Suppliers by $
— Weekly/Bi-weekly based on outstanding claims
• Cross-functional participation for key suppliers
– Technical Service
– Warranty Administration
– Supplier Quality
– Product/Life Cycle Engineering
— Ad hoc calls with other suppliers as needed
— Enhanced Supplier Engagement
> Automated Claims Notification via E-mail
— Implemented 4Q12 as a Continuous Improvement Project
Tavant Proprietary & Confidential

8. CI and Issues Resolution
> Opportunities & Problems Submittal
— Web-based Ticket Entry and Tracking System
• Tavant Support System / JIRA
— Automated E-mail Notifications
— Weekly Conference Call to Review Open Tickets
— Enterprise-wide Review of CI Opportunities
— Testing of Changes Prior to Implementation
Tavant Proprietary & Confidential

9. Help Business In Improving Recovery
> Tightly coupled process between Warranty, Part Return and
Supplier Recovery
> Supplier portal
> Integrated data available for analysis
> Customized recovery reports
> Mass updates of Recovery claim attributes
> Easy to track and follow up
> Effective work flow
> Save recovery claim processing time
Tavant Proprietary & Confidential

10. Warranty & Recovery Process
Tavant Proprietary & Confidential

11. Recovery – Application Setup
> Manage Supplier
— Sync/Create supplier and map supplier to sectors
— Define Supplier site location, associate supplier parts
— Auto generated reports - Total claim#/claim$
> Manage Supplier Contract
— Recovery based on Causal/Removed part
— Supplier response/dispute period
— Compensation terms covered – derived/flat rate
— Minimum % acceptance claim amount to debit supplier
— Associate parts covered in contract(s)
> Supplier Recovery Admin
— Define Business Rule/Condition for Claim routing
— Define supplier groups
Tavant Proprietary & Confidential

12. Recovery Process in Application
> Initiation – Auto generation on warranty pay
— Consider Supplier contract & Part return status
— Claim routing based on Business Rules/conditions
— Auto/Manual assignment of Claim(s) to supplier(s)
> Recovery Claim Processing
— Supplier Recovery Processing team
• Well organized inboxes, review and send to supplier
• Track & act on claim till the closure, reopen supplier accepted. Ability to
send claim to warranty department
— Supplier: Mass update - Accept/Dispute claims
• Request/Receive part
> Recovery Part Return Management
— Track, Inspect and Ship part to Supplier
— Request dealer for part
Tavant Proprietary & Confidential

13. Product Improvement
> Product Road Map
— Inputs: Business users, Suppliers, Market Trend
— Execution: Define yearly road map
• Continuous update/prioritize based on inputs
• Warranty Council / Enterprise Change Council approval
— 2012 Road Map main features
• Customized views of inboxes & download to MS Excel
• Improved work flow / edit recovery claim until ready for debit
• Add/Share attachments to claim by all users
• Generate pdf / print of recovery claim
• Updated help for supplier recovery
• Way to track shipment with carrier/tracking number
Tavant Proprietary & Confidential

14. Lessons Learned & Takeaways
> Robust Supply Agreements are a “MUST”
> Packaged Warranty System is the Way to Go
— Cannot imagine the logistics of a manual system
> What Statute of Limitations on Warranty?
— Unless specified in the Supply Agreement
> There’s Always 50/50
— When you agree to disagree
> Leave no Stone Un-turned
— Warranty is not the only source of Cost Recovery
> If it is to be, It is up to us!
— The Calvary is not Coming
Tavant Proprietary & Confidential

15. > Thank You!
PEOPLE. PASSION. EXCELLENCE.