Proof Of Stock Reductiondue to Sincere Efforts from IT

DepartmentPrepared by:

Ghassan Kabbara

December 19th 2006

Auto Car Parts Trend of Stock Value since August 24th, 2005. (Excluding MC Stock)

COST OF STK

2000000

2020000

2040000

2060000

2080000

2100000

2120000

2140000

2160000

2180000

23/0

8/20

05

06/0

9/20

05

20/0

9/20

05

04/1

0/20

05

18/1

0/20

05

01/1

1/20

05

15/1

1/20

05

29/1

1/20

05

13/1

2/20

05

27/1

2/20

05

10/0

1/20

06

24/0

1/20

06

07/0

2/20

06

21/0

2/20

06

07/0

3/20

06

21/0

3/20

06

04/0

4/20

06

18/0

4/20

06

02/0

5/20

06

16/0

5/20

06

30/0

5/20

06

13/0

6/20

06

27/0

6/20

06

11/0

7/20

06

25/0

7/20

06

08/0

8/20

06

22/0

8/20

06

05/0

9/20

06

19/0

9/20

06

03/1

0/20

06

17/1

0/20

06

31/1

0/20

06

14/1

1/20

06

28/1

1/20

06

12/1

2/20

06

Stock Position is being daily monitored.

COST OF STK

2000000

2020000

2040000

2060000

2080000

2100000

2120000

2140000

2160000

2180000

23/08/

2005

06/09/

2005

20/09/

2005

04/10/

2005

18/10/

2005

01/11/

2005

15/11/

2005

29/11/

2005

13/12/

2005

27/12/

2005

10/01/

2006

24/01/

2006

07/02/

2006

21/02/

2006

07/03/

2006

21/03/

2006

04/04/

2006

18/04/

2006

02/05/

2006

16/05/

2006

30/05/

2006

13/06/

2006

27/06/

2006

11/07/

2006

25/07/

2006

08/08/

2006

22/08/

2006

05/09/

2006

19/09/

2006

03/10/

2006

17/10/

2006

31/10/

2006

14/11/

2006

28/11/

2006

12/12/

2006

• As of August 24th 2005, Stock Value was KD, 2,160,370

• As of December 17th 2006, Stock Value is KD 2,070,102

• Over Net All Stock has been reduced by

KD. 90,000

Net Stock Reduction Due to Efforts is KD 30,000

COST OF STK

2000000

2020000

2040000

2060000

2080000

2100000

2120000

2140000

2160000

2180000

23/0

8/20

05

06/0

9/20

05

20/0

9/20

05

04/1

0/20

05

18/1

0/20

05

01/1

1/20

05

15/1

1/20

05

29/1

1/20

05

13/1

2/20

05

27/1

2/20

05

10/0

1/20

06

24/0

1/20

06

07/0

2/20

06

21/0

2/20

06

07/0

3/20

06

21/0

3/20

06

04/0

4/20

06

18/0

4/20

06

02/0

5/20

06

16/0

5/20

06

30/0

5/20

06

13/0

6/20

06

27/0

6/20

06

11/0

7/20

06

25/0

7/20

06

08/0

8/20

06

22/0

8/20

06

05/0

9/20

06

19/0

9/20

06

03/1

0/20

06

17/1

0/20

06

31/1

0/20

06

14/1

1/20

06

28/1

1/20

06

12/1

2/20

06

How Stock Reduction was achieved?

• 1st Step: Reprogrammed Application to Cater for Maximum 3 months stock from previous 4 months stock. (This was introduced after a thorough analysis of the Inventory Data made available to me by the IT Dept. Involved many simulations prior to implementation. )

• 2nd Step: Changing Bi-monthly Shipment of Stock from supplier to Weekly Shipments for Replenishment Orders.

• 3rd Step: Introducing Controls in Application to minimize Panic Orders, Monitor and Eliminate Back Orders.

• 4th Step: Keeping a Close watch of the Stock (utilizing Utilities to provide me with alerts for abnormal events.)

Break Down of Stock for Auto Parts

Non Supplier Items

OILS, Batteries,Galco GAS

Local Purchase, UsedThose items that did not expereince an

Automated Stock Control.Local Purchases are made by Warehouse

Controlled StockThose items Selected from 2004 Databasethat have experienced over 12 months of

Stock Reduction

Controlled Stock • Total Items 50,000• The Stock has witnessed a Net Reduction of KD.90,000

but in reality and due to our efforts KD 30,000 is reduced.KD 60,000 due to LP Used Items(correction of Cost)

• It was only these controlled stock items that were being affected by the Controls. The Non-Supplier Items, we have no control off and neither the Local Purchases.

Controlled StockThose items Selected from 2004 Databasethat have experienced over 12 months of

Stock Reduction

True Affect of Controlled Stock Reduction

• Therefore in order to see the True affect of the Stock Reduction that has occurred due to the measures and controlled introduced one has to Focus on those Controlled List.

• That is measure the outcome (Stock Reduction only for those controlled 49220 Line Items.)

Controlled StockThose items Selected from 2004 Databasethat have experienced over 12 months of

Stock Reduction

Visual of Controlled Stock Reduction Vs Total Stock Reduction

1,700,000

1,750,000

1,800,000

1,850,000

1,900,000

1,950,000

2,000,000

2,050,000

2,100,000

2,150,000

2,200,000

Controlled Stock 1,985,100 1,948,858 1,913,339 1,878,705 1,880,588 1,874,690

All Stock 2,158,058 2,117,002 2,109,810 2,094,602 2,089,481 2,077,102

21/08/05 31/12/05 31/07/06 30/09/06 13/11/06 18/12/06

Cumulative Stock ReductionMonths Vs Stock reduction

-

20,000

40,000

60,000

80,000

100,000

120,000

Cont Dec 36,241 71,760 106,395 104,511 110,410

All Stk Dec 41,056 48,248 63,456 68,577 80,956

4 11 13 15 16

Further Proof of Stock Reduction for the Controlled Items.

• We have taken all those Purchases and Sales at Cost for the controlled 49220 items. Clearly you can see that KD. 85,580 is being reduced.

• Please note that the Purchases are measured at last replacement Cost and Sales are measured at weighted average. Hence we are not really comparing apples-to-apples.

Why this KD 110,000 Reduction cannot be seen in Finance Reports.• The reason we cannot see this in our Financial Reports is simply

because in Finance Stock Values are not broken down and Auto Car Parts and MCPP Parts are all merged into one. Not to forget that Obsolete Stock Provisioning has been made in Finance Records.

• This is a well known Phenomena that arises between Parts Dept and Finance Dept. Each have their reporting structures to serve their purposes.

Summarizing …

• Efforts in the last 18 months have been dedicated to Spare Parts Inventory Management.

• The Challenge was that their was no capture of Relevant data that could aid me the introduction of the latest techniques in Ordering. Not to Forget the Supplier restrictions and interferences with our Orders.

• Relevant Information I am referring to is Measuring Lead Times of all Items, Capture of Residual Stock, Capture of Critical Data on items that are ordered Manually and for the Sake of Urgent Orders, etc…..

• Also not to forget that Local Purchases( Consumables also contaminate the stock position.)

• Recently Also the introduction of Items purchased on Whole Sale ( such as Oils, Batteries, Galco Gas, etc..). These items are also beyond my control.

Thank You

• All Data Sources are available to our auditors to double confirm the Figures that I have referred to in this presentation.