Danny Windham

1
ADTRANThe Network Access Company
2
Telecommunications

• Multi-billion dollar industry
• Voice and digital data transmission
• Carrier and End User

3
Where we are today

• Product portfolio - 1,400
• 16 year profitability history
• 2004 revenue - 454 million
• 2004 units produced - 2.3 million
• 1,674 employees
• Huntsville, Alabama

4
Disruptive Market Strategy

• Identify proven, high-volume market opportunities
  
• Out-engineer the competition
• Re-engineer/cost-reduce products
• Drive for market share leadership

5
Solid Customer Base
Carrier Global
Enterprise
6
The Winning Edge

• Engineering innovation
• In-house silicon development
• Instrumental in industry standards development
• Proven engineer development program
• Culture of cost engineering
• Released 241 new products in 2003
• Manufacturing efficiencies
• Advanced supply chain management
• High-volume production
• Superior customer support
• Attentive pre- and post-sales technical support
• Comprehensive training programs
• Supportive installation and maintenance programs

7
Supply Chain Overview

• 200 Employees
• Planning
• Purchasing
• Transportation / Logistics
• Manufacturing / Outsourcing
• Raw Material / Finished Goods Warehouses
• Finance
• Systems

8
Supply Chain Mission Strategy
Charter
To Be A World Class Telecommunications Supply
Chain Focused On Customer Service, Quality And
Financial Performance
Mission
Our Mission Is To Develop And Implement Best In
Class Supply Chain Processes and Strategies
9
OUTSOURCE MANAGEMENT
10
OUTSOURCING CONSIDERATIONS

• Global Services Supply Chain
• Align Outsourcing Strategy with Corporate
  Strategy
• Define Scope
• Manufacturing
• Supply Chain Management / Logistics
• BPO
• Define Specific Objectives
• Tactical
• Reduce Operating Costs Reduce Capital Expense
  Demand Variability Management Supply Chain
  Optimization
• Strategic
• Leverage CM Core-Competency Improve Internal
  Business Focus Shared Risks Supply Chain
  Leverage Global Footprint Benefits DF Model

11
OUTSOURCING CONSIDERATIONS

• Service Provider Selection
• Considerations
• Global Footprint Process Maturity Sectors
  Serviced Scope of Services Certification /
  Industry Specifics Process Controls IT- System
  Capabilities, Integration Opportunities Supply
  Chain - Organization, Annual Spend, Processes
• Partnership Model
• Drives Best Long-Term ROI
• Involvement in business goals and development of
  associated strategy
• Improves Risk Management
• Contingency planning
• Associated Communication Flow Process
• Robust data exchange
• Focused resources
• Supply Chain Initiatives
• Cost reduction
• Enhance flexibility / Reduce liability

12
ADTRAN GLOBAL MANUFACTURING
PARTNERING FOR SUCCESS
13
Supply Chain
Supply Chain Logistics
MIGRANE
14
Negative Impacts

• Asia Trade Lane Capacity-Congestion
• Supply Chain Complexity
• Security Regulations-Initiatives
• Carriers Market
• U.S. Logistics Infrastructure

15
Offensive Logistics Strategy

• Leveraging your transportation spend
• Plan what-if scenarios with executive
  management
• Partner only with 1-2 major service providers
• Take control of your inbound freight spend

16
Offensive Logistics Strategy

• Offer incentive based contracts
• Share capacity forecast with primary carriers,
  daily, weekly, monthly
• Plan alternate ocean methods to intercept or
  transfer containers on the west coast

17
Offensive Logistics Strategy

• All water routes through the Panama Canal to East
  Coast Ports
• Negotiate flat all-in rates to include
  surcharges, with tiered pricing negotiated in
  advance for Peak
• Set clearly defined performance expectations
  with carriers

18
Offensive Logistics Strategy

• Maintain high corporate visibility at VP and CEO
  level
• Campus visit and supply chain operations tour
• Establish penalties for damaged, late, bumped
  freight