Automotive Vertical Update - QAD Inc · Design/Tech Companies vs. Manufacturing Companies....

Automotive Vertical UpdateTom Roberts, QADTerry Onica, QAD

Safe HarborAutomotive Vertical Update

2

This presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to significant risks and uncertainties. Actual results and events may differ materially from those set forth in these forward-looking statements. These risks and uncertainties are detailed in QAD’s SEC filings, including its latest Annual Report on Form 10-K and in particular the section titled “Risk Factors” therein and other periodic reports subsequently filed by QAD with the Securities and Exchange Commission.

This presentation contains references to certain financial measures that have been adjusted to exclude certain expenses and other specified items. These financial measures differ from comparable measures calculated and presented in accordance with accountingprinciples generally accepted in the United States of America (“GAAP”) in that they exclude unusual or non-recurring charges, losses, credits or gains. Management believes that financial presentations excluding the impact of these items provide useful supplemental information that is important to a proper understanding of the Company’s results. These presentations should not be viewed as a substitute for results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP financial measures presented by other companies.

This presentation is intended to outline QAD’s general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, functional capabilities, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functional capabilities described for QAD’s products remains at the sole discretion of QAD.

QAD undertakes no obligation to update forward-looking statements.

IntroductionAutomotive Vertical Update

3

Tom RobertsVP- Automotive

QAD

Terry OnicaDirector, Automotive

QAD

AgendaAutomotive Vertical Update

• Driving Disruptive Innovation- Where Did I Go Wrong? - Top Disruptors

• The Problem with Disparate Systems- Multiple ERPs- Integration

• The Case for Adaptive ERP

• Summary: Own the Disruption

4

Driving Disruptive InnovationAutomotive Vertical Update

5

Where Did I Go Wrong?Automotive Vertical Update

6

Where Did I Go Wrong?Automotive Vertical Update

7

The All Important “S” – Existing or Exiting?Automotive Vertical Update

8

By 2027, the average company lifespan on

the S&P 500 will be less than 12 years

Will Your Company Be Here in 10 Years?Automotive Vertical Update

“My company is ready for disruption”

“We will deal with disruption when it gets here”

“We will follow the lead of the customer”

“We don’t have a plan”

9

We Will Not Go QuietlyAutomotive Vertical Update

• Exploit Advanced Technology

• Squeeze Out Waste and Cost

• Execute M&A Initiatives with Speed and Intent

10

Top DisruptorsAutomotive Vertical Update

11

MAKE TO ORDER AT SCALE

DIGITAL TRANSFORMATIONOF MANUFACTURING

ANYTHING AS A SERVICE (XAAS)

Additive Manufacturing – The World is Changing

Airbus

Adidas

US Navy

12

Automotive Vertical Update

Additive Manufacturing Brings Unique OpportunityAutomotive Vertical Update

13

Expect the lines between manufacturing verticals to blur

Imagine the same printer printing a door panel, then a seat, then a vehicle front grille – this is not far away, and it will blur the lines between manufacturing

company divisions and change the manufacturing plant footprint

Design/Tech Companies vs. Manufacturing CompaniesAutomotive Vertical Update

Follow the money…• Apple does not manufacture mobile phones – FoxConn• Cruise Automation is worth more than the rest

of GM combined• Ford and Adidas are working with Carbon, Inc

on 3D Printing• Companies want the ongoing subscription revenue

from XaaS

14

Will there be a larger movement toward “Build where consumed?”Will Tier Ones Exist or Exit? The all important “S”All companies say they are tech companies, but…

XaaS3D printed HVAC lever arm for an

older model Ford Focus

Optimized, Standardized and Put on RailsAutomotive Vertical Update

15

Could you manage those high frequency production changes enabled by additive manufacturing in your current process scenario? Manual? Excel? Direct Integration?

BOM / Routings / Bill of Process

8 ERPs

PLM

Best Practice in AutomotiveBOM Integration - PLM to ERP 8x Cost

What about potentially hundreds of dealers that now not only order parts, but build them as well?

Aftermarket?

Auto parts

Dealers?

The Problem with Disparate SystemsAutomotive Vertical Update

16

Multiple ERPs are a Barrier to Absorbing DisruptionAutomotive Vertical Update

Today’s companies have

• Significant levels of disparate processes and data

• Siloed manufacturing divisions• Widening manufacturing skills gap • High frequency of on-premise applications• Expensive, aging, slowly deployed

physical IT assets

17

HOWDO YOU

CONSOLIDATE

?

CPO

CommodityDirector - Indirect

Buyer

Buyer

Buyer

Buyer

Buyer

Buyer

Operational Director

Buyer

Buyer

Buyer

Buyer

Buyer

Buyer

Operational Director

Buyer

Buyer

Buyer

Buyer

Buyer

Buyer

NA

How Did We Get Here? Multiple ERPs…Automotive Vertical Update

18

EU

EU2

AP

Company A

1

2

3

4

Company A merges with Company B, with immediate blind task reduction in overall spend and FTEs without a planned process roadmap.

40% miss synergy targets…

CPO

CommodityDirector - Indirect

Buyer

Buyer

Buyer

Buyer

Buyer

Buyer

Operational Director

Buyer

Buyer

Buyer

Buyer

Buyer

Buyer

Operational Director

Buyer

Buyer

Buyer

Buyer

Buyer

Buyer

Company B

6

7

8

5

9

NA

EU

AP

19

Single ERP Processes and Shared Services Is the Key

FOR EXAMPLE

Companies that are supported by flexible architecture and a single ERP capture a broader range of synergies at a faster pace - McKinsey

10

Ask three people to log into four different websites and order the

same 10 productsLog into a website and

order 10 items

10 or

• Automotive Vertical Update

Disparate Systems Drive Cost in Industry 4.0Automotive Vertical Update

Robotic Process Automation (RPA) automates business processes through the linking of screens and systems through scripting and screen recordings.

Each unique system, process, and data set requires its own scripting activity

ERP 1ERP 2ERP 3ERP 4

Automated Operations Deck

RPA Script must be created 4 separate times for each ERP –multiplying cost and

time by 4

A single ERP strategy only requires a single point of change to

introduce innovation

RPA

Automated Operations Deck

Operations Deck – Machine Up Time, Scrap Postings, Budget to Actual, Spend Aggregation, Sales, AR/AP, DSO, etc.

Its Not Just Additive Manufacturing and RPAAutomotive Vertical Update

21

ECC 6.0 EB2

EE 2016

EE 2016

ECC 6.0 EB2

EE 2016

EE 2016

ECC 6.0 EB2 Fujitsu

EE 2016

ECC 6.0 EB2 Fujitsu

EE 2016

ECC 6.0 EB2 Fujitsu

QAD 9.0

4.7 EB2 BaanQAD 9.0

4.7 EB2Oracle

/1CQAD 9.0

ACME Inc. 28 sites globally

1 2 3

4

5

7

8

6

Each Process, Code set, and Unique Master Data Element Requires Investment and Integration of EACH

I4.0 Technology

ACME Corp Legacy System LandscapeAutomotive Vertical Update

22

ACME Application ListAutomotive Vertical Update

• ERP• Sales / CRM• Shop Floor• Sequencing• EDI • PLM/PDM• Design CAD/CATIA• Financial Consolidation• Collaboration/Office Tools• Data Storage• Human Capital Management• Recruiting• Performance Management• Learning Management• Time and Attendance• Scheduling

• PPM• Process Flow Software• Business Intelligence• Asset Management• Travel and Expense• Enterprise Integration• Testing Management• Quality Management• Trade Management • Transportation Management• Information Security• Badge Readers• Volume Forecasting• E-Procurement• Virtualized Desktop• Plant Maintenance

23

What Acme Really Looks LikeAutomotive Vertical Update

24

1 2 3

5 76

4

8

Scenarios

• Organization and Headcount

• Customer Changes

• Adapting I4.0 Technologies

NONE OF THIS WILL SHOW UP IN A CURSORY BUSINESS CASE

What projects have you executed in the last 3-5 years?

The Case for Adaptive ERPAutomotive Vertical Update

25

The Rise of Cloud and 5GAutomotive Industry Update

26

• Manufacturing Plants may no longer need physical network gear or servers

• May reduce or remove (?) full time plant IT employees

• Companies that have moved to cloud operations and SD-WAN will be more easily able to benefit from the technology

• Companies that can evolve their system landscape with speed in the next 5 years will be disruptors

• 5G will clearly drive capital reductions and increased EBITDA

“By placing sensors that use 5G directly on the components or tools, Ericsson was able to detect faults in real time and reduce the error rate to 15%. [from 25%] The average production cost of a blade was reduced by 3,600 EUR ($4,075).” CNN

But, What If…?Automotive Vertical Update

27

QAD is Driving Disruptive InnovationAutomotive Vertical Update

• Speed to Benefit- Easy On Boarding Methodology- Business Process Workbook tools- Augmented Resources- Proven Speed

• Purpose Built- Automotive Best Practices (MMOG/LE)- Adaptability

• Commitment to Customer

28

QAD Adaptive ERPAutomotive Vertical Update

• Globally Enabled, Financially Localized ERP System as a service

• No Data Centers/Servers needed for ERP• No Aging Versions and Maintenance• No DBAs - Oracle/SQLServer/Progress/etc.• No Technical Designers/Coders• No Release Managers• No Functional Analysts, Configurators• Fewer Supplier Relationships and Contracts• Advantages of Economy of Scale• Simplified payment/commerce

connections• New technology releases proliferate

quickly and completely

29

Channel Islands UX

FUTURE

Data Lake

QAD Cloud ERP 2016

QAD Cloud ERP 2019

QAD Cloud ERP 2019

QAD Cloud ERP 2019

QAD Cloud ERP 2019

QAD Cloud ERP 2019

QAD Cloud ERP 2019

QAD Cloud ERP 2016

QAD Cloud ERP 2019

QAD Cloud ERP 2019

QAD Cloud ERP 2019

QAD Cloud ERP 2019

QAD Cloud ERP 2019

QAD Cloud ERP 2019

QAD Cloud ERP 2016

QAD Cloud ERP 2019

QAD Cloud ERP 2019

QAD Cloud ERP 2019

QAD Cloud ERP 2019

QAD Cloud ERP 2019

QAD Cloud ERP 2019

QAD Cloud ERP 2016

QAD Cloud ERP 2019

QAD Cloud ERP 2019

QAD Cloud ERP 2019

QAD Cloud ERP 2019

QAD Cloud ERP 2019

QAD Cloud ERP 2019

Summary: Own the DisruptionAutomotive Vertical Update

The Best Practices for Absorbing Technological Change• Single Code set/Process Template/Master Data• High System Adaptability • Cloud• Embedded Industry 4.0 technologies • Strategic Platform for M&A• Swiftly acting today to absorb the change of tomorrow

30

Companies moving now to transform their operations have a massive competitive and cost advantage over the unprepared

Next StepsAutomotive Vertical Update

• Visit the Automotive page of QAD.com• Attend Related Explore Sessions• Visit the Demo Center

31

Highlighted SessionsAutomotive Vertical Update

32

A Hands-On Digital Transformation Journey

Raman Mehta, VisteonTuesday, 3:00 PM-4:00 PMRhythms 2/3

ERP Moves to Real Time via Integrated

Production Execution

Glenn GraneyTuesday, 4:15 PM-5:15 PMWaterbury Ballroom

Yanfeng’sImplementation of QAD

Automation Solutions and Integration

Lucian Manolache, YanfengAutomotive Interiors &Waseemuddin Safiri, QADWed, 3:00 PM-4:00 PM, Rhythms 2/3

Highlighted SessionsAutomotive Vertical Update

33

Drive Customer Satisfaction and

Profitability through the Customer Lifecycle

Guthrie, Andrews, Fitchett, QADWednesday, 3:00 PM-4:00 PMWaterbury Ballroom

Yanfeng’s Rapid Upgrade to EE and

Move to QAD Cloud

Mike Silletti, YanfengAutomotive Interiors Wednesday 4:15 PM-5:15 pmRhythms 2/3

Procure to Pay - A Day in the Life

Marta Losada and Eladi Minguez, QADThursday, 9:45 AM-10:45 AMWaterbury Ballroom

Question and AnswerAutomotive Vertical Update

34

Tom RobertsVP- Automotive

QAD

Terry OnicaDirector, Automotive

QAD

Contact InformationAutomotive Vertical Update

• Tom Roberts, t6r@qad.com• Terry Onica, tjo@qad.com

35

Thank You!Automotive Vertical Update

36

www.qad.com©QAD Inc. 2019