ADTRAN:The Network Access Company

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Telecommunications

Multi-billion dollar industry

Voice and digital data transmission

Carrier and End User

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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

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“Disruptive” Market Strategy

Identify proven, high-volume market opportunities

Out-engineer the competition

Re-engineer/cost-reduce products

Drive for market share leadership

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Carrier Global Enterprise

Solid Customer Base

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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

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Supply Chain Overview

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

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Supply Chain Mission & Strategy

Charter

To Be A World Class Telecommunications Supply Chain Focused On Customer Service, Quality

And Financial Performance

MissionOur Mission Is To Develop And Implement “Best In

Class” Supply Chain Processes and Strategies

OUTSOURCE MANAGEMENT

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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

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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

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PARTNERING FOR SUCCESS

ADTRAN GLOBAL MANUFACTURING

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Supply Chain

MIGRANE

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Negative Impacts

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

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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

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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

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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

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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