‘Your supply chain in safe, expert hands’

Servicing an Economy in ShockA ‘resilient’ providers view

Agenda

About SerCom

Economic Factors

The Green Question

The SerCom Scenario

Survival & Growth

Summary

Q&A

About SerCom

DCC plc

Micro P

DCC Food &

BeverageDCC EnvironmentalDCC HealthcareDCC EnergyDCC SerCom

Gem

PiltonSharptext

DistrilogieSerCom

Solutions

SerCom Corporate : DCC Divisional Structure

SerCom Solutions: Founded in 1978 as a printer

Revenues of €156 m

160 staff

Key markets include: Technology/IT products, Retail & E-business

SerCom Corporate : Our Locations and Customers

SERCOM SOLUTIONSDUBLIN

IRELAND

Centralised IT, SCM, Finance

“The Engine”

SERCOM SOLUTIONSLIMERICK

IRELAND

Procurement, Manufacturing,

Assembly

SERCOM SOLUTIONSMSZCZONOW,

LODZ,

POLAND

Sourcing, QA, Assembly,

Procurement, Manufacturing

SERCOM SOLUTIONSSHENZHEN,

CHINA

Sourcing, QA, Expediting

SERCOM SOLUTIONS

Austin, Texas

Nashville, Tennessee

Winston-Salem, North Carolina

Chicago, Illinois

USA

Outsourced Planning & Procurement

Largest customers

10 years

4 years

10 years

7 years

10 years

6 years

2 years

SerCom Services

Supply Chain Activities

Product & Component Sourcing

Forecast & demand management

Warehousing & hubbing

Logistics

Quality assurance

Supplier consolidation & procurement

Consigned stock programs

Inventory and lead time reduction

Advanced planning

Services and Manufacturing Activities

Kitting, Assembly & Final pack-out

Co-Packing

CD-R

Drive Testing / Flashing

Component Swaps

Firmware Uploads

Failure Analysis

Electronic Sub-Assembly

Screening/Testing/ Rework

Fulfilment / pick and pack

Returns management

‘If it moves, tax it, if it keeps moving, regulate it, if it

stops moving, subsidize it’! Ronald Reagan

Economic Factors

Economic Factors

Barry Asmus

‘Economists are pessimists….who predicted 8 of the last 3 depressions’

Recession – views no longer really vary

ESRI’s August report, Alistair Darling’s ‘worst crisis in 60 years’

USA & Wall Street Banking crises & meltdowns

Eurozone under pressure – France & Italy struggling with deficits

Volatile oil prices – energy led inflation

Huge speculation about the direction / situation of major customers

Consumer spending – reduced and set to reduce further

Additional woes

Companies declare a strategy and then change direction

Conflicting overall strategies - significant levels of senior turnover

Ferocious competition and cost pressures

Companies cancelling new product launches

Market has become too competitive and the product is abandoned

Exchange rate changes has resulted in distributors losing points which

make the product sale unviable

Three year planning is an excellent disciplinary tool, but

the outcomes rarely match the second/third years in the plan

A solid / risk free plan can be drafted up…… by whom ?

‘I can remember when the air was clean and sex was dirty’.

George Burns

The Green Question

Consumers are paying attention ...

Only 10% of consumers in the US & UK

believe efforts by government and companies

to inform them about climate change

65% report they know “a fair amount”

to “a lot” about environmental issues

and problems, up from 49% in 2005

Source: GfK Roper Green Gauge Report 2007

… but they do read the package

72% of consumers say that product and

packaging labels are a source for

environmental information

Greenbacks

8%

Sprouts

34%

Grousers

14%

Apathetics

33%

True Blues

11%

All Signs Point to

Sustainability Being a Long-term Macro Trend

True Blues

31%

Greenbacks

10%Sprouts

26%

Grousers

15%

Apathetics

18%

Source: GfK Roper Green Gauge Report 2007

2005 2007

True Blue Greens: “Environmental Leaders”

Green Back Greens: “Look How Green I Am!”

Apathetics: “Isn’t Everyone Indifferent?”

Sprouts: “Environmental Fence Sitters – seek information”

Grousers: “One Person Can’t Make a Difference”

True blues

11%

True blues

31%

Current Landscape for Sustainability

Brand owners are launching and growing brands focused on sustainability, health and wellness

Wal-Mart’s new challenge to Packaging companies• Have 100 new sustainable products by April 2008 in the market

Pack Expo• Theme of show dedicated to sustainability

• Leveraging the show’s success - a best practice in representing the complete scale of supplier’s packaging platform

NITL Survey• 80% of respondents have stated that environmental/sustainability issues are likely

to become more critical

Economic

Environ-

mentSocial

Consumer Insights

Sourcing & Use

of Raw MaterialDesign and

Manufacturing

Transportation &

Delivery

Recovery Process

Return to Raw

Material

Sustainable Packaging Platform Strategy

Product Use / Retail

The SerCom Scenario

SerCom’s Key Markets

IT

MANUFACTURING

Sercoms

Revenue Potential

Off

Shoring

Off ShoringOutsourcing

StrategiesCost Pressure

Off

Shoring

Cost

Pressure

Outsource

Strategy

Off

Shoring

Cost

Pressure

SerCom’s Key Markets

CONSUMER

ELECTRONICS

Sercoms

Revenue Potential

Market

Reduction

Market

Reduction

Ferocious Cost

PressuresCompetition

Market

Reduction

Competition

Cost

Reduction

Market

Reduction

Competition

Anything positive to report ?

There is some time!

Changes in strategy – take time to implement

Volumes for this calendar year are (incredibly) up on last year

Companies under Immediate Pressure

As companies are resource constrained, they are more inclined to outsource

Inventory & pipeline management become even more critical – all assistance seems well received

SerCom’s own Readiness to absorb Change

Markets and product offerings have diversified and are portable

We have excellent backup of parent company if significant investment is required

SerCom’s Evolution

‘It has yet to be proven that intelligence has any survival value’

Arthur C. Clarke

Survival & Growth

2000- 2008

Wealth &

Income

Global Economy SSL Profit Trends

Macro Economics versus Profit Levels

Be Portable!

Cornerstone of our survival & growth strategy

Ability to deploy staff and systems quickly (record is 3 weeks from

business award to go live across three locations)

Enabled by our ERP system & in-house based IT support personnel

Ability for Irish based personnel to absorb significant levels of

international responsibilities – excellent efficiencies are achieved

We have set up in 8 new locations across 3 continents since 2004

NITL Survey:

51% of respondents stated they were going to make significant changes

to their operations within the year

Keep investing in IT!

SerCom has SAP since 1999 – currently on MySap ERP, future proofed to 2012

Our in-house experts can deploy SAP anywhere in three weeks

SAP manages all aspects of our business and is entirely real time

Portal access is available from anywhere

We can customise our processes to suit a wide range of businesses

We can integrate systems easily – currently linked to 18 companies

Our systems are scalable, and portable !

“SerCom Solutions sets the standard in the flexible

use of SAP within the supply chain”

…Fiona Walsh, Business Development Manager, SAP

Enhance Partnerships

Partnerships formed with a number of key logistics companies

Globally, SerCom can now relocate with customers, without additional

infrastructural investment, anywhere in the world

The Logistics company can, with SerCom, offer a comprehensive customised

solutions which includes procurement and planning

Our IT systems are already integrated, our respective employees work as one

team, & we can provide real time, multi-site visibility to key customers & suppliers

Out of our 8 new locations since 2004, only 2 are SerCom owned

Collaboration in Central/Eastern Europe

Our first Poland based employee - Piotr

Supporting Sales Activity Days in Romania

Sourcing and Procurement Logistics and Assembly

Total Solution

Leading edge Logistics Service Offering

Inbound

Logistics

Warehousing

Fleet and Yard

Management

Assembly

&

Kitting

Multi-modal

Transportation

Finalisation / Packout

Sourcing

Supplier

Evaluation

Audit

&

Sampling

Seal of

Approval

Planning &

ProcurementInventory

Availability

Info. Visibility

Transparency

Info. Visibility

Transparency

Sourcing

Supplier

Evaluation

Audit

&

Sampling

Seal of

Approval

Planning &

ProcurementInventory

Availability

Inbound

Logistics

Warehousing

Fleet and Yard

Management

Assembly

&

Kitting

Multi-modal

Transportation

Finalisation / Packout

Info. Visibility

Transparency

Partnership Approach Total Solution

Leading edge SCM Service Offering

‘China is a threat, China is a customer, China

is an opportunity…..you cannot ignore it’

Kenichi Ohmae

Expand China Offering

Expand China Offering

Full-time team in China supporting the following activities:

Sourcing

Supplier Auditing

Product Quality Evaluation & Compliance

Management of New Product Development & Introduction Processes

Cost Management

Procurement & Financing

QA & Factory visits

Rework Management

NITL Survey:

- 85% of respondents stated see China as an opportunity rather than a threat

Main markets:

Consumer product retailers, furniture retailers, large OEM’s, spot orders

Factory Audit Reviews

34

24

7

21

Factories Visited

1st Pass Approval

Approval pending Corrective Actions

Extensive Remedial Action required

Failed Approval Process

China Sourcing : Some statistics!

China Office & Team: August 2008

Major own brand sellers from SerCom China

A – C Class Components purchased from a host of suppliers across the globe

SerCom service is either value-add or buy and supply per component

OEM Commodity category examples:

– A Class: Notebook Subassemblies, Power Supplies, PCB’s, Drives,Software

– B Class: Data cables & Power cables, Batteries, Chargers, Server Bezels, Docking

Stations, PCMCIA cards, Graphic cards

– C Class: Print, Pre print activities, Marcom materials, Retailer display requirements,

Packaging, CD’s, Wallets, MRO, Labels & badges, Screws and fasteners

Distribution / Retail Commodities:

– Including our best selling Digital Photoframes, UMPC’s, MP3/MP4 accessories, Data cables,

Portable DVD’s, Batteries & Rechargers, LCD’s/Monitors, Speakers, Keyboards & Mice

Diversification from

Current Component Categories

Now quote this!

And these!

The Green Question

Do green issues become faded in turbulent times ?

Waste & energy management can actually save significant money

U.S. Election impact ?

SerCom will champion environmental projects which save consumers money

Paper alternatives

Waste management

Repackaging proposals reducing space and shipping requirements

Pooling

• Customer A:– Data Cables 11% (benchmarking & freight negotiation)

– Power Cords 9% (supply chain and design reengineering)

– Labels & Badges 12% (redesign, negotiation & manufacturing location)

• Customer B:– Packaging 38% (benchmarking and use of alternative materials)

– CD’s 12% (negotiation – addnl 23% possible with design changes)

• Customer C:

– 12% delivered savings across all packaging/print commodities prior to go live

– 30% cumulative savings delivered over 3 years

• China Initiative– Savings vary from 43% to 25% across a wide variety of commodities

• Strong (full-time) cost reduction team with expertise across many commodities

• All above customers operate a cost saving sharing mechanism with SerCom

Promote General Cost Savings Opportunities

Summary

SerCom’s Growth & Survival Strategy (1 of 2)

Economic challenges affect everyone….but it is an ill wind……..

Promote cost saving potential from outsourcing some activities

Ability to provide a quality based solution from low cost economies

Promote green initiatives as cost saving initiatives

Drive additional sales through existing customers (commodities/divisions)

Summary

SerCom’s Growth & Survival Strategy (2 of 2)

IT System maintenance / enhancement

Enhance Logistics partnerships

Continue to diversify markets and service offerings

Continue to promote key staff and enhance international staff training

Adapt, adapt, adapt!