Assets Returned From LeaseProject: 0307-000-0001

Bill Cody OperationsColumbus OH

3

Project Definition

Problem Statement:

Annually, 23,500 assets tied to lease contracts terminate in the West Region. Current recovery rate is 79%, leaving 4,920 assets not being recovered and thus represents potential loss of revenue and margin opportunities.

Project Definition:

Increase the number of assets recovered for the West Region from 79% to 95% without increases in headcount or IT expense to IKON.

Project Benefits:

Additional revenue opportunities in wholesale and retail markets with associated positive margin implications.

8

CT Tree

Critical to Satisfaction (CTS)

Asset Disposition upon notification the lease termination.

Critical toQuality (CTQ)

Critical toDelivery (CTD)

Critical to Cost(CTC)

All lease itemsreturned and/ oraccounted for

Accurate leaseschedules

Final dispositionrecored in all

systems

All systems arereconciled and in

agreement toasset disposition(OMD/Ikonics)

Timely notificationof lease

termination

Accurate leaseschedules

Timely equipmentdisposition

Accurate pick upschedules

Equipmentdisposition

Wholesale/ Usedmarket availability

Pick-up's occurwhen scheduled

Assets dispositionedto Used market arein alignment with'fluff

and buff' criteria

Account detailsare accurate(equipment

location)

9

SIPOC

Process: Process Owner:

Suppliers Inputs Outputs

(Providers of the required information) 7

(Resources required by the process)

6

(Deliverables from the process) 3

Requirements Requirements

IOSC Lease SchedulesEquipment to be returned identified

Some Equipment Dispositioned with some System Updating

Equipment pick up and returned timely Customer

Marketplace/Branches Termination ReportsAvailable CC associates Reconcilliation Reports

Steady flow of product for resale Sales

Configuration CentersEquipment Move Requests

Current Asset Tracking database Pick Up Schedules

Export sales opportunity Wholesale

Customer Care Center OMD/Ikonics ReportsInventory Move Request Receiving Reports

Refurbushed equipment Baja

CustomersBuyout or Extension Paperwork

Decision Criteria: return/rewrite/etc. Used Inventory Listing Accounts reconciled Finance

Termination ReportsIkonics/OMD updated/reconciled IOSC

2 Equipment Move Requests Shipping ApprovalsConfiguration Centers

Return Equipment Disposition: Wholesale; Refurb and Resale (Used); Scrap; Customer

Buyout; Term Renew al; Rew rite

1

3

Assets Returned from Lease John Totah

Process(Top level description of activity)

8

Customers(Anyone w ho receives a deliverable from the

process) 5 4

Lease Termination for

Equipment Asset

Asset Disposition & Reconciliation

Completed with all systems updated

10

Process Map - Asset Recovery

Lease TermIdentified

Termination Listing- OMD

-IKONIC's

Is this aBankrupty or

Bad Debt?

MarketplaceReview

No

IOS Capital LegalInvolvement

Bankruptcy NoticeCollection Process

Asset Cleared forRecovery

Asset Release

ContractRewrite?

AssetOpportunity

Review?Residual Offset

New ContractCreated

No

No

Systems Updatedas "Recovered"

Sales Contract

Sales Rewrite

Cash SaleGive Away

Yes

Yes

ProcessCompleted

Inventory MoveRequest Initiated

in OMD

No

Inventory MoveRequest

Inventory MoveRequest

Order CategoryUpdated

Pick UpScheduled

Pick Up NoticePick UpOccur?

Sales or IOSCResolves Issuewith Customer

No

SalesCustomer

Delivery SchedulerDelivery Team

Product Returnedto Configuration

Center

Yes

Delivery TeamWarehouse Associates

FinalDisposition?

WholesaleUsed Market

Scrap

OMD and IKONICSUpdated as Asset

Recovered

Marketplace - IKONICSCentral Team - OMD

IOSC

Marketplace

Config. Ctr.

Key:

12

Process Metrics

Definition of Y Process Metric % of Assets Recovered through the System

(OMD/Oracle reconciled to IKONICS) after Lease Termination. This encompasses:

Terminations where assets are recovered through normal lease expiration

Terminations where customers maintain assets (rewrites, outright purchase, or term renewals) after lease expiration

Early lease terminations due to Bankruptcy/Bad Debt (non-pay)

Recovery opportunity starts with Lease Termination and ends with all Systems Updated and Reconciled to reflect recovery

14

Process Opportunity

Project is focused on improving recovery percentage and increase revenue/margin opportunity Recovery to be 95% Revenue is incremental with no added headcount to achieve

Secondary opportunity may be to Reduce the Cycle Time in the process No metrics are currently tracked Reducing cycle time will allow for quicker revenue/margin recognition opportunity

Third opportunity may be to reduce headcount associated with the process Currently 10 FTE’s assigned to Lease Recovery with an additional 115 people

involved in the process

16

Measurement System

Objective: Increase Recovery Rate on Lease Terminations to 95% for West Region

Measurement system to be used: OMD: Terminated Assets by Termination Code -

Recovered/Unrecovered/Total by Region, by Marketplace IKONICS: Same Data but is considered the Standard Discreet data - Recovered? Yes or No

Gage problem identified OMD requires clean up to correct measure process for future data

analysis Coding errors identified and need reconciled

17

Measurement System -Baseline Data

Detail: OMD IKONICS

Term Code Unrecovered Total Assets Recovery % Unrecovered Total Assets Recovery % Unrecovered Total Assets

TMDRR Rewrite 928 1,105 16.0% 86 369 76.7% 842 736 TMDUP Upgrade 751 7,198 89.6% 102 7,038 98.6% 649 160 TMDEC End of Contract 544 1,473 63.1% 11 1,385 99.2% 533 88 TMDCR Customer Return 513 5,299 90.3% 144 5,054 97.2% 369 245 TMDOB Out of Business 432 1,511 71.4% 16 1,207 98.7% 416 304 TMDTR Term Renewal 410 484 15.3% 149 421 64.6% 261 63 TMDCV Conversion 402 737 45.5% 58 687 91.6% 344 50 TMDPP Purchase Paid 300 536 44.0% 5 1,544 99.7% 295 (1,008) TMDPU Partial Upgrade 200 2,263 91.2% 25 1,003 97.5% 175 1,260 TMCCB Cash Buyout (Return) 126 1,555 91.9% 26 1,251 97.9% 100 304 TMDRS Reverse Sale 113 193 41.5% 3 48 93.8% 110 145 TMDB1 Bankruptcy - Ch 11 59 388 84.8% 3 333 99.1% 56 55 TMDB7 Bankruptcy - Chapter 7 49 103 52.4% 6 82 92.7% 43 21 TMDLR ?? 29 107 72.9% 3 90 96.7% 26 17 TMDDN Downsizing 18 48 62.5% 13 48 72.9% 5 - TMDCB Competetion B/O 17 122 86.1% 7 97 92.8% 10 25 TMDQC Quality Credit Accomm. 9 136 93.4% 322 870 63.0% (313) (734) TMDBR Receivership 8 45 82.2% - 37 100.0% 8 8 TMDSK Skip 4 10 60.0% - - N/A 4 10 TMDFO Funding Out 3 60 95.0% 2 60 96.7% 1 - TMDB3 Bankruptcy - Ch 13 1 8 87.5% - 7 100.0% 1 1 TMDCD Contract Dispute 1 16 93.8% - 13 100.0% 1 3 TMDPE Problem w/ Asset 1 7 85.7% 3 263 98.9% (2) (256) TMDMR Misrepresentation - 6 100.0% - 6 100.0% - - TMDPC Performance Cancellation - 2 100.0% - 7 100.0% - (5)

Total 4,918 23,412 79.0% 984 21,920 95.5% 3,934 1,492

DIFFERENCESTotal West Region Total West Region

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Measurement System -Baseline Data

Dollars are based on original charter - currentlyunder review

Revenue Opportunity

Total Unrecovered Assets: 4,918 From Recovery Rate Validation Worksheet

Less: Customer Maintained* 1,638 * Maintained relates to Rew rites, Term Renew als and Outright Purchase

Assets Available for Disposition 3,280

Revised Charter Assumption based on inclusion of all West Region Activity

% of Region Total Avg. Wholesale # to be Wholesale # to Avg. Retail Retail ScrappedSegment Terms Available Value Wholesaled $ Retail Value $ Units

1 18.8% 617 50$ 525 14,000$ - - -$ - 2 25.0% 820 175$ 683 53,000$ 91 1,500 136,667$ 46 3 18.8% 617 250$ 183 45,677$ 274 2,000 548,124$ 160 4 33.8% 1,109 1,000$ 456 456,230$ 342 6,000 2,053,037$ 310 5 3.6% 118 2,500$ 33 38,000$ 66 9,000 590,400$ 20

100.0% 3,280 1,880 606,907$ 773 3,328,228$ 535

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Measurement System - Data Collection Plan

Daily: Lease Termination Reports Source: IKONIC’s (IOSC supplied) Data includes: Customer Name, Equipment Serial Number,

Termination Code, Date of Termination, Marketplace, etc. Provided to Marketplaces for Disposition and/or Comments

Weekly: Reconcile Reports Source: IKONIC’s and OMD Data merged and reconciled between systems (in Oracle Discovery)

based on Equipment Serial Number Rolling 12 months to capture all aged open items Used to insure Recovery of Asset is complete

21

Measurement System Capability

Measurement system in place: Data is extracted from both OMD and IKONIC’s and can

be reconciled Details by marketplace, by customer, by equipment serial

number, etc. are available

Data testing for capability required to determine: proper coding assignment occurring physical asset receipt opportunity

are assumptions for revenue/margin potential valid?

Marketplace specific area for improvement

22

DPMO - Long Term

Defect Rate(OMD): 4,918 defects on 23,412 opportunities Based on 1,000,000 opportunities = Long term DPMO of 210,063

OMD data needs to be scrubbed to exclude Customer maintained equipment Expectation is defects will be reduced to 3,200 equating to a Long

term DPMO of 154,084 Process can be made to reach ~ 30,000 DPMO

Represented by Bankruptcies which require legal release

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Process Performance and Entitlement

Poor3

Current Process A - Poor Control, Poor TechnologyB - Improve Control, Technology is Fine

C A B C - Control is Good, Improve Technologyo D - World Classnt Z Shiftrol

C D

GoalGood 0

0 6 Zst

Poor GoodTechnology

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Define Performance Objectives

Based on 100% recovery for all assets that can be returned $3,930,000 in incremental revenue will be achieved based on current assumptions if only 95% are returned - $3,730,000 (objective) if only 70% are returned - $2,750,000 if only 50% are returned - $1,970,000 if only 20% are returned - $790,000

Note: OMD is considered System of Opportunity

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Pareto Chart for Defects by Type

RR UP EC CR CV TR OB PP PU CB RSO thers

900 684 542 484 398 388 381 278 156 122 106 180

19.5 14.8 11.7 10.5 8.6 8.4 8.2 6.0 3.4 2.6 2.3 3.9

19.5 34.3 46.0 56.5 65.1 73.5 81.8 87.8 91.2 93.8 96.1 100.0

0

1000

2000

3000

4000

0

20

40

60

80

100

Defect

CountPercentCum %

Pe

rce

nt

Co

un

tPareto Chart for Defects by Type

Multitab: Defect Detail

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O thersNVCVMtWORDSWLAHIPOG BWA

18 221 232 241 283 444 448 448 495 6371152

0.4 4.8 5.0 5.2 6.1 9.6 9.7 9.710.713.824.9

100.0 99.6 94.8 89.8 84.6 78.5 68.8 59.1 49.4 38.7 24.9

4000

3000

2000

1000

0

100

80

60

40

20

0

Defect

CountPercentCum %

Perc

ent

Cou

ntPareto Chart for Defects by Marketplace

Pareto Chart for Defects by Marketplace

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Cycle Time - IKONIC’s

3202702201701207020

95% Confidence Interval for Mu

25201510

95% Confidence Interval for Median

Cycle TimeVariable: Ikonic's

10.000

34.307

20.960

Maximum3rd QuartileMedian1st QuartileMinimum

NKurtosisSkewnessVarianceStDevMean

P-Value:A-Squared:

11.000

37.296

25.183

315.000 26.000 10.000 5.000 1.000

110319.80673.877311277.2435.738623.0716

0.000138.543

95% Confidence Interval for Median

95% Confidence Interval for Sigma

95% Confidence Interval for Mu

Anderson-Darling Normality Test

Descriptive Statistics

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Issues to be Addressed

Differences between OMD and IKONIC’s need to be identified as to cause and reconciled

Current processes still need to be documented for the West Region and IOSC as it pertains to this project

Agreement on data needs to occur and acceptance of opportunity in the West Region

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Next Steps

Validate revenue and margin opportunity from IKON Wholesale and Used (Retail) Markets - submit Project Amendment if warranted

Document process gaps in the West Region based on current Northeast Region flow - scheduled for 9/9-9/11 in Phoenix

Reconcile OMD to IKONIC’s based on Termination Coding Document IOSC process

Begin detailed process mapping for deployment

34

Project DMAIC Checklist/Status

Problem Statement: Annually 23,500 assets tied to lease contracts terminate in the West Region. Current recovery rate is 79% leaving 4,920assets not being recovered and thus represents potential loss of revenue and margin opportunities.

Black Belt: Bill Cody CTS’s: Asset disposition upon lease termination

Project Champion: Tom Hammond Defects to be Reduced: Assets identified as non-recovered

Deployment Champion: John Totah Beginning DPMO/Sigma Level: 210,000 defects - 0.8 Sigma

Master Black Belt: Dan Douglas Final DPMO/Sigma Level: ________________________________________

Six Sigma Project DMAIC Checklist

Project : 0307-000-0001 Assets Recovery from Lease Termination

Define Measure Analyze Improve Control

Completion Date: Completion Date: Completion Date: Completion Date:

Discover Variable Relationships

Establish Current Performance

Establish Performance Objective

ID Alternative Solutions

Determine “Best Fit” Solution

Establish Process Tolerances

Update FMEA

Develop Pilot Plan

Pilot “Best Fit” Solution

Validate Improved Performance

Conduct Cost/Benefit Analysis

Complete Improve Phase Project Review

Redefine Process Capability

Develop Control Plan

Develop Mitigation Plan

Implement Process Controls

Develop Monitoring Plan

Implement Process Control Plan

Obtain Financial Validation

Completion Date:

X Define Project Scope

X Initiate Team (Kick-off)

X ID Process Customers

X ID Process CTS’s

X ID Process Metrics (Y’s)

X Complete SIPOC Map

Complete Define PhaseProject Review

Receive Approval to Move to theMeasure Phase

Receive Approval to Move to theControl Phase

Confirm Baseline Capability

Identify Sources of Variation

Complete Detailed Process Map

Complete C&E Diagram & Matrix

Complete FMEA

Perform Data Collection for Analysis

Screen Potential Causes

Conduct Graphical Analysis-

Conduct Hypothesis Testing

Complete Root Cause Analysis

Receive Approval to Move to theAnalyze Phase

X Develop Data Collection & Sampling Plan

X Identify Potential X’s

Validate Measurement System

X Collect Data on Y’s

Perform Capability Analysis

Voice of Process/Benchmark

X Define Performance Objectives

Complete Measure Phase Project Review

Receive Approval to Move to theAnalyze Phase

Receive Approval to Close the Project

Complete Control Phase Project Review

Obtain Financial Analyst Sign Off

Obtain MBB Sign Off

Obtain Project Champion Sign Off

Obtain Steering Committee Sign OffComplete Analyze Phase Project Review

Leverage Project within Organization

X

X

X