Risk Management, Executive Responsibility

and IATF: 16949

Safe Harbor
This presentation includes forward-looking statements about QAD and its business. These statements are subject to risks and uncertainties that may
cause actual results and events to differ materially. These risks and uncertainties are detailed in QAD’s SEC filings, including the company's latest
Annual Report on Form 10-K dated April 15, 2016 and in particular the section titled “Risk Factors” therein and other periodic reports the company
files with the Securities and Exchange Commission thereafter.

This presentation contains certain references to 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 accounting principles generally
accepted in the United States of America (“GAAP”) in that they exclude unusual or non-recurring charges, losses, credits or gains. This presentation
identifies the specific items excluded from the comparable GAAP financial measure in the calculation of each non-GAAP financial
measure. 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 business results by investors. 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.

The following 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.

Agenda

• Strive for Operational Excellence

• IATF 16949 – Opportunity for Change
• Enterprise Risk Management as a Start
• View Quality from a Value Perspective
• Operational Excellence as a Roadmap
IATF 16949 Review

• ISO 9001:2015 + AIAG + OEM specific

• Mandatory compliance to sell in automotive
industry
• Effective compliance date September, 2018
• Each organization must undergo an audit to
prove compliance
• Only about 3% complete
Opportunity for Change

• Enterprise wide • Product Safety &

changes are a good Manufacturing
transition point Feasibility
• Top management • Risk-based thinking
actively engaged

*LNS Research
Single Enterprise System

• Software-based quality management system

for consistency
• Web solution to provide common, friendly
environment
• Enterprise based licensing scheme for budget
• Single system becomes single source of truth
Risk Management

• Affects most, if not

Identify
all, departments and
levels of the Risk Analysis &
Monitor
enterprise Register Eval.

• Risk management Treatment

based on IATF 16949
changes
Incorporating Risk in the Enterprise

• Formalized risk methodology – ISO 31000?

• Implement EQMS with enterprise risk module
• Train teams and/or departments
• Formulate a risk governance team
• Improve and evolve
Single Risk Register

• Enterprise risk register

• Filterable by org. level Impact
Ext Ext High High Mod
and risk drivers Ext High High Mod Mod

Probability
• Consistency related to High High Mod Low Low

risk High Mod Low Low Min

Mod Mod Low Min Min
• Provides a company
wide priority
Focus on High Risk

• Tackle high risk

opportunities Impact
Ext Ext High High Mod
• Keep value in mind Ext High High Mod Mod

Probability
• Mitigating low cost, High High Mod Low Low

high risk items provide High Mod Low Low Min

Mod Mod Low Min Min
best value
Quality as Value

• Forget quality--shoot for operational

excellence
• Operational excellence implies quality
• Present quality in terms of value
 Compared to What?

• Choose a maturity model

• Determine relative status on the model
• Determine ultimate goal STAGE 5
STAGE 6

STAGE 4 Operational
Automated
STAGE 3
Some Excellence
STAGE 2 EQMS
Desktop Automation
STAGE 1
Spreadsheet Database
Paper
Possibly Compliant
At Risk Exceeds Quality Standards
No Process or Margin
High Process Costs Quality is a Profit Driver
Benefit
Full Value Assessment

• Translate Quality to Value

• Value assessment report
• Represent report in common terms
• DuPont Model
Value Assessment Model

QMS Maturity Model

Business Proc.

Level 1 Outcomes
QMS Best Level 2
Practice Metric
Level 1 Outcomes
QMS Best Level 2 Level 3 Value
Practice Metric Report
Level 1 Outcomes
QMA Best Level 2
Business Proc.

Practice Metric
Level 1 Outcomes
 Cost of Compliance

Paper-based QMS Automated QMS

• Manually • Increased
Intensive Efficiency
• Prone to Error • Lower Cost for
• Inefficient & Same Level of
Risk

Costly Risk

Automation
Savings

Cost
Operational Excellence Roadmap

• Operation Excellence as priority 1

• Use the IATF transition as the driver for
change
• Involve as much of the organization as
possible
• Get executive buy in by showing quality value
• Title

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