Customer Adoption of QAD Lean Manufacturing Solution Gains Momentum

DETROIT--Aug. 3, 20041, 2004--

Automotive, Electronics, Industrial and Other Manufacturers Worldwide Adopt QAD Software for Advanced Manufacturing Initiatives

QAD Inc. , a leading provider of enterprise solutions for global manufacturers, continues to see momentum for a host of lean manufacturing capabilities its software provides customers. For the first half of QAD's 2005 fiscal year (February 2004-July 2004), the company has generated more than a 60-percent increase in the number of customers adopting QAD Lean Manufacturing, compared with customer adoption during the first half of fiscal year 2004. Additionally, the company has generated more than 120-percent year over year growth in the number of customers for the 12 months ending July 2004 compared with the previous 12 months. Today, more than 80 customer sites have added QAD Lean Manufacturing functions to their deployment of QAD MFG/PRO eB2 software. QAD Lean Manufacturing helps manufacturers effectively use kanban systems to align inventory with demand for pull-based replenishment.

Based on Toyota standards for lean manufacturing that are widely accepted by the automotive industry, QAD's Lean Manufacturing solution integrates electronic representation of kanban processes with core ERP functions to provide comprehensive level loading, tracking and visibility of production. The solution supports electronic kanban as well as physical card-based visual systems. Even suppliers operating abroad can follow the progress of parts as they flow through the manufacturing process, and manufacturers can gauge - and control - the cost of buffer supplies and inventory holdings. QAD Lean Manufacturing helps streamline supply chain communication so that companies can understand real customer demand and calibrate production to take advantage of advanced manufacturing techniques such as continuous flow, pull replenishment and kanban visualization.

QAD Lean Manufacturing includes:

-- Set-up and management of supermarkets, so manufacturers can control inventory quantity and initiate pull-based replenishment. Supermarket quantities can be established manually, calculated automatically based on flexible, user-defined parameters, or modeled using workbench tools. In addition, enhanced kanban card management gives manufacturers complete flexibility in viewing kanban cards and loops to plan updates.

-- Calculation of safety stock based on parameters such as quantity, or automatically calculated through a selection of formulas based on measurements such as number of days that the system uses and average demand. The amount of inventory is tightly managed with automated techniques for continuous improvement.

-- Load leveling tools calculate a suggested daily level schedule by shift for each item based on the established process volume, mix analysis, pitch and other parameters. Buffer performance is evaluated and adjusted automatically.

-- Production initiated by customized signals. Kanban loops can be set up with automatic accumulators based on order quantity or specified time intervals, so that the system automatically authorizes production. Limited-use cards can be created and automatically deactivated, for short-term tasks or unique demand.

-- Real-time visibility into electronic kanban signals. Integration with QAD MFGx.net Supply Visualization provides authorized internal or external suppliers with secure insight into kanban status.

"Lean is essential to our vision for the manufacturing sector, and the latest enhancements to QAD MFG/PRO underscore our commitment to trimming the time it typically takes for a manufacturer to receive, process and respond to demand," said Pamela Lopker, QAD president and chairman of the board. "We've seen the advantages lean manufacturing offers individual companies and we are passionate about its potential impact on the supply chain. For more than 20 years, QAD has combined the best thinking in manufacturing theory with leading-edge technology to provide global manufacturers with solutions to their real-world problems."

Customers Adopt QAD Lean Manufacturing Solution

Since QAD Lean Manufacturing was introduced in late 2002, manufacturers have added these functions to their deployment of QAD MFG/PRO eB2 software at more than 80 sites worldwide. Adoption has been particularly strong in several of the six vertical markets QAD serves, including automotive, electronics and industrial. Three-quarters of early adopters of QAD Lean Manufacturing have purchased and are undertaking deployment, most extensively in Asia Pacific and North America, followed by Europe, Middle East and Africa. QAD anticipates future momentum in keeping with these initial trends.

"TRW Automotive operations are dependent on real-time information, and to meet their needs we've standardized on QAD solutions at 40 sites in 15 countries worldwide," said Chuck Fox, director information systems, North America, TRW. "QAD Lean Manufacturing helps us more closely manage inventory and streamline supply chain communication, for insight and action that's closer to real time -- and that drives us closer to our goals for continuous improvement."

Companies that have deployed QAD Lean Manufacturing have been able to produce to demand and more accurately calculate required inventory, reducing costs associated with carrying inventory at the proper location and levels, as well as costs resulting from rushing -- or halting -- production to keep pace with demand and overcome bottlenecks and delays.

"QAD has assembled a powerful set of lean manufacturing tools that work well in our automotive manufacturing environment," said Jerry Powell, director of materials control systems -- Europe, DURA Automotive Systems, Inc. "For example, kanban can be applied in many different ways, and therefore it long has been considered difficult to integrate into ERP systems. QAD has developed a very flexible and adaptable system that can be used at all points in the supply chain and the manufacturing process. At DURA, supplier and internal process scheduling now is fully managed using kanbans."

According to William Dameron, IT director, Speedline Technologies, "Our success depends upon the principals of lean manufacturing. On our ever-continuing path to improvement and the elimination of waste QAD, has been an invaluable partner. As part of our core system MFG/PRO eB2 is helping Speedline Technologies achieve its lean initiatives." Speedline Technologies is the global leader for single-source process knowledge, solutions, and service to the PCB assembly and semiconductor packaging industries.

Dameron added, "The kanban module within MFG/PRO has made it possible for us to quickly and efficiently pull materials through our supply chain. QAD has a clear vision of its direction and more importantly, the direction of its customers."

Lean Manufacturing Future Enhancements

The new enhancements are part of QAD's ongoing commitment to help global manufacturers initiate lean manufacturing easily and quickly. Future capabilities QAD will introduce include further refinement of kanban process controls, production line design and material routing optimization for greater control of the physical flow of material on factory floor. In addition, QAD is working to add extended enterprise signaling capabilities enabling trading partners to send and receive kanban signals regardless of the ERP applications each party uses.

Services and Support

In conjunction with the introduction of lean manufacturing functions, QAD Global Services provides a full range of services and support to assist global manufacturers with design and implementation of QAD Lean Manufacturing, as well as training and performance tuning to ensure QAD systems deliver optimal results as customers' business evolves.

About QAD

QAD enterprise applications leverage advances in Internet and enabling technologies to provide critical functionality for managing manufacturing resources and operations within and beyond the enterprise, enabling global manufacturers to collaborate with their customers, suppliers and partners to make and deliver the right product, at the right cost and at the right time. Manufacturers of automotive, consumer products, electronics, food and beverage, industrial and medical products use QAD applications at approximately 5,200 licensed sites in more than 80 countries and in as many as 26 languages. For more information about QAD, telephone +1 805 684 6614, or visit the QAD Web site at: www.qad.com. To receive any of QAD's press releases via facsimile, contact +1 800 356 0747, or outside the U.S. contact +1 213 253 5647.

"QAD" and "MFG/PRO" are registered trademarks of QAD Inc. All other products or company names herein may be trademarks of their respective owners.

Note to Investors: This press release contains certain forward-looking statements made under the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. A number of risks and uncertainties could cause actual results to differ materially from those in the forward-looking statements. These risks include, but are not limited to, evolving demand for the company's software products and products that operate with the company's products; the company's ability to sustain strong licensing demand; the ability to sustain customer renewal rates at current levels; the publication of opinions by industry analysts about the company, its products and technology; the reliability of estimates of transaction and integration costs and benefits; difficulties relating to integration of a new business; the entry of new competitors and their technological advances; delays in localizing the company's products for new markets; delays in sales as a result of lengthy sales cycles; changes in operating expenses, pricing, timing of new product releases, the method of product distribution or product mix; general economic conditions, exchange rate fluctuations and the global political environment. In addition, revenue and earnings in the enterprise resource planning (ERP), e-business and distributed order management software industries are subject to fluctuations. Software license revenue, in particular, is subject to variability with a significant proportion of revenue earned in the last month of each quarter. Given the high margins associated with license revenue, modest fluctuations can have a substantial impact on net income. Investors should not use any one quarter's results as a benchmark for future growth. For a more detailed description of the risk factors associated with the company and the industries in which it operates, please refer to the company's Annual Report on Form 10-K for the fiscal year ended January 31, 2004.