QAD Enterprise Applications Make It Easy for Auto Suppliers to Comply with Recent Updates to Global MMOG/LE Guidelines; Solution Provider Plays Key Role in Making Efficient Long-Distance Supply Chain a Reality

CARPINTERIA, Calif.--Aug. 22, 2006--QAD Inc. , a leading provider of enterprise software applications for global manufacturers, today announced that its solutions support the latest version of global materials management guidelines released last month by leading North American and European automotive trade groups. The Global Materials Management Operation Guideline Logistics Evaluation (MMOG/LE) standards provide a set of best practices for suppliers to assess and improve materials management, with an emphasis on using automation for measurable results.

Standardized materials flow is a crucial success factor in consistent -- and efficient -- long-distance supply chain function. QAD -- the sole ERP software provider on the Global MMOG/LE update committee -- offers solutions that simplify the path to compliance with specific materials management principles from the Automotive Industry Action Group (AIAG) in North America and Odette International Limited in Europe. The Global MMOG/LE guidelines were created to gauge suppliers' compliance with OEM requirements for materials flow, a key criterion in world-class automotive production.

"The latest version of materials management guidelines reflects industry recognition that simplicity is essential for standards adoption by companies of all sizes," said Pamela Lopker, QAD president and chairman of the board. "QAD's support for Global MMOG/LE guidelines reflects our commitment to the automotive sector and to improving supply chain performance, as does our long-time presence in burgeoning manufacturing centers in Asia and Eastern and Central Europe."

Standards Adoption Benefits Industry

More than 1,000 Global MMOG/LE supplier audits have been conducted in North America and Europe since the global guidelines were introduced in 2004. As suppliers in emerging manufacturing centers adopt the principles already embraced by established markets, Global MMOG/LE effectively serves as a global standard for materials flow in long-distance supply chains.

"There's a steep price to pay for inventory that's in the wrong place at the wrong time, and a thriving global automotive industry will depend on a standard level of performance for materials flow, no matter where the supply base is located," said Dr. Yilong Chen, AIAG's general director of Asia-Pacific affairs and chief representative in China. "Already, Global MMOG/LE guidelines have streamlined suppliers' evaluation process, and AIAG-sponsored training for suppliers in China will help perpetuate a degree of consistent supply chain function that benefits the entire industry."

Suppliers are reporting the advantages of compliance, which range from an enhanced ability to participate in the global automotive industry, to gains in operational performance. According to Odette(a), a European automotive manufacturer's survey of nearly 50 of its compliant suppliers revealed benefits, including reduction in line stoppages, rework, logistics incidents, premium freight expenses, obsolete material, inventory carrying costs and data entry time, as well as improvement in delivery performance.

"Global MMOG/LE guidelines help smaller suppliers in emerging markets such as the Czech Republic, Turkey, Romania and Slovakia gain insight into improvements they can make that will put their materials management practices on a par with Tier-1 suppliers," said John Canvin, managing director of Odette. "We're seeing momentum in Central and Eastern Europe already, with an increase in Global MMOG/LE compliance training participation."

Support to Accelerate Compliance

Suppliers such as Freudenberg-NOK, a leading manufacturer of elastomeric sealing and noise, vibration and harshness (NVH) products, have turned to QAD for help simplifying compliance verification. QAD has identified aspects of its enterprise applications that support each point of the latest Global MMOG/LE guidelines, and the QAD Global Services consulting organization offers an assessment service to help suppliers worldwide evaluate their processes and systems, as well as map a plan of action for compliance.

Global MMOG/LE version 2 compliance is just one aspect of QAD's work with the industry and individual customers to pioneer technology and process standards that will achieve advanced manufacturing goals. QAD also is providing leadership in the development of key performance indicators that complement version 2 guidelines with a means to gauge the results of compliance, and has played a pivotal role in AIAG and Odette's development and expansion of standards for supply chain connectivity and communication.

About QAD

QAD is a leading provider of enterprise applications for global manufacturing companies. QAD applications 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 life science products use QAD applications at approximately 5,500 licensed sites in more than 90 countries and in as many as 27 languages. For more information about QAD, telephone 805-684-6614, or visit the QAD Web site at: www.qad.com. "QAD" is a registered trademark 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 license and service demand; the company's ability to leverage changes in technology; the company's ability to sustain customer renewal rates at current levels; the publication of opinions by industry and financial analysts about the company, its products and technology; the reliability of estimates of transaction and integration costs and benefits; the entry of new competitors or new offerings by existing competitors and the associated announcement of new products and technological advances by them; delays in localizing the company's products for new or existing markets; the ability to recruit and retain key personnel; 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) software industry 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 performance. 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 fiscal 2006 ended January 31, 2006.

(a) "AIAG and Odette Announce Release of Updated Global Materials Management Operations Guideline/Logistics Evaluation (MMOG/LE)," July 24, 2006.