Building Stronger Customer Relationships

1
Building Stronger Customer Relationships

• Bruce Edwards
• Chief Executive Officer
• Consumer, Retail and Healthcare Americas

2
Developing Exels Target MarketsTop 50 customers
Total Logistics Exel Spend
Share 13 11 4 10 22 2 7
7 2 8 32 1 10 20 2 2
13 1 50 105 2

• bn
• Sector
• Consumer
• Retail
• Healthcare
• Automotive
• Technology
• Other
• Total

• Current outsourcing estimated at less than 15
  overall
• Exel has built a strong account management
  structure
• Exel has largest share of current outsourced
  logistics activities

Represents a Significant Growth Opportunity
3
Growth Potential Remains Strong

• Despite the significant presence that Exel has
  with these targets today, our upside potential
  remains strong
• Exels penetration of their supply chain spend
  has historically been very low
• Prior to the merger, offered a limited portfolio
  of services, either related to transportation or
  warehousing
• Prior to the merger, limited in ability to
  assemble complete supply chain solutions
• Prior to merger, limited by breadth or depth of
  geographic presence
• Very low percentage of the customers logistics
  spend

4
Increasing Share of Supply Chain Spend
Supply Chain Spend
Supply Chain Spend
Today, with its expanded portfolio and broader
geographic reach, Exel is increasing its share of
target customers supply chain spend
Exel continues to build relationships at a more
senior, strategic level in our customers
organisations
5
Dedicated Global Account Teams

• Account Team Model
• Team Member Responsibilities

Ultimate Accountability

Quality Assurance

Customer Satisfaction

Delivery of Business Plan/Growth

Owns Financial Results

Project Planning
Senior

Tracks Progress/Issues

Customer Operational
Project
Results (KPIs)

Account Plan Strategy

Champions Continuous
Manager

Leads Pursuit of Future
Improvement
Growth and Relationships

Manages Project
Implementation
Development
Operations
Manager
Owner
Exel uses dedicated global account teams to
pursue these growth opportunities and build
these relationships
6
Objectives

• To develop shared strategies to promote the
  growth and profitability of both our customers
  and Exels businesses
• Align globally to
• Deliver global consistency and operational
  excellence
• Co-ordinate activities across the globe and
  across Exels business units
• Enable strategic change
• Leverage best practices

These teams and the underlying processes
differentiate Exel and provide significant
competitive advantage
7
Joint Account PlanningDifferentiates Exel

• Customer
• Business Challenges
• Supply Chain Objectives

• Shared Strategy/Objectives
• Business Growth
• Supply Chain
• Improvements
• Closer Relationship

Specific projects

• Exel
• Business Objectives
• Supply Chain Capabilities
• or Solutions

Account planning implemented jointly with target
customers is one of the underlying disciplines
that differentiates Exel
8
Investment in Project ManagementDelivers
Consistent Execution

• Project Management Office
• Responsible for providing
• Thought leadership and process
• Dedicated project managers
• Flex resources and training
• Over 1000 associates trained to date in 5
  countries
• Exploit opportunities to
• Decrease costs
• Share best practices
• Achieve global consistency
• Goal is to create Project Management as a core
  discipline

Exel has also invested heavily in a disciplined
project management to insure consistent execution
9
Project Management DifferentiatesExel from
Competitors

• Evidence
• For Geneva, 5 weeks from initial contact to
  start-up of Eastern Distribution Center
• Reduced timing of average start-up project by
  over 30
• Project cost overruns reduced by 80
• Improved resource utilisation by 20, saving
  5,000 manhours YTD
• Able to replicate VW-Spain supplier park in Mexico

• Results
• Improved project costs and schedule performance
• Earlier realisation of revenue stream
• Reduced start-up costs
• Improved resource management
• Global consistency

10
Summary

• Focused on limited number of major customers
• Merger has helped Exel to expand its share of
  these customers supply chain spend
• Significant opportunity to grow further with
  these target customers
• Exel is pursuing these opportunities through
  account management and resulting deeper
  understanding of our customers and their needs
• Project management further enables Exel to
  differentiate itself and grow with targeted
  customers by consistently delivering on its
  commitments

11
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12
Align Strategies to Improve Customer Service and
Increase Revenue

• Unilever Strategy
• Achieve savings target
• Focus on Total Business Productivity to achieve
  greater cost efficiency
• Develop well-defined replicable processes
• Bundle outsourced services to include
  transportation and custom packaging to achieve
  simplicity and lower cost
• Streamline distribution network
• Leverage the combined scale of Unilever HPC and
  Unilever Bestfoods
• Employ a flexible space/real estate strategy
• Target growth in South America

• Exel Strategy
• Share best practices, logistics resources, lower
  costs
• Deliver operational excellence and continuous
  improvement
• Expand services in existing facilities (e.g.
  co-locate packaging in DCs)
• Integrate and rationalise network
• Deliver customised supply chain solutions
• Improve customer service, leverage technology to
  enhance supply chain visibility and efficiency
• Leverage campus value proposition
• Open new markets

13
Relationship goes beyond traditional services

• The result has gone beyond merely providing new
  services and serving new business units
• Unilever engaged Exel in many aspects of its
  supply chain
• Warehousing and distribution in N S America
• Opportunity for additional transportation
  services in N America Europe
• Packaging
• New product introduction
• Early discussions about manufacturing
  opportunities
• Potential for gaining business at other strategic
  business units within Unilever, i.e. Slim-Fast
  Foods acquired in 2000

14
to the development of a true strategic
relationship

• Exel has assisted in the integration of the
  Bestfoods acquisition
• Unilever looks to Exel to provide global
  consistency, supply chain visibility and shared
  best practices
• Exel contributes to Unilevers postponement
  strategy, by helping to streamline its packaging
  process
• Exel manages Unilevers entire Brazilian
  distribution network
• Unilever looks to Exel to provide pan-European
  transportation management solution
• Exel orchestrates other supply chain providers to
  deliver necessary support to Unilevers operations

15
delivering growth to Exel
m

• Milestones
• Awarded Lipton Middletown in 5/98
• Awarded HPC Stockton in 11/99
• Awarded Lipton Atlanta in 5/00
• Awarded Unilever Mexico in 5/00
• Awarded Unilever Brazil in 10/00
• Awarded European transportation center in 6/01
• Awarded HPC Carlisle Los Angeles in 7/01
• Awarded Bestfoods Carlisle Atlanta in 07/01

Revenue with Unilever
16
Significant Benefitsto Unilever and Exel

• Benefits to Unilever
• A global partner that can help it expand
  geographically
• Globally consistent processes, and simplified
  management (e.g. consistent KPIs,
  operating service agreements, project management
  approach)
• Delivered cost reduced by 5 year-on-year
• Bundled services that streamline the supply chain
• Excellence in safety and operational performance
  (accident frequency rate reduced by 20,
  productivity increased 10)

• Benefits to Exel
• Average growth above 25 per year
• Shared best practices and cost savings in excess
  of 10
• Competitive differentiation and defensibility in
  the face of a reduced supplier base
• New opportunities in transportation and custom
  packaging
• Opportunities in Argentina, Chile, Canada, USA,
  Europe

17
Conclusions

• The case study illustrates how Exel is
• Applying the principles of account management to
  our global target accounts
• Increasing penetration of our customers supply
  chain spend
• Using project management to facilitate the
  transfer of best practices and to ensure the
  global consistency that our customers seek

We are confident our approach will continue to
differentiate Exel and enable significant growth
18
Creating New Value inthe Automotive Industry

• Leigh Pomlett
• President, Automotive Worldwide

19
Project Nirvana
20
What is Project Nirvana?

• Inbound flow to the Ford Blue Oval European
  manufacturing plants (VO and PTO)
• Return flow of packaging to supply base
• 500m freight spend

Nirvana processes are a key enabler in the Ford
European Turnaround Strategy
21
Fords Nirvana Project

• Project Nirvana involves logistics design and
  management for Ford of Europe plants
• 1,400 suppliers
• 33,000 parts
• 70 carriers
• Re-engineering the inbound supply chain
• Requirement for over 150 logistics professionals
  across Europe
• UK, Germany, France, Spain and Belgium
• The team will deal with network design,
  operational execution and control, freight
  purchasing, supplier management and carrier
  management

22
European Nirvana Current Scope

• UK
• Bridgend PTO-Engine
• Dagenham VO
• Dagenham PTO-Engine
• IEO - Dagenham
• Halewood PTO-Transmission
• Leamington Forge
• Southampton VO
• Belgium
• Genk VO
• IEO - TDS Essers Genk
• Germany
• Cologne VO
• Cologne PTO-Engine
• Cologne PTO-Transmission
• Cologne Forge
• Saarlouis VO
• France
• Bordeaux PTO-Transmission

LLP On Site as at 1 October 2001
23
Management Processes

• Project Board
• Scope changes
• Project dashboard (monthly project business case
  status)
• Super-group leaders meeting
• Red flag issues log
• Status reports (progress, updates and issues)
• Nirvana Master Timeline (Gantt Chart)
• Nirvana web site
• Folders by super-group
• Sub-folders by workstream
• Status reports
• Issues logs
• http//nirvana.agra.com

Project board
Project Management
Functions
Design
Execution
Systems
24
Dashboard
25
Project Web-Site (250 Users)
26
Weekly Telegram

• Make available the possibility to get in a flash
  the view of Concerns across all European Plants

27
Communication is a must

• Give complete view of all meetings in place
  across Europe
• Share overall activities
• Unify procedures

28
LLP Supply Chain Agents
Lead Logistics Partner LLP Call Centre LLP
Plant
Plant
Supplier
Carrier

• SCM Centre
• Plant MP L
• Information flow
• ...

• Route No.
• Check calls
• Time windows
• Route incidents
• ...

• Pull system DCI
• Packaging rules
• Time windows
• ...

29
Manage External Logistics

• Intelligent collection
• Line back philosophy
• Pull
• Fixed time windows
• Supplier
• Plant
• Fixed transit time
• Direct loads
• Milk-runs
• Consolidation

• Visual factory
• Route indicator
• Parking area
• Receiving docks
• Receiving procedures
• Dock control board
• Metrics
• Ford production system
• Market-places with minimum maximum Quantities
• Overdelivery area

30
Compliance vs Non Compliance PUS Valencia
Vehicle Operations June 2001
Monthly Compliance to PUS. Evolution
31
Bullseye Study

• Valencia

32
Bullseye Study

• Cologne

• Saarlouis

• Genk

33
Training, who, where and when?
34
Ford European LLPHR Notes

• Average age 28
• Diversity 30 F and 70 M (target50/50)
• Degree 80
• Masters/Postgrad 30
• Bilingual 100 (more than 2 languages 90)

35
Quality Mission

• Moving Ahead
• Our goal is to take the Nirvana concept to a
  state of consistent delivery of a common process
  irrespective of language, culture or geography to
  any supply chain management project.

36
Jaguar Operation
Consolidation Center Tamworth, UK
37
Jaguar Operation

• Jaguar X200 Program
• 180,000 sq ft dedicated facility located within
  Jaguars X200 assembly plant
• Coughlins responsibilities for the X200 program
  require comprehensive logistics management
  services including
• consolidation operations
• pipeline management from the designated suppliers
• packaging and packaging design
• repackaging when required
• materials management
• transportation cube optimization
• transportation control
• deconsolidation
• sequencing
• lineside feed

38
Creating Value for Customers
39
Creating Value for Customers

• Solution Sets
• Create value through consistent implementation
  and operation anywhere in the world
• Supplier park solution set
• Aftersales solution set

40
Automotive Client Expectations

• Launch quickly, at lower cost
• Repeat best practices
• Learn from mistakes
• Use standard processes and systems
• Provide integrated, supply chain management
  solutions
• Remove risk (to themselves)
• Innovate
• Continuously improve

41
Changing Our Approach
Current approach
Solution set approach
Competition advantage to client unique value is
created here !
Customised Created
Customised Configured
30
70
Reapplied (Base) For multiple customers
and geographies
70
Reapplied (Base)
30
42
Reasons for Change
Today
Measure
Solution set
High
Costs
Reduced
Slow/long
Speed/time
Faster/Reduced
High
Complexity
Reduced
Variable
Quality
Improved
High
Risk
Reduced
Low
Leveragability
Improved
At risk
Customer satisfaction
Improved
43
Supplier Park Solution Set
44
VW-SEAT SpainLogistics Concept
Bodyshop
Paintshop
Dashboard
Harnesses
Tyres
Assembled car
SEAT
JIT materials flow
JIT materials flow
Key supplier 1
Industrial Park
Key supplier 2
Key supplier 3
Subassembly
Key supplier 4
Logistics services
Key supplier 5
Safety time
etc.
45
VW MexicoLogistics Concept
Remote Supplier
Remote Supplier
Milk-run Transportation
Local Supplier
Local Supplier
JIT transportation
Delivery to assembly line
Bodyshop
Paintshop
Assembly Point 1
Assembled car
Assembly Point n
...
46
Sequencing Global SupportResources
Toledo
Operations/Material
Flow/Supply Chain
RILC Staff
Columbus
Ohio, USA
Mexico
Spain
Sequencing
Sequencing
Operations/Systems
Operations/Systems
Marco Lopez
Adria Margalef
Eduardo Perez
Manoli Escala
Jaime
Sastre
47
Current Supplier Park Locations
Sweden
Detroit, USA
Barcelona Spain
Vittoria, Spain
Hungary
Puebla Mexico
Ford, Brazil
48
Glupex Sequencing System

• Proprietary system used in global supplier
  parks/sequencing centres since 1992
• Receives and translates sequencing broadcast
  signals from the assembly plant
• Creates industry standard sequencing and
  container labels
• Distributes pick assignments to specific work
  areas
• Monitors integrity of the broadcast and
  communications from the plant

49
Aftersales Solution Set
50
DaimlerChryslerGrowth with Solution Set Delivery

• Taylor, MI
• Core Mgmt.

• Portage, IN
• Inbound

• Brownstown, MI
• Inbound

• Detroit
• Aftersales

• Minneapolis - 7/01
• Aftersales

• Portland, OR
• Aftersales

?

• Toledo
• Inbound

• Denver
• Aftersales

?

• Lathrop -6/01
• Aftersales

?
?
?
?

• Memphis - 5/01
• Aftersales

?
?
?
?
?

• Greer, SC
• Inbound

?

• Monterrey
• Inbound

• Los Angeles
• Aftersales

?
?
?
?
?

• Atlanta
• Aftersales

• Toluca
• Aftersales

?

• Cedros
• Inbound

?

• Lago Alberto
• Inbound

Vitoria, Spain
51
Goodyear WorldwideOperating Locations

• United States
• 8 operating sites
• 3.9m ft² DC space
• 600 associates
• 54 tractors
• 54 million 00/01 revenue (est.)

• Europe
• 6 operating sites
• 740,000 ft² DC space
• 200 associates
• 68 tractor/straight trucks
• 18 million 99/00 revenue

52
Goodyear Account Services

• Warehousing
• Dedicated transportation
• Tyre bundling
• Auto/light truck
• Medium truck
• Tyre branding
• Labelling
• Returns processing

• Customer service
• Transportation services
• Freight handling
• Shared transportation
• Quality inspection

53
Project Management Success

• Mid South Logistics Center 08/01/95
• Great Lakes Logistics Center 03/03/97
• Columbus Wingfoot 09/01/97
• Columbus Public 11/02/98
• Northeast Logistics Center 03/01/99
• York Wingfoot 03/01/99
• Memphis Wingfoot 02/01/99
• Florida Logistics Center 06/01/99
• Florida Wingfoot 11/01/99
• Columbus EPD / Industrial Hose 11/01/99
• Southern California Logistics Center 06/01/00
• Sears Memphis 01/05/01
• Des Moines Literature Center 06/01/01

54
Southern California Logistics Center

• Victorville, CA
• 40 acres, 828,000 ft²
• 99 truck doors
• 102 trailer spots
• Customer will-call dock
• Occupancy January 2001

• General Manager Bill Jannen
• Associates 95
• 303,025,378 throughput tonnage
• 6,129,781 shipped units
• Goodyear, Kelly, Dunlop
• Original equipment replacement
• 7 day/24hr operation
• Semi-production
• Tyre Branding
• Cost Plus Financial Agreement

55
Northeast Logistics Center

• York, PA
• 47.6 acres, 1,004,093 ft²
• 116 truck doors, 6 rail doors
• 200 trailer spots
• Customer will-call dock
• Occupancy June 1999

• General Manager Barry Gay
• Associates 151
• Wingfoot fleet
• 16 tractors
• 31 trailer
• 628,538,570 throughput tonnage
• 9,535,190 shipped units
• Goodyear, Kelly
• Original equipment replacement
• 7 day/24hr operation
• Semi-production
• Tyre shaving
• Tyre branding
• Cost plus financial agreement

56
Conclusion
Measure Costs Speed/time Complexity Quality Risk L
everagability Customer satisfaction
Result Reduced Faster/Reduced Reduced Improved Re
duced Improved Improved
57
Creating New Value through Innovation in Retail

• Stewart Oades
• President, Retail Worldwide Consumer Europe

58
Differentiating Exel Retail
Global, Regional and National LLP Services
Integrated Systems Solutions including SCI
Complete range of Value-Added Services
e-Commerce services
In-Store Logistics
Consolidation Centres
DC Management
Transport Management
Inventory Management / Replenishment
Freight Forwarding Customs Brokerage
Pre-Retail Services
Value Added Services
Last Mile Delivery Services
Reverse Logistics
Manufacture Raw Materials
Primary Movement
Secondary Movement
End Customer
Export / Import Activities
Distribution Centres
B2B and B2C Distribution
59
Creating Value -The Transport Challenge

• Transport costs are rising
• Congestion
• More complex faster supply chains
• Fuel, driver and road costs
• Opportunities exist to improve efficiency
• Improved management processes
• Improved planning scheduling
• Creating economies of scope
• Extended supply chain from supplier to store
• Within and between retailers and manufacturers
• Across own fleets, contractors and hauliers
• Requiring new management and process models

60
MTS - the Exel Transport SolutionFocused on
eliminating waste across the extended supply chain
61
Significant Value Can Be Created

• Significant cost savings of 10-20 can be
  achieved
• through reductions in
• km run 5 - 15
• Paid driver hours 5 - 25
• Tractors required 10 - 25
• Haulier purchasing 5 - 10
• Administration control 10 - 30

MTS is a new way of addressing old issues in
complex multi-site environments
62
Joint Retail Logistics (MS)National control of
non-food transport

• Daily task Up to
• 300 store deliveries
• 250 supplier collections
• 150 DC deliveries

63
Synergies can be Created Between Retailers and
Manufacturers
Low

• Share in systems platform
• Share in planning centre operation
• Act as carrier for each other
• Share supplier collections
• Share fleet operations

Benefits Integration Complexity
High
The Exel planning operation at Coventry now plans
transport on behalf of MS, Comet and Littlewoods
64
Sainsburys MTS project overview

• National planning and control of integrated
  primary, intermediate and secondary distribution
• Real time visibility and control of own fleet
  operations
• A focal point for driving further benefits from
  the Sainsburys transport network
• A platform for planning and control of
  international movements

65
Managing Transport across Europefor Unilever and
Kraft
From
to
Warehouses
European
Transport Centre
Carriers

• Benefits
• Better scheduling
• Better purchasing
• Visibility of costs
• Control of service
• Consistent quality

66
Future Developments

• Our aim is to continue to develop the Exel offer
  to
• create increasing value, including
• Wider geographic coverage
• Further control of inbound logistics
  (internationally and domestically)
• Enabling a more responsive supply chain
• Improving availability
• Reducing waste
• Links with replenishment processes
• Reducing lost sales for fashion, electronics,
  seasonal and promotional goods

67
Creating New Value for Technology Manufacturers

• Marc Blouin
• President, Technology Europe

68
Creating Value forTechnology Customers

• Connecting with customers
• Global customer development teams
• Define, design, detail, deliver
• Creating value through solution sets
• Focus on service offerings
• Encompass total supply chain
• Continuous supply chain improvement
• Global PC components manufacturer
• Leading telecom manufacturer

69
Customer Development and Delivery
Information systems enabled
Global customer development teams
Core competencies
Velocity
Competitiveness
Strategy
Design/Define/Detail
Customer teams
Customer teams
Execution
Continuous improvement
Agility
Cost effectiveness
Deliver
Theatre operational teams
Key
Supply chain
Information systems enabled
Needs
Actions
70
Solution Sets
Vendor Managed Inventory
Technical Services
Fulfilment
Service Logistics
Source
Make
Deliver
Suppliers
End users
Global Freight Management Multimodal/all supply
chain components/customs clearance Specialist
Transportation Technical Distribution/Technical
Couriers
Lead Logistics Provider
71
Customer ChallengeA manufacturer of PC
components sought a single global transportation
provider in an attempt to standardise lead times
and to gain visibility
Customer Impact
Exels Actions
Financial Benefits
Consistency of transit hours
Increased revenues
Improved customer service
lt48 hours
Improve predictability
Minimisation of loss and damage
Optimisation of inventory levels

• Reduced costs
• Warehousing
• Capital
• Transportation
• Obsolescence
• Claims
• Reduced fixed cost

Consolidation of transportation and closer
communication with carriers
Assumption of DCs, charged by usage
Flexibility to meet changing business requirements
72
Implemented SolutionExel was awarded the
contract to manage the component manufacturers
transportation from its plants in the Far East to
customers globally
Network Design
Dublin
North American OEMs
North America DC
European OEMs
Consolidation
Regional Distribution
Manufacturing Singapore
Singapore
Europe DC
Consolidation
Japan
Asia DC
Regional Retailers
Manufacturing Japan
Asian OEMs
Penang Contract Manufacturer
73
Evolution of RelationshipAs Exels relationship
with its customer has deepened, its range of
services has been enhanced to include value-added
activities
Global Planning/ Partnership With Customer
Value-added Fulfilment

• Pick, pack, ship
• Retail kitting
• Warranty validation
• Warranty exchange programmes
• Electromechanical assembly, testing and failure
  analysis
• Quality assurance
• Materials and supply base management

• In-house teams within customer
• On-going Objectives
• Reduce fixed assets and headcount for customer
• Reduce inventory
• Reduce order to delivery cycle
• Risk management constant surveillance, reduced
  insurance premiums

74
Value CreationRevenue EnhancementsIn cutting
finished goods inventory, Exel has enabled its
customer to enhance average sales prices,
creating 380 million of value
Price To OEM Before And After Exel Involvement
With Customer()
108
110
4.8
In reducing finished goods inventory from 42 days
to 6 days, Exel has enabled its customer to
realise higher average prices, since prices in
this market decline by 1 per week
103
100
Sale Post-Exel
Price To OEM()
Value Created For Customer
90
Sale Pre-Exel
380 million
0
1
2
3
4
5
6
Date Of Sale(weeks after production)
75
Value CreationCost and Inventory ReductionA
further 250 million of value results primarily
from Exels ability to cut its customers
inventory and transportation costs
Value Created For Customer
250 million
Other Benefits For Customer
Procurement For Kits

• Reduced component and management costs through
  increased focus

Reduction of excess from 200,000 to 70,000
through reduced loss and damage as a result of
increased visibility and closer management
Insurance
20
Relocation Of US DC
35

• Reduced labour and site costs
• Reduced transportation costs through more central
  location

Transportation
60

• Purchasing scale
• Improved coordination and communication between
  customers plants and airlines

Prompter payment from OEMs through reduced errors
Accounts Receivable

• Reduced network cycle time from between 72 hours
  and 96 hours to a consistent 43 hours through
  better management of carriers and increased
  visibility

Inventory
140
76
Next StepsAdditional Value Creation
OpportunitiesFurther opportunities for Exel lie
in its customers new division, where the company
can support after sales service levels
Opportunities For Exel To Create Value For Its
Customer
New Division

• Customer will require satellite parts depots
  globally to meet service level agreements with
  end-users
• Reverse logistics
• Assembly and shipping in US

77
Customer ChallengeResponding to the challenge of
a leading telecom manufacturer seeking
significant improvements in its inbound supply
chain, Exel delivered a value creating VMI
solution
Exels Actions
Customer Impact
Financial Benefits
Reduced inventory levels

• Reduced costs
• Inventory
• Obsolescence
• Warehousing

Supply chain visibility
Delayed inventory ownership
Vendor hub
Reduced inventory levels in factory inbound
warehouse
78
Value CreationCost and Inventory
ReductionExels delivery of a VMI solution has
created 239m of value for a leading telecom
manufacturer
Value Created For Customer
239 million

• Transfer of inventory holding from manufacturers
  production facility to Exel hub
• Less inventory on-hand reduced space/cost

Warehousing
2
Inventory Delay

• Reduced inventory carrying costs
• Reduction in on-hand inventory value from 35m to
  3m

27
Inventory Reduction

• Reduced inventory purchased to satisfy actual
  production requirements, enabled by supply chain
  visibility tools

210
Not to scale
79
Creating Value forTechnology Customers
Global customer development teams
Sun Xerox Motorola Agilent Apple
Philips Maxtor Celestica 3Com TI
Compaq Ericsson HP Dell Lucent
Sony Hitachi Honeywell
Vendor Managed Inventory
Technical Services
Fulfilment
Service Logistics
Specialist Transportation
Global Freight Management
Lead Logistics Provider
80
Developing an IT Strategy to Create New Value
for Customers

• Nigel Underwood
• Chief Information Officer

81
IT Integration3-Dimensional View

• What are our customers needs ?
• End to end visibility/management of the supply
  chain
• Service levels aligned to business requirements
• How is Exel meeting these needs?
• What are our plans to meet future needs?
• What are Exels needs to manage its own value
  chain?
• Top to bottom business architecture
• IT strategy focussed on solutions processes
• What have we delivered?
• What are our plans to improve our capability?
• What are the IT challenges in managing the
  change?
• Customer needs transitioning
• Business capability transitioning
• Global IT inter-business processes evolving

Customers supply chain
Customers
Solutions Delivery
Operational Management
Exel
Business/IT Alignment
82
The Story Post Merger

• Quick Wins
• Customer feedback/new opportunities
• Business needs cost synergies
• Solution set rationalisation
• IT standards/harmonisation
• Last 6 months
• Business/IT strategy alignment
• IT governance
• New customer experiences
• Bigger wins and future building blocks
• Next 6 months
• Systems plan - roadmap
• New solution sets
• New business architecture
• New enterprise models (Exel, customer, partners)

83
Customer AlignmentFeedback Q4 2000 stressed the
importance of CIO developing end-to-end IT
strategies for Exel

• The biggest opportunities for Exel are to
  develop the processes and systems, particularly
  web-based systems. They must invest in their
  future more aggressively, particularly around the
  Internet, and they must communicate their
  capabilities and market themselves more
  aggressively. They must think Internet.
• In the near term, there may be an opportunity to
  become experts in one area of the supply chain,
  but in doing this the company must have its eye
  on the three to five year goal of being
  end-to-end.
• Senior Vice President, Supply Chain Operations,
  Compaq

84
End-to-end View of Key Componentsof an
Integrated Logistics Service
Inbound hub
Contract Assembly Kitting
Order Fulfilment Centre

• Manage vendor inventory
• Manage warehouse
• Undertake preassembly
• Transport to plant and feed line
• Manage payments

• Manage inventory run MRP
• Procure components and manage suppliers
• Manage warehouse
• Develop manufacturing process
• Assemble kit / configure product
• Manage payments

• Manage inventory
• Process orders
• Manage warehouse, especially picking and dispatch
  of orders
• Track, trace and prove dispatch
• Manage payments

Inbound Logistics
Supplier management
Manufacturing
Outbound Logistics
Order management
End users
Suppliers
Alerts, payments
Inventory
Assemble Test Configure
Inventory/ warehouse mgt
Direct sales
Transport management
Kitting, shipments
Transport management
Resellers
Specialist Transportation
Service Logistics

• Transportation Management
• Select, monitor and manage carriers
• Consolidate shipments and break bulk, including
  package delivery
• Track, trace and prove delivery
• Clear customs and manage payments

• Merge-in-transit
• Process orders
• Manage dispatch from suppliers, and inbound and
  outbound transportation to cross dock
• Track, trace and prove delivery
• Manage payments

• Manage spare part inventory, both centrally and
  distributed
• Receive and process service orders
• Manage equipment collection and return, or swap
  out
• Conduct initial assessment of fault and deliver
  to service centre

85
The Solution Set World
Measure Costs Speed/time Complexity Quality Risk L
everagability Customer satisfaction
Result Reduced Faster/Reduced Reduced Improved Re
duced Improved Improved
86
Warehouse Management -An Element of the Supply
Chain
87
Infrastructure and Content Can Be Leveraged
across Multiple Solution Sets
Strategy Knowledge People Process Technology
Solution Elements
Base of Reusable Solution Objects
88
Current Compaq Service Offerings
Ayr Contract Logistics Freight Management
Seoul Freight Management
Shanghai Freight Management
Toronto Freight Management
Amsterdam Freight Management
Tokyo Freight Management
Houston Contract Logistics Freight Management
Luxembourg Freight Management
Taipei Freight Management
Guadalajara Freight Management
Hong Kong Freight Management
Mexico City Contract Logistics
Penang Freight Management
Kuala Lumpur Contract Logistics Freight
Management Distribution Centre
Singapore Contract Logistics Freight
Management VMI Hub
Johannesburg Contract Logistics Freight
Management
Sydney Freight Management
89
Our Global Partnership with Compaq
North America
Latin America
EMEA
Asia Pacific

• Inbound Hub
• SOI hubs (raw materials)
• Other Value added Services
• Contract Assembly
• Kitting and Configuration
• Manufacturing support (in-plant)
• Order Fulfilment
• FM merge/fulfilment
• Transport
• Airfreight
• Seafreight
• Brokerage/FTZ
• Specialised delivery (DSP)
• VAS (Overpack/in-plant)

90
SCI-Contract Winning Technology

• Key differentiator in global integrated contracts
• 18 live customers, 4 new implementations by end
  2001
• Integral component of customer demand chains

91
Keeping Ahead of the Competition
Availability and performance
Volumes forecast to grow 10-fold
SCI2
To consignment level

To purchase order
Merge in transit
Forwarders
Integrators
Cost base needs to be - Lower per unit -
Scalable - Predictable
3PLs
S/W vendors
Competitors and software vendors increasing
functionality
92
ePLIntegrating Elements of the Supply Chain
Information
Processes
Applications/Infrastructure
Exel
Third Party
Exel
Third Party
Exel
Third Party
Information
Information
Information
Information
Information
Information
Processes
Processes
Processes
Processes
Processes
Processes
Applications/ Infrastructure
Applications/ Infrastructure
Applications/ Infrastructure
Applications/ Infrastructure
Applications/ Infrastructure
Applications/ Infrastructure
93
ePL Process Architecture
Plan
Execute re-plan
Settle
Goods at shipper Capacity with carriers Order
with customer
Goods at customer Capacity utilised Payments with
partners

• Contracts
• Orders
• Consolidation
• Rate Route
• TLC
• Options
• Book

• Visibility
• Alerts Messages
• Intelligent Options
• Arrival time estimator
• Compliance checking
• Landed cost
• Document filing

• Plan v actual
• Payments
• Margin

Dynamically populated data Orders, shipments,
inventory, capacity, cash
B2B Integration Workflow
Carriers
Customers
Clients
Vendors
Banks
Customs
94
Business Architecture
Time
Alignment
External drivers
Business objectives
Information
Customers
Suppliers
Solutions Development Operations
Customer Management
Support Services
Fin.
HR
IT
Applications
Integration
Infrastructure
Integration
95
Business IT Alignment
IT Imperatives Align our IT strategy and
organisation to exceed the future needs of our
customers. Reduce the time and cost of delivering
IT solutions to customers. Deliver
consistent service to global customers Facilit
ate integration across the customers value chain
the glue - network Improve the consistency of
quality delivered on projects. Improve the
consistency of support delivered to operational
sites Bring innovation (service in addition to
technology) to increase the value of solution
design Provide an IT framework (strategy,
standards and integration tools) to facilitate
the effective and speedy integration of newly
acquired businesses
Overall Business Imperatives Customer
Focus Global Coverage Integrated
Capabilities Increased consistency Innovation
Enable integration and acquisitions
96
The Impact of IT on Key Business Measures
Margin mix
Growth
Agility
Risk
Cost
Customer Loyalty
Development (ROI)
Support (cost v service)
Deployment (cost/speed)
People
Standards
Common purpose
SCI 2 partnership
Solution sets Regional support centres
Scope scale increase with key global partners
eg.Oracle/IBM
Some real examples during last 6 months
Knowledge sharing eg. customers/ services
CGEY contract Improved service 1.4m savings pa
IT account directors service definitions
97
IT Strategy

• Business direction (ePL)
• Common solution sets
• Internal processes and capability
• Organisational flexibility
• Infrastructure as a utility
• Strategic sourcing
• Level of investment
• Business ownership

98
Collaborative IT Planning
Supply Chain Partners
Exel
Customer
Market Growth
External Business Objective IT
Processes Applications
Supply Chain Strategy IT Strategy
KPI's / Performance
Information
Programme Management
Project Management
Change Management
Operational Support
Capacity Planning
Applications Roadmap
Infrastructure
Third Party IT Partners
99
Service Levels

• Moving from cost plus to service definitions
• Closing the gaps (requirements v capability)
• Establishing end to end service levels
• Refining SLAs by geography
• Managing changing conditions

Component Analysis
End-to-end definition
X
SLA 1
SLA 2
X
X
Cost
Process flow/ component mapping
X
X
X
Component pool
X
Service Level
100
Summary

• Customers needs
• End-to-end visibility/management of the supply
  chain
• Exel meeting these needs now/component re-use
• Next generation solution sets
• End-to-end service levels
• Exel improving own capabilities
• Top to bottom business architecture
• IT strategy focussed on solutions and processes
• Delivered some big wins already
• Plans to improve future capability
• New business models evolving
• Customer needs transitioning
• Business capability transitioning
• Global IT inter-business processes evolving
• Collaboration and partnership

101
Panel Discussion
102
Closing Remarks

• John Allan
• Chief Executive

103
Key Messages for the Day

• Exels strategy is competitive and valid
• Customer focus and deeper customer penetration
  are key sources of growth
• Growth is also driven by the development of new
  solutions and the replication of existing proven
  solutions
• IT continues to grow in importance as solutions
  become more integrated and sophisticated
• We have intensified our focus on value creation
  for our customers
• We have the financial processes and controls to
  ensure we capture a share of that value for our
  shareholders

104
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