OneTouch Supply

1
One-Touch Supply

• Prepared by
• World Wide Technology
• Anheuser Busch Inc.
• Friday May 27, 2005

2
Presentation Overview

• Team Overview
• Project Overview
• Project Players
• Business Problem
• Project Approach
• Current Supply Chain

• Potential Scenarios
• Scenario Cost Impacts
• Proposed Supply Chain
• Expected Results
• Next Steps

3
Team Overview

• Brian Firsick (AB) - Manager, Transportation
  Planning
• Steve Gallaher (AB) Manager, Transportation and
  Logistics
• Shawnee Gaffney (WWT) - Director, Supply Chain
  Operations
• Chad Bockert (WWT) - Director, Business
  Development
• Tim Denny (WWT) - Lead Business Systems Analyst
• John Miller (WWT) - Account Executive

4
Project Overview

• World Wide Technology was selected by Boeing as
  the system integrator contracted to provide a
  holistic solution for procurement, distribution,
  installation and disposition services for desktop
  and laptops to end users across Boeings user
  base.

5
Project Players

• Boeing end user and ultimate customer for all
  parties involved.
• Dell manufacturer of all systems
• WWT supplier and distributor of all systems
  produced by Dell and other OEMs
• Blue Current desk side installation services

6
Business Problem

• Boeing has challenged World Wide Technology to
  provide 10 year over year savings related to the
  cost associated with the deployment of each
  system.
• Lease for Austin facility expires in October
  2005, which presents an opportunity for space
  reduction

7
Project Approach

• Pictorially represent the current supply network
• Analyze historical data (2004)
• Evaluate scenarios
• Formulate assumptions based on historical data
• Identify scenario cost components
• Select optimal scenario

8
Pictorial Current Supply Network
193K Parts Shipped Annually 74Inventory 26
Build to Order
55.2
10.3
13.3
Laptops
Direct Ship 21.3 Other
Boeing
Dell
Product Mix 55 Desktops 45 Laptops
WWT
Malaysia
9
Current Supply Network

• All laptops are manufactured in and shipped from
  Malaysia. US entry point in Nashville.
• All other products are sourced in Austin.
• Seattle, SoCal and St. Louis represent 78.7 of
  all shipments
• 74 of shipments are shipped out of stock,
  requiring a 6-day OTD SLA
• 26 of shipments are made to order, requiring a
  12-day OTD SLA

10
Total Logistics Cost - 2004 Actual

• Warehousing - 1,339,609
• Transportation - 438,048
• Order Processing - 405,754
• Inventory Carrying Cost - 199,621
• Total Cost - 2,383,032

11
Potential Scenarios

• Scenario 1 - utilize St. Louis Southern
  California facilities with direct shipments from
  Dell packaging (Nashville Reno) and
  manufacturing (Austin) facilities
• Scenario 2 - leverage St. Louis Southern
  California plus open a new facility in Seattle
  accepting direct shipments from Dell packaging
  (Reno) and manufacturing (Austin) facilities
• Scenario 3 maintain current state

12
Assumptions based on data

• Current State is not optimized
• 2004 is representative of future product mix and
  regional distribution
• Dell pays transportation cost, so costs estimated
  based on assumed rates

13
Scenario 1
31.6
68.4
Laptops
Boeing
Dell
WWT
Malaysia
14
Scenario 1 - Cost impacts

• Increased overall transportation cost due to 2
  long shipments for all Seattle shipments
• Increased inventory carrying costs due to 41
  increase in inventory levels
• Decreased inventory carrying costs due to
  increase in inventory turns as a result of
  shortened lead-times
• Decreased warehouse space and labor due to
  elimination of Austin
• Decreased order processing labor due to
  elimination of duplicate order processing for
  cross docks

15
Total Logistics Cost - Scenario 1

• Warehousing - 845,215
• Transportation - 651,027
• Order Processing - 365,754
• Inventory Carrying Cost - 269,488
• Total Cost - 2,131,484
• Overall Reduction of 11

16
Scenario 2
55.2
31.6
13.3
Laptops
Boeing
Dell
WWT
Malaysia
17
Scenario 2 - Cost impacts

• Decreased overall transportation cost due to
  expected full truckload shipments to 3
  distribution centers
• Increased inventory carrying costs due to 73
  increase in inventory levels
• Decreased inventory carrying costs due to
  increased inventory turns as a result of shorter
  lead-times
• Decreased warehouse space and labor due to
  elimination of Austin and addition of smaller
  space in Seattle

18
Total Logistics Cost - Scenario 2

• Warehousing - 1,082,605
• Transportation - 394,868
• Order Processing - 365,754
• Inventory Carrying Cost - 333,367
• Total Cost - 2,176,594
• Overall Reduction of 9

19
Proposed Supply Chain

• Based on the data presented, we recommend
  Scenario 1 as the most cost effective model

20
Expected Results

• Overall reduction in Total Logistics Cost
• Increased customer satisfaction due to potential
  for reduced SLAs in St. Louis and SoCal

21
Next Steps

• WWT will present findings based on this analysis
  to Dell and Boeing to gain support for
  implementation.
• WWT will assign appropriate IT and operational
  resources to redesign the current process and
  modify current system integration points to fit
  the proposed model.
• Dell must assign appropriate IT resources to
  modify the current system integration points.
• WWT will develop an implementation plan with an
  associated timeline