Linking Business Strategies to Logistics

The Value of Elemica’s Logistics Solutions

QuickLinkTM Integration Connections Inter-Co

Master Data Elemica

Client ERP

Document Stream

Document Stream Client

Partner’s ERP

Mapping

Elemica Supply Chain Operating Network

Discovery

3rd Party Applications SmartLinkTM Applications

On-Boarding

Collaboration

Universal Data Model

Universal Business

Documents

ELEMICA CONFIDENTIAL

Business Process Dashboard

Messaging Dashboard

Unstructured Data

SmartLinkTM Analytics + = Universal Business

Concepts

Our Discussion Today

The Quest for a World-Class Supply

Chain

Linking Business Strategies to Supply

Chain Objectives

Quantifying the Value of Logistics

Solutions

Commencing Your Journey

The Value of Supply Chain Excellence

Bottom 25%

Avg

Perf

orm

ance

vs.

Indu

stry

Progressive 15%

World Class 10%

Average 50%

0%

Source: Corporate Executive Board, Supply Chain Management Research Group, 2006

SCOR Level 1 Metrics

P&L: Top Line

P&L:

Bot

tom

Li

ne

Bala

nce

Shee

t

Metrics that Matter

Competing Supply Chain Metrics

Sources: “An Econometric Analysis of Inventory Turnover Performance in Retail Services”, Gaur, Fisher & Raman, May 2004 “TIME FOR A MEA CULPA?”, Lora Cecere, Supply Chain Insights, April 2014

“Nine out of ten companies are stuck at the intersection of operating margin and inventory turns, but

they do not know what to do about it.”

- Lora Cecere

Supply Chain Objectives

Velocity (Responsiveness)

Agility (Flexibility)

Reliability

Efficiency (Costs, Assets)

Consume the fewest possible

resources COGS

Increase Velocity of Product, Information,

& Cash Flows C2C

Respond to Changes Quickly

Sales, COGS Provide Perfect

Orders to Customers Sales, COGS

What is your Competitive Strategy?

• Provide comparable products and services at lower prices than your competitors

Cost

• Provide comparable products and services that perform better, last longer, fewer defects than your competitors

Quality

• Provide faster lead times, flexibility to handle changes, more convenience, less restrictions than your competitors

Service

• Provide unique features and better designs than competitors on similar products or be the first to market on new products

Innovation

Source: Adapted from The Discipline of Market Leaders, Treacy & Wiersema, 1997, Basic Books

Prioritizing Supply Chain Objectives

Reliability Agility

Quality

Cost

Service

Innovation

Velocity Efficiency

2nd 3rd 1st 4th

Velocity Agility Reliability Efficiency

Reliability Agility Efficiency Velocity

Velocity Agility Reliability Efficiency

Addressing the flat curve to world-class supply chain status

1. Design your supply chain to align with competitive strategy 2. Force-rank your acceptable metrics & targets based on these priorities 3. Set expectations with leadership as to these targets

Happy Path

Velocity (Responsiveness)

Agility (Flexibility)

Reliability

Efficiency (Costs, Assets)

Increase Velocity of Product, Information,

& Cash Flows

Respond to Changes Quickly

Provide Perfect Orders to Customers

Consume the fewest possible

resources COGS

Sales, COGS

Synchronization

Connect supply to demand

COGS, Sales, C2C

C2C

Sales, COGS

The Value of Elemica Logistics Solutions

Velocity (Responsiveness)

Agility (Flexibility)

Reliability

Efficiency (Costs, Assets)

COGS

Sales, COGS

Sales, COGS

Time Slot Management Freight Cost Management Terminal & Whse Visibility

Global Shipment Visibility & Control

Transport Execution Time Slot Management

Logistics Sourcing Transport Execution

Time Slot Management Freight Cost

Management

Synchronization

COGS, Sales, C2C

Global Shipment Visibility & Control

Time Slot Management

C2C

Real Value Realized

$265-$325 Automation & Collaboration Savings Shipments & Freight Invoices

Lower Labor Costs Reduced data entry, paper handling Better POD visibility Reduced time fixing errors Lower freight audit effort

Lower Freight Costs Improved carrier negotiations Reduced detention charges Fewer premium, cancellation charges Better control over assessorials

Improved Cash-to-Cash Cycle Faster POD information Better terms with carriers Better inventory management Real-time visibility to LSP activities

$2356 Cost/Shipment Before Elemica

$2061 Cost/Shipment With Elemica

$32

$82

$181

Continuing the Quest

Align the SC with strategy

Determine metrics & targets

Create roadmap of initiatives

Prioritize & Rationalize

Implement & measure

Engage with Elemica at any step in this process!

Use Elemica tools for estimating value and

rationalizing opportunities

Cindi Perdue Hane Vice President, Logistics

cindi.hane@elemica.com Phone: +1 404 477 5286

cindi.hane

@CindiHane

cindi.hane@elemica.com

www.elemica.com

Appendix 1: Tools for Estimating Value

15%

19% 62%

4%

Booking Automation

Operations Planning & Tracking

Paying

Performance Mgmt

Labor Savings

§ Automated booking improves productivity and quality of logistics team’s activities

§ Site resources are optimized with carrier appointments. Real-time visibility and POD eliminates tracking activities and dispute resolution

§ Freight Cost Management eliminates post-audits and disputes

§ Access to data in single system eliminates data gathering and streamlines analysis

$32 in Labor Cost Savings per Shipment

Freight Savings

§ Logistics Sourcing activities improve negotiated rates

§ Automation & Visibility reduce errors on shipment data and allow for proactive management to reduce expedited costs

§ Time Slot Management dramatically reduces detention charges at load/unload locations

§ Collaborating on assessorials improves accuracy, allows for passing charges to customers, reduces disputes

53%

21%

14%

12%

Negotiating Errors Detention Paying

$181 in Freight Cost Savings per Shipment

C2C Savings

§ Automated shipment confirmations from LSPs reduces Days of Inventory by speeding up PGI.

§ Time Slot Management reduces mean lead time and variation, which reduces inventory levels.

§ Better in-transit inventory visibility throughout long supply chains promotes optimized inventory practices, reducing DOI.

§ Multi-party shipments are more prone to delays in pick-ups at hand-off points. Visibility allows more pro-active management of these shipments. Reduces DSO.

§ POD is required before customer approves invoice. Authenticated POD reduces DSO.

§ Can negotiate better terms with (some) carriers because of electronic approval and payment - lowers disputes and decreases variability of their DSO. Increases DPO.

$82 in C2C Improvements per Shipment

Value by Logistics Solution

Logistics Sourcing $95.00

Transport Execution, Shipment Visibility $96.10

Terminal & Warehouse

Visibility $17.81

Time Slot Management

$44.21

Freight Cost Management

$41.87

Savings per Shipment including Labor, Freight, and C2C costs

Appendix 2: Tools for Rationalizing Initiatives

Value of Transport Execution

Improved Productivity of Logistics Ops

• How much does your company spend on booking & tracking freight? Fixing errors? Dispute resolution due to missing POD?

• Do people collect and analyzing freight data for performance management?

• What valuable customer services activities could they be doing instead?

Reduction in Freight Costs

• What % of your shipments are expedited? Why?

• Could you eliminate expedited shipments with automation? Visibility?

• What % of shipments are impacted by data errors?

• Are data errors causing cancellations and returns charges?

Reduction in Cash-to-Cash Cycle

• On what % of shipments do you have authenticated Proof of Delivery (POD)?

• How are you meeting VAT exemption requirements for Confirmation of Arrival?

• What % of shipping errors occur on multi-party shipments?

• Would improved visibility allow you to reduce inventory?

Value of Time Slot Management

Reduction in Detention Charges

• What is your average detention charge?

• What %age of your shipments incur detention?

• What if you could eliminate detention at your loading facilities?

Reduction in Cash-to-Cash Cycle

• What is your variability of shipment lead times?

• How are you buffering this uncertainty with inventory?

• Could you accelerate PGI by eliminating detention?

Improved Site Operations

• How do you handle surges in truck arrivals?

• If you could smooth the labor requirements across the shift, could you reduce labor costs?

Value of Freight Cost Management

Reduction in Audit & Pay Charges

• What do you spend per shipment on Freight Audit & Pay activities?

• What %age of your shipments require dispute resolution?

• What % of carrier invoices/payment advices are entered manually?

Reduction in Freight Charges

• Do you believe more discipline is needed in freight payment process?

• What % of your assessorial charges should be passed to your customers?

• Could you take advantage of early payment discounts?

Reduction in Cash-to-Cash Cycle

• Could you negotiate better terms with carriers in exchange for reduced DPO variability?

• Could you implement self-billing program with more discipline in freight cost approvals?

Value of Terminal & Warehouse Visibility

Accelerate Post Goods Issue

• Do any of your LSPs provide shipment confirmations manually?

• How many days of delay could you eliminate if you received shipment confirmations in real time?

Reduction in IT Infrastructure Costs

• Have you implemented ERP terminals at your LSPs’ facilities?

• What is your annual spend on these terminals?

Improved Data Quality & Security

• Do you receive consistent data across your network of LSPs?

• Do you need to eliminate ERP terminals at LSPs in order to meet your company’s data security standards?