2015 Scholarship Recipients John Cutler MBA Scholarship Jonathan Wood – University of Tennessee Myron B. Smith & Dr. John Metzger Undergraduate Scholarship Hirel Patel, Zoetis Megan Smith, Johnson & Johnson Jillian Whiting, Johnson & Johnson 1

Katie Freisen March 25, 2015

Context/Background Objective  Improve utilization of loading space within a ULD (unit loading device)/container by Best-fit Gaylord (pallet) size. Best fit for packing and best fit within aircraft  Gaylord is 42”x57” vs. 40”x48”  Efficient & compliant packaging process at DCs to maximize chargeable vs. actual pricing per KG Scope  Geographical scope: Global (AP, US, EMEA,LATAM)  Functional scope : Transportation (Air, Ocean & Surface-FTL) & Warehousing (packaging) What does it mean?  More products in a gaylord and more gaylords in a ULD Pilot was successful – implemented for all freight ex. Memphis DC Open space that we paid for because carrier could not resell Fully utilized footprint benefits carrier and rate Configurations of 9 full pallets and 3 half pallets

Project OPAL: Optimization of Air Pallet Loading Objectives Overview: The objective of the project is two fold: 1) Efficient packaging of pallet at Distribution/ manufacturing centers (i.e. more products in the pallet). 2) Improve cubic utilization of container used in Transport (ie: ULD for air) Approach: Phased approach will pilot high volume high opportunity lanes. Phase I: Tier 2 high volume air lanes and pilot site Phase II: Site level implementations focused on high volume locations Phase III: Replicate process across multiple modes Phase IV: Align with planning on perfect order quantities Sustain: Through monitoring & analyzing networks, ensure optimized shipment size and volumes measured through reporting & metrics 4 Deliverables Key Benefits: Transportation movements with operational impact measure related to pallet utilization, volumes and products by lane Optimized shipments across all modes of transportation leading to reduced operating costs - Operating costs include transportation spend reduction, increased utilization of packaging supplies, increased purchasing leverage with common size gaylords Alignment between operations, transportation and planning. Savings estimate: 4-8%, high side 15% 2013 Savings: Average 8-9% 2014 Results: Average 15-18% Multi-Year Deployment Plan Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 P1: Pilot Lanes MLC – EDC and RDC P4: Upstream Alignment with Planning (Perfect Order Sizing) P4: Upstream Alignment with Planning (Perfect Order Sizing) Visibility Development to Sustain and Monitor Network Performance P2: Site Level Implementations (Top 5 All of MLC rolled out 5/29; EDC on target 8/11 P2: Site Level Implementations (Top 5 All of MLC rolled out 5/29; EDC on target 8/11 P3: Multi-Modal Optimization * Partnering with Project Gemstone on Damage Reduction

How did we calculate savings? 1) Compared old footprint to new (physically) 2) Compared chargeable vs. actual weight different on invoice to calculate actual savings 3) Larger volume shipments have more potential for savings Shipment TotalsShipments New Config Pallets Old Config PalletsReduction MDCEDC % OriginDestDateNew ConfigOld ConfigSavings MDCEDC8/7/ % MDCEDC8/9/ % MDCEDC8/9/ % MDCEDC8/12/ % MDCEDC8/13/ % MDCEDC8/14/ % MDCEDC8/15/ % 5

OPAL: MLC Chargeable KG Reduction Origin & Destination Pairs