2001 Cost Optimization program Charles Coker, Jr., Staff Vice President - Purchasing and Logistics

Why Do They Do It? l increasing competitive pressure l slowing growth l need it faster

The Sonoco Difference l with others, productivity burden is the supplier’s problem l to succeed, approach must be sustainable l Sonoco knows something about sustainability l Sonoco approach is different

Supply Chain Insights  competition is fierce  companies no longer compete one-on-one  old rules no longer apply  integrate and synchronize  waste and inefficiency must be eliminated

Limited Leverage with Suppliers Complex & Costly Order Entry/Payments System Supplier Proliferation 25M+ Domestic Suppliers Carriers Low Level Visibility of Data ‘One Company’ View to Suppliers Strategic Alliances with Fewer Suppliers or Outsource Leverage via Consortiums Automated Transaction Execution Supply Chain Management System Wide Analysis of Data Strategic Management Transaction Execution SCP&L Strategic Vision Historical Situation Long Term Vision

Sonoco’s Four Key Drivers l Growing the Top Line l Productivity l Capital Effectiveness l People, Culture, and Values

How to Proceed? l message of collaborative cost reduction l take message back to your company l test our approach

Four Step Approach ¶ assess opportunities - your internal operations - our shared logistics activities - our internal operations

Four Step Approach ¶ assess opportunities · joint review and prioritization ¸ 8% price reduction to initiate ¹ reconcile and adjust

Sonoco Productivity Definition l costs compared to previous 12 months l exclusive of market changes l use of appropriate indices to gauge market change adjustment

System-wide Cost Reduction Example One Supplier Company $5 million

System-wide Cost Reduction Example One Supplier Company $5 million l 8%adjustment yields $400,000 l Sonoco productivity initiative yields $500,000 l Supplier nets $100,000 favorable gain

System-wide Cost Reduction Example Two Logistics Company $2 million

System-wide Cost Reduction Example Two Logistics Company $2 million l 8%adjustment yields $160,000 l Sonoco discovers additional service capabilities l Supplier realizes new business offsetting price adjustment

Supply Chain Cost Reduction with Sonoco Global IPD Customer 9% Global IPD Customer 9% Savings Delivered on Reduced Procurement Costs

Supply Chain Cost Reduction with Sonoco Global IPD Customer 20% Global IPD Customer 20% Reduction in Packaging Material Return Rate

Supply Chain Cost Reduction with Sonoco Global IPD Customer 17% Global IPD Customer 17% Savings Delivered on Reduced Warehousing Costs

Supply Chain Cost Reduction with Sonoco Global IPD Customer 8% Global IPD Customer 8% Savings Delivered on Reduced Shipping and Transportation Costs

Supply Chain Cost Reduction with Sonoco Global IPD Customer 30% Global IPD Customer 30% Savings Delivered on Reduced Core Cutting Costs

Supply Chain Cost Reduction with Sonoco Global IPD Customer 11% Global IPD Customer 11% Savings Delivered on Total Supply Chain Cost on all Components

System-wide Cost Reduction Shared Benefits Suppliers

Sonoco Purchasing and Logistics Productivity Initiatives Corrugated Steel Films Lumber Europe Materials Europe Logistics Truckload Carriers IT Outsourcing Telecommunications PC Support Dedicated Trucking Inks Laminates Adhesives External Paper Canadian Projects Flexibles S&E Chemicals Speciality Papers Resins Energy MRO Color Concentrate Ocean Freight Coal Inbound Rail Temporary Labor Packaging Less Than Truckload Small Parcels and Air Express Area Fleet Focus Transport Equipment On-Line Purchasing Warehousing

Action Plan Timeline December , 2000 Meet with Sonoco Purchasing / Logistics Representatives Develop Preliminary Productivity Project Summaries, Establish Stretch Productivity Targets December 15, 2000Communicate Price Adjustment Commitment Communicate Preliminary Productivity Projects January 1, 2001Adjust Sonoco Price

Action Plan Timeline January 30, 2001Complete Productivity Plan Prioritization and Work Plan with Sonoco Liaison February 1, 2001 Implement Productivity Programs through and Track Results March 30, 2001 April 30, 2001Adjust Sonoco Pricing +/- Based on Productivity Program Results

Questions “Why should I adjust my price up front?” l skin in the game l organizational engagement l aggressive targets yield better results

Questions “What skin does Sonoco have in this arrangement?” l willingness to keep you whole l sustainable, long-term approach l requires risk on both sides

Questions “How do I know that you’re committed?” l CEO involvement l 100 years of dependability l deployment of resources

Questions “What’s in it for me?” l long-term approach l compliance l concern for your profitability l open dialogue for new ideas l sound business partner l commitment to success

Wrap-Up Session Charles Coker, Jr.

Sonoco’s Four Key Drivers l Growing the Top Line l Productivity l Capital Effectiveness l People, Culture, and Values

Limited Leverage with Suppliers Complex & Costly Order Entry/Payments System Supplier Proliferation 25M+ Domestic Suppliers Carriers Low Level Visibility of Data ‘One Company’ View to Suppliers Strategic Alliances with Fewer Suppliers or Outsource Leverage via Consortiums Automated Transaction Execution Supply Chain Management System Wide Analysis of Data Strategic Management Transaction Execution SCP&L Strategic Vision Historical Situation Long Term Vision

How to Proceed? l message of collaborative cost reduction l take message back to your company l test our approach

Four Step Approach ¶ assess opportunities · joint review and prioritization ¸ 8% price reduction to initiate ¹ reconcile and adjust

Purchasing and Logistics l Sonoco’s Commitment: n Visibility to Opportunities n Compliance n Receptive to Change n Growth

Purchasing and Logistics l Sonoco’s Supplier Expectations: –Fully Integrated Approach to Productivity –Proactive –Leadership –Creativity –Challenge Us!