Supply Chain Management Presentation to Emerson March 24th 2004 Supply Chain Management Presentation to Emerson “Creating operating and capital efficiencies that generate strong cash flow to fund dividends, strategic acquisitions, capital investment and technology development.”

Executive Summary Benefits of a single source supply chain provider for Emerson’s international logistics Establish enterprise wide visibility Divisions have visibility to tracking and exception management Ability to capture shipping data (volume by trade lane and sourcing patterns) Shift from Multi Country Consolidation to Single Country Consolidation to increase supply chain efficiency and lower cost Increase supply chain efficiency Lower consolidation cost Compressing cycle time Achieve goal of ocean freight savings and cost reduction APLL to target lowering freight cost by 15% by offering tier 2 options

Executive Summary Adopt a best practice environment for Emerson’s supply chain Increase utilization of containers (current estimated utilization 35cbm of 55%) Through greater box utilization target savings of 30% Shift air freight to ocean freight Work to optimize customs brokerage, deconsolidation, distribution and airfreight networks Partner with a “best in class” service provider to optimize Emerson’s supply chain Proven track record in implementing supply chain solutions Leading information technology programs – EDI and See Change End to end supply chain management company Industry and customer recognition

Emerson – APLL Strategic Drivers Three Strategic Drivers VISIBILITY SCALE ORGANIZATION Outcome: Enable Emerson and APLL to consistently optimize decision making Lower transportation costs and reduced cycle time Long term partnership and knowledge gain creates efficiency, innovation, flexibility and faster response times How?: Data Aggregation Process Management Communication Expanded SCC Enhanced Pricing Enhance Network Fully allocated team Program Management Flat, Cross Functional Structure

High Level View Services Actions Analysis Consolidation Create Logistics Procedure (LP) Identify the divisions to be involved Deconsolidation Create deconsolidation hub options Identify traffic pattern Distribution Convert LTL into FTL Identify distribution destinations CHB Reduce number of brokers Determine how the brokers are deployed Freight Analysis Focus on ocean imports Ocean contract management Identify ocean lanes Full container pricing Apply full container rates FCL volume/rate info Less than container pricing CBM Pricing Mimic FCL model Account Management Two levels of management planned Assess account management structure

Current Product Flow APLL/Emerson achieved savings of over 35% with current consolidation program

Projected Product Flow Target utilization savings of 22% equals over $2 million

APLL Proposal Outlined Action Plan Detail the project team Define the scope of the project Outline the first 100 days Identify new opportunities to optimize the program Review ocean transportation management Review pricing Present destination cross dock and delivery options Present customs brokerage recommendations Highlight the benefits of See Change Formalize agreement

Action Plan Actions Status Need Phase Who Due date Review/confirm APL rates In progress I Dave Hill, Rick Monday, Mar 15 Moradian Provide Carrier rate options Completed I Dave Hill Monday, Mar 15 Provide LCL per CBM rates CFS-CFS Completed I Dave Hill, Chris Nalbantyan Project Management assignment - define org structure/support (US & Asia/cust. Svc.) Completed I Brigitte Wagner, Monday, Mar 15 Rick Moradian Initial EDI/PO upload In progress I Brigitte Wagner Monday, Mar 15 Asia to Europe: Engage Emerson Europe contacts Completed Consol/SCC, LCL II Jesper Nielsen, Tuesday, Mar 16 Dave Hill, Bob Bodee Deconsol - Torrance, meet with Cat Logistics re: Southaven I Chris Corrado Apr 12 SCT: review SOW and implementation I Brigitte Wagner, Mar 22 Rob Haney EDI/PO uploads develop plan by division and training manual II Brigitte Wagner Phase II Aug 1 Analyze current and alternative DCs, review TMS options Need LTL/DC shipping History II Cliff Wright, Chris Aug 1 (tentative) Corrado, Bob (weight,dims,carrier) Bodee Set up airfreight process (import and export) II Dave Hill, Kevin May 1 Jones Asia to Europe: Manage Consol/SCC, LCL II Jesper Nielsen, TBD Dave Hill Review SCT capability for 4PL foreign-foreign, Europe-US II Brigitte Wagner, Aug 1 Dave Hill Meet with Carmichael re: managing broker design/plan Broker list, entry volume, rates II or III Dave Hill, Paul Aug 11 (tentative) Woolley, Bob Bodee, Jorge Longa

The Deployment Manager will be positioned in St. Louis APLL Project Team APLL has nominated Will Warne as Deployment Manager and will be supported by leads in operations, IT, engineering and analysis to create the master Logistics Procedure (LP), interface with divisions and discover process improvements The Deployment Manager will be positioned in St. Louis

APLL Account Management Two levels of account management Deployment Manager to oversee the implementation and on-boarding Origin customer service will coordinate shipments based on the LP and coordinate vendor edification Destination customer service will manage the flow of information, interface with divisions and provide exception management

APLL / Emerson Project Team Larry Kremer Rick Moradian Vice President Vice President Jorge Longa Will Warne Bob Bodee Project Manager Client Manager Business Development Raymond Choy Cliff Wright Carlos Camara Pam Evans APLL North Asia APLL Solutions Engineer See Change Services APLL Customer Support Tracy Wong Chris Nalbantyan Maria McCafferty TBD APLL South Asia Transportation Analyst EDI Implementation APLL Customer Support

Expand Current Program Drive more freight through the consolidation network Multi country consolidation (MCC) Single country consolidation (SCC) Less than container shipments Focus on managing the area of greatest impact. Asia to North America Asia to Europe Target divisions to participate Design LP template to apply to the new divisions Begin mapping Purchase orders (850’s) into APLL operating system (ACS123)

Gantt Chart: 100 Day Plan

Primary focus is to maximize SCC shipments First 100 days Primary focus is to maximize SCC shipments Optimize loadability of the container Target consolidating freight into 40’ containers Target utilization 48 cubic meters or 40,000#’s Use the less than container program as a value add Minimize dwell time Continue the MCC program as needed Example: Philippines and Taiwan

Identify New Opportunities Identify new areas to reduce cost Could result from divisional meetings International freight that was not previously identified Convert air freight to ocean freight Determine new ways to reduce cost Optimize distribution/cross dock locations Review the options and benefits with Emerson Implement the changes

Review Emerson Ocean Contracts Reviewed the ocean contract information provided by Emerson Reviewed the port pairings and volumes provided Compared Emerson contracts with APLL carrier contracts

Analysis of Data Provided Sample Data Summary Size 20’ 40’ 40HC 45’ Units 644 869 358 117 Tier 1 Tier 2 Emerson ocean spend $2,638,666 $2,638,666 APLL contract rates $2,576,622 $2,379,293 Immediate Savings $62,042 $259,372 Percentage 2% 9% Observations: Good potential to reduce the number of 20’ containers Increase savings by APLL negotiating future Tier 2 contracts

Full Container Pricing

Develop Predictable CBM Pricing Consolidation and ocean freight combined Price by lane - container freight station to distribution center door Quicker transit than MCC Loadability variables Heavy weight commodities Service and transit requirements Division specific packaging

Proposed Fees Target average rate of $88 per cbm/rev. ton for consolidated shipments Single Country Consolidation $2.00 cbm/RT for all origins currently in the program $4.00 North and central China $3.50 India $3.50 Japan $60 Factory Loads Globally Multi Country Consolidation (to be phased out) $12.00 cbm/RT See Change Transactional Fee .70/cbm Mapping is an additional charge $4000 per division for standard EDI mappings $5000 per division for Flat File or non standard format

Cubic Meter Pricing - Overflow

Destination Cross Dock and Delivery Continue to cross dock in Carlsbad and Southaven Propose improved cross docking strategy First priority is to shift Carlsbad to LA (Torrance) Add additional cross dock destinations Need better understanding of volumes to destinations for best pricing

Straight transload into LTL truck No storage included Torrance Cross Dock Maintain current rate $6.25 / CBM handling charge established for Liebert Straight transload into LTL truck No storage included Re-evaluate rates for programs involving sortation

APLL Cross Dock Benefits As more divisions are added costs are reduced through: Adding deconsol locations closer to final destination Elimination of transloading congestion from divisional warehouses Use of APLL’s transportation management system – shift freight from LTL to truckload

Current Deconsolidation Centers

Potential Deconsolidation Network

Potential APLL Cross Dock Locations

Example of Domestic LCL Consolidation

Managing broker to coordinate other brokers Brokerage Plan Managing broker to coordinate other brokers Scope of brokerage includes US, Europe & Asia Move towards fewer brokers Encourage cross division shipping Issues Currently 70+ brokers Resistance to change

Customs House Brokerage Fewer brokers creates: Greater control Better visibility to all entry activity Product Classification Consistency Higher rate of compliance Decreases the chances of containers being held because of multiple brokers clearing freight in a container. Example of Savings through Brokerage Consolidation

See Change - Adding Value Multi level supply chain visibility For tracking shipment status Ocean, air, CHB, deconsolidation, delivery Unique internal visibility Visibility at the divisional level Exclusive visibility at the corporate level Provides customized exceptions mgmt Exceptions set based on specific KPI’s

Our Model: Create Quality Connectivity ERP/OMS Vendor Packing List / ASN Orders/Product 3PL/Forwarder TMS Search User Shipments/ Equipment Exceptions User Reports WMS/ Deconsolidation User Carriers/ Customs Truckers/ Rail Inventory In Transit

Incorporate 100 day plan into the agreement Formalize Agreement Upon agreement of the 100 day plan, create a contract to formalize the details Incorporate 100 day plan into the agreement Create master agreement which defines Relationship Terms and Conditions KPI’s 5 year term