Warehousing and Distribution Solutions - by Incredible Logistics Solutions, Inc. Incredible Logistic Solutions, Inc. is a single-source provider of software, professional services and equipment. TRAINING PROGRAM

INDIANA/PURDUE-FORT WAYNE LOGISTICS TRAINING PRESENTATION “WAREHOUSE MANAGEMENT SYSTEMS” PRODUCT MOVEMENT SYSTEMS (“WMS”) – SOFTWARE IMPACT IN TODAY’S MARKETPLACE - EFFECTS ON THE RETAIL/WHOLESALE DISTRIBUTION SUPPLY CHAIN. 1. PREMISE TO SUCCESSFUL “WMS” IMPLEMENTATION. 1.1 - DEVELOP A DISTRIBUTION CENTER STRATEGIC MASTER PLAN (DCSMP). CONDUCT OPERATIONAL ASSESSMENT. DEFINE FUTURE REQUIREMENTS. DEVELOP ALTERNATIVES. EVALUATE ALTERNATIVES. DOCUMENT “DISTRIBUTION CENTER STRATEGIC MASTER PLAN”. Today’s supply chain strategy is based “Pull” type inventories to satisfy ‘real-time’ customer service levels rather than “Push” type inventory requirements of the Past. With the advent of Internet Trading , we are faced with larger customer service problems - translating to larger and more complicated distribution problems. It is imperative that we can track product as close to the origin as possible. It is also necessary that we can provide accurate and fast shipping information. The closer that we can get to achieve true “cross-dock” applications, the better we will be at achieving ‘real-time’ customer service. Before we can choose a “Warehouse Management System” we must develop a business plan. These systems become more of a “Product Movement System” to track the product from origin to end user.

2. - DEVELOPING A STRATEGIC MASTER PLAN 2.1 - CONDUCT AN OPERATIONAL ASSESSMENT STUDY. (UNDERSTAND THE CURRENT STATUS OF EXISTING AREAS OF THE DISTRIBUTION CENTER OPERATIONS.) 1. CUSTOMER SERVICE 2. DISTRIBUTION CENTER MANAGEMENT AND CONTROL 3. INVENTORY ACCURACY AND TURNOVER PROFILE 4. EXCESS PAPERWORK 5. SPACE UTILIZATION 6. LAYOUT - PRODUCT FLOW AND THROUGHPUT 7. LABOR PRODUCTIVITY 8. EQUIPMENT METHODS 9. EQUIPMENT UTILIZATION 10. BUILDING FACILITIES 11. HOUSEKEEPING AND SAFETY

3. - DEFINE FUTURE REQUIREMENTS. 3.1 - DEVELOP A FIVE YEAR BUSINESS PROJECTION TOANSWER THE FOLLOWING QUESTIONS: • HOW WILL ORDER VOLUME CHANGE? • WILL INVENTORY LEVELS CHANGE? • WILL INVENTORY TURN RATES CHANGE? • WILL PRODUCT MIX CHANGE? • WILL CUSTOMER REQUIREMENTS CHANGE?

4. - DEVELOP ALTERNATIVES. 4.1 - DEVELOP VARIOUS APPROACHES TO DISTRIBUTION CENTER AUTOMATION. DEVELOP PROJECTED OPERATIONAL COSTS. DETERMINE POTENTIAL SAVINGS IN SPACE AND LABOR. DEVELOP ALTERNATIVE BUDGET INVESTMENTS. DEVELOP INVENTORY PROFILES.

5. - EVALUATE ALTERNATIVES 5.1 - EACH ALTERNATIVE WILL REQUIRE AN “INTERNAL RATE OF RETURN” OR “PROJECT PAYBACK” CALCULATION TO DETERMINE ECONOMIC FEASIBILITY.’ 5.2 - DEVELOP AN OPERATIONAL QUALITATIVE ANALYSIS TO CONSIDER ISSUES, WHICH ARE DIFFICULT TO EXPRESS ECONOMICALLY. SAFETY ERGONOMICS EMPLOYEE EDUCATION USING THE “DISTRIBUTION CENTER STRATEGIC MASTER PLAN” APPROACH IS THE ONLY METHOD OF PROPERLY CONFRONTING DISTRIBUTION CENTER AUTOMATION.

IDENTIFYING INFORMATION FLOW PROBLEMS AREA SYMPTON RECEIVING TRUCKS WAITING – EQUIPMENT NOT AVAILABLE – NO ADVANCED KNOWLEDGE OF WHAT IS COMING LIFT TRUCK OPERATORS DON’T KNOW WHERE TO GO OVER CROWDED RECEIVING AREA – ASSIGNED LOCATIONS OCCUPIED PUT - AWAY STORAGE CROWDED AISLES – EXESSIVE HONEYCOMBING UNEVEN PRODUCT MIX ORDER PICKING PRODUCT UNAVAILABLE – AISLES TRAVELED MORE THAN ONCE PER ORDER OR WAVE PACKAGING MATERIALS UNAVAILABLE – MIS-LABELED PRODUCTS CROWDED STAGING AREA – PRODUCTS ROUTED AND GROUPED INCORRECTLY STAGING SHIPPING SHIPPING DELAYS – TRUCKS WAITING – CUSTOMER COMPLAINTS

(“WAREHOUSE MANAGEMENT SYSTEMS”) “PRODUCT MOVEMENT SYSTEM” - BENEFITS: REAL-TIME COMPUTER CONTROL OVER DIRECT LABOR AND MATERIAL HANDLING EQUIPMENT PRODUCE MORE EFFICIENT OPERATIONS, LOWER OPERATING COSTS, AND PRODUCE HIGHER LEVELS OF CUSTOMER SERVICE.  OPERATIONAL BENEFITS OF COMPUTER-INTEGRATED DISTRIBUTION SYSTEMS INCLUDE: 1 - INCREASED SPACE UTILIZATION. • INCREASE THE TOTAL NUMBER OF PICK FACINGS. • INCREASE OVERALL DENSITY. 2 - IMPROVED PRODUCT FLOW THROUGH THE DISTRIBUTION CENTER. • REDUCE THE NUMBER OF TIMES PRODUCT IS HANDLED. • REDUCE PRODUCT HANDLING AND TRAVEL DISTANCES.

“PRODUCT MOVEMENT SYSTEM” - BENEFITS: 3 - IMPROVED INVENTORYACCURACY. • IMPROVE PROCEDURES FOR CYCLE COUNT. • PROVIDE REAL-TIME INCREMENT/DECREMENT OF INVENTORY. 4 - IMPROVED CUSTOMER SERVICE. • REDUCE LEAD TIMES TO PROCESS ORDERS. • ELIMINATE ORDER PICKING ERRORS WITH BARCODE SCANNING. 5 - INCREASED LABOR PRODUCTIVITY THROUGH COMPUTER- ASSISTED OPERATIONS. • INCREASE PRODUCTIVITY THROUGH BATCH PICKING OF ORDERS. • INCREASE PRODUCTIVITY THROUGH DIRECTED PUTAWAYS/PRODUCT MOVES/CYCLE COUNTS. • INCREASE PRODUCTIVITY THROUGH USE OF ENGINEERED LABOR STANDARDS.

“PRODUCT MOVEMENT SYSTEM” - BENEFITS: 6 - REDUCE OVERALL INVENTORY LEVELS WHILE REDUCING STOCKOUTS. • REPORT ACCURATE INVENTORY LEVELS TO BUYERS AND PRODUCTION PLANNERS - “ON-LINE”. • REPORT ACCURATE INVENTORY VELOCITY HISTORY TO BUYERS AND PRODUCTION PLANNERS. THE “RETURN ON INVESTMENT” (ROI) ANALYSIS OT THE INTEGRATED PRODUCT MOVEMENT SYSTEMS PROJECT CAN USE THE FOLLOWING FINANCIAL BENEFITS: • REDUCTION OF DIRECT LABOR COSTS. • REDUCTION OF EXCESS FACILITY COSTS. • REDUCTION OF INVENTORY ASSET LEVELS.

INTERFACING “ELECTRONIC DATA INTERCHANGE” (EDI) WITH - ”PRODUCT MOVEMENT SYSTEMS” (PMS). TODAY’S MARKET PLACE USES TERMS SUCH AS :   • EFFICIENT CONSUMER RESPONSE (ECR). • CONTINUOUS REPLENISHMENT PROGRAMS (CRP). • VENDOR MANAGED INVENTORY (VMI). • FAST FLOW THROUGH. • CROSS-DOCKING. FACILITATING THE EXCHANGE OF INFORMATION AND HELPING COMPANIES MANAGE THE FLOW OF MATERIALS THROUGH THE DISTRIBUTION PIPELINE, “FAST FLOW THROUGH” INVOLVES PART COOPERATION AND PART COMPUTER TECHNOLOGY INTEGRATED WITH MECHANICAL OR MANUAL CROSS-DOCKING FACILITIES.

THREE ESSENTIAL ELEMENTS TO SUCCESS: • PRODUCT INFORMATION AND IDENTIFICATION MUST BE SIMULTANEOUS WITH PHYSICAL DISTRIBUTION. • PRODUCT MUST BE READILY AVAILABLE AND NOT NEED TO BE WAREHOUSED TO MEET DEMAND. • FINAL DESTINATION OF PRODUCT MUST BE KNOWN PRIOR TO ITS RECEIPT.

PRODUCTS THAT TYPICALLY LEND THEMSELVES TO CROSS-DOCKING ARE: • PROMOTIONAL OR TRENDY ITEMS. • HIGH VOLUME PRE-ALLOCATED PRODUCT. • SEASONAL OR CYCLICAL PRODUCTS. • DIRECT DELIVERY PRODUCTS. • PERISHABLE OR TEMPERATURE CONTROLLED PRODUCT SENSITIVE TO EXPIRATION DATE OR LOT CONTROL. • INTER-STORE TRANSFER PRODUCT. • BACK-ORDERED PRODUCT REQUIRING IMMEDIATE DISPOSITION.

INVENTORIES REDUCE BECAUSE YOU ARE MATCHING PRODUCTION TO CONSUMER DEMAND, REDUCING SHELF LIFE. EFFICIENT CONSUMER RESPONSE (ECR) IS CLOSELY RELATED TO (EDI) ELECTRONIC DATA INTERCHANGE. BOTH INVOLVE A MANUFACTURER OR PROCESSOR AND IT’S DISTRIBUTOR GETTING TOGETHER TO PERFORM STANDARD BUSINESS TRANSACTIONS OVER THE “INTERNET” OR OVER A COMPUTER NETWORK. (ECR) EFFICIENT CONSUMER RESPONSE PRODUCES A POWERFUL BUSINESS PARTNERSHIP WITH COMPUTER TECHNOLOGY TO CUT COSTS, AND INCREASE COMPETITIVENESS. A DISTINGUISHING CHARACTERISTIC OF EFFICIENT CONSUMER RESPONSE (ECR) IS PARTICIPATION OF THE RETAIL MERCHANT IN THE PARTNERSHIP.

INVENTORIES REDUCE BECAUSE YOU ARE MATCHING PRODUCTION TO CONSUMER DEMAND, REDUCING SHELF LIFE. CONTINUOUS REPLENISHMENT PROGRAMS (CRP) ARE A SPIN OFF OF EFFICIENT CONSUMER RESPONSE (ECR). CONTINUOUS REPLENISHMENT PROGRAMS ASSIST THE RETAILER BY TRACKING PRODUCT SALES MOVEMENT, AND ANTICIPATING DISTRIBUTION INVENTORY STATUS BY TRACKING PRODUCT REPLENISHMENT UTILIZING “PRODUCT MOVEMENT SYSTEMS’” BARCODE TRACKING CAPABILITY. THE (PMS) COMMUNICATES DIRECTLY WITH THE VENDOR THROUGH (EDI). UTILIZING CONTINUOUS REPLENISHMENT PROGRAMS REDUCE SAFETY STOCK LEVELS TO 3-5 DAYS. PERISHABLE PRODUCT CAN BE CROSS-DOCKED, FURTHER EXPEDITING THE PRODUCT TO THE RETAIL STORE LEVEL.

TYPICAL SCAN TUNNEL SET UP TO SORT PRODUCT FOR ROUTING

TYPICAL CROSS-DOCK – AUTOMATED DISTRIBUTION CENTER

TYPICAL AUTOMATED DISTRIBUTION CONVEYOR SYSTEM COMPONENTS ORDER SELECTION MULTIPLE LEVEL PICK MODULES

TYPICAL AUTOMATED DISTRIBUTION CONVEYOR SORTATION SYSTEMS TYPICAL CASE SORTER HIGH SPEED SLIDING SHOE TYPE TYPICAL SMALL PACKAGE SORTER – TWO SIDE REV. POP UP ROLLER TYPE TYPICAL SMALL TOTE MULTI-ADDRESS SORTER POP UP ROLLER TYPE

TYPICAL AUTOMATED DISTRIBUTION CONVEYOR SHIPPING ACCUMULATION LANES AND MERGES TO SORTATION LANES. TYPICAL CONVEYOR ACCUMULATION LANES TYPICAL CONVEYOR ACCUMULATION LANES COMBINER – MULTIPLE LANES TO ONE LANE TYPICAL CONVEYOR ACCUMULATION LANES WITH SAW-TOOTH MERGE