WAREHOUSE BENCHMARKING Meeting January 2010

Seven Steps to Successful Benchmarking Plan 1. Set Benchmarking Priorities 2. Identify the Key Processes Measure 3. Collect Data – Operational and Managerial Compare 4. Identify the Exemplar – Research and compare best-in-class performance 5. Identify Gaps – Define reasons for low performance 6. Identify Improvement Roadmap – Develop an improvement roadmap and set priorities Act 7. Close Gaps and Improve/Refine Processes

Step 1: Set Benchmarking Priorities Align distribution function objectives to the corporate goals (i.e. Reduce distribution costs by 25%, Attain 99% On-time shipments) Identify and work on the things that have the most impact to the corporate strategy

Step 2: Identify Key Processes Identify your core processes Rank those based on both the strategic impact on your company and the impact on your customer(s).

Step 3: Collect Data Once the processes that represent high strategic value to both the company and the customer are identified, gather performance data for those process areas. Quantitative benchmarking will indicate which areas are not performing well.

My Performance, Best Practice & the Gap KPIYouGapPoor Practice Major Opportunity Inadequate Practice Disadvantage Common Practice Average Good Practice Advantage Best Practice Best in Class Average Warehouse Capacity Used 82%<78%>=78% to <85% >=85% to <87% >=87% to <95% >95% Peak Warehouse Capacity Used 70%<90%>=90% to <95% >=95% to <98% >=98% to <100% >=100% Inventory Count Accuracy 99.9%<95.6%>=95.6% to <98.4% >=98.4% to <99.3% >=99.3% to <99.9% >=99.9% Days finished inventory on hand 74>=90>=51 to <90>=30 to <51 >=14 to <30 <14 Inventory shrinkage as a % of total inventory 0.3%>=1.25%>=0.544% to <1.25% >=0.074% to <0.544% >= % to <0.074% <0.0043% Lost Sales (%SKUs stocked out) 7%>=5%>=3% to <5% >=1.08% to <3% >=0.14% to <1.08% >=0.14% Process: Storage & Inventory Control - KPIs High GapMedium GapLow Gap

Step 4: Identify the Exemplar (Best-in-Class) Do not stop benchmarking effort only with quantitative benchmarking results Look qualitatively at the processes, sub- processes and process attributes to understand the successful environment Use process benchmarks

Receiving & Inspection : Process Benchmarks Process Group Poor Practice Inadequate Practice Common Practice Good Practice Best Practice Dock Management Trailer deliveries not scheduled Trailers not unloaded in a timely way Shippers may notify of deliveries, but times not scheduled Trailers unloaded as they arrive and labor is available Receiving appointments manually tendered, shippers given delivery window Trailer deliveries scheduled in broad time windows in a manual process Manual scheduling of trailer receipts to maximum labor & dock space utilization, shippers given delivery time Reduction of trailer switch times by pre- planning all trailer moves & yard staging of trailers Dock appointments are made & a commitment to unload every vehicle within 2 hours when the appointment is kept, labor & dock space utilization is optimized

Receiving & Inspection : Self-Assessment Process GroupPoor Practice Inadequate Practice Common Practice Good Practice Best Practice Rank12345 Dock Managementx Transactions Product LabelingX ASN & Supplier Communication X ProcessX InspectionX Cross DockingX MetricsX RFIDX Self-Assessment Total Score 16

Step 5: Identify Gaps The qualitative process assessment is summarized, gaps identified and processes identified for improvement

Warehouse & Fulfillment: Gap Analysis ProcessGapPoor Practice Major Opportunity Inadequate Practice Disadvantage Common Practice Average Good Practice Advantage Best Practice Best in Class Receiving & Inspection Material Handling & Putaway Slotting Storage & Inventory Control Picking & Packing Load Consolidation & Shipping Shipping Documentation WMS High GapMedium GapLow GapYouExemplar

Warehouse & Fulfillment:Roadmap Rating Tool- Results ProcessStrategic Impact Cost/Performance Impact Total Rating Gap Receiving & Inspection 6 Material Handling & Putaway 6 Slotting4 Storage & Inventory Control 5 Picking & Packing 6 Load Consolidation & Shipping 4 Shipping Documentation 2 WMS5 High GapMedium GapLow Gap High ImpactMedium ImpactLow Impact Highest & Secondary Priority

Step 6: Identify Improvement Targets With an understanding of the strategic impact, value and the gap-to-best practice, the company can now establish improvement targets. It is important that the company spend its improvement resources (human & financial) on the areas that will generate the greatest return.

Warehouse & Fulfillment: Gap Review ProcessGapPoor Practice Major Opportunity Inadequate Practice Disadvantage Common Practice Average Good Practice Advantage Best Practice Best in Class Receiving & Inspection Material Handling & Putaway Slotting Storage & Inventory Control Picking & Packing Load Consolidation & Shipping Shipping Documentation WMS High GapMedium GapLow GapYouExemplarTarget

Step 7: Close Gaps Establish achievable near-term targets for selected focus areas. Set targets for those areas in which you will invest in significant improvement initiatives.

Warehouse & Fulfillment: Final Initiatives ProcessGapPoor Practice Major Opportunity Inadequate Practice Disadvantage Common Practice Average Good Practice Advantage Best Practice Best in Class Receiving & Inspection Material Handling & Putaway Slotting Storage & Inventory Control Picking & Packing Load Consolidation & Shipping Shipping Documentation WMS High GapMedium GapLow GapYouExemplarTarget Interim Target