1. Rayonier’s Annual Supply Chain Day - 2011 “Staying Connected and Driving Value”

2. Reliability Model

3. 2 Reliability Excellence Model Foundation Established by Area Reliability Teams

4. 3 Rayonier Reliability Model Vision: Run our equipment from scheduled outage to scheduled outage

5. 4 DSOP - Design, Service, Operate and Procure Work processes required to deliver reliable performance D - Designed and built to meet our requirements S - How we take care of it so that it continues to perform O - How we use it to produce our products P - How our procurement system (specify, purchase, deliver, store) delivers parts and services to support reliability Leadership awareness of DSOP deficiencies is required in order to achieve alignment on what to do and how to do it Leadership must understand its priorities and focus for reliability within the organization - what is emphasized DSOP concept

6. 5 Organizational changes More supervisor/employee time: Shift supervisors/ maintenance supervisors Improved maintenance/operations coordination: OMC role Focused planning: Professional planner role Improved contractor execution: Maintenance engineers Continuous failure elimination: Reliability engineer Improved operator/mechanic training: Training department

7. 6 Reliability practice changes Work will be initiated by written work requests Increased focus on mechanic feedback for continuous improvement All emergency break-in work executed by shift maintenance, when possible Maintenance work orders will be planned and scheduled Critical equipment information will be verified Standardization of work flows and business processes Implementation and training of “Best Practices” at both mills

8. Reliability

9. 8 Supply Chain - overview  Committed to safety  Built on customer service  Driving efficiency  Focused on values

10. 9 Supply Chain - overview Focus on Safety Current RIR To Become The Safest RIR < 1.0 Develop Road Map 2010 Safety Plans High Level Budget Items Resources and Org-D Q4 2009 Enabling 2010 Implementing 2012 Sustaining 2011 Improving Focused Safety Action Plans Leadership Behavior Employee Participation Measures and Recognition Drug and Alcohol Program H&S Compliance Audits Wellness and Health IH Strategy PSM Compliance Audits Develop Mgt. Systems Implement Mgt. Systems Beyond Recordables Contractor Safety Included

11. 10 Supply Chain - overview Customer service Preferred suppliers People engagement Feedback Efficiency What are you doing to make it easier to do business with Rayonier? What can we do to make it easier to do business with you?

12. 11 Supply Chain - efficiency

13. 12 Supply Chain - overview Rayonier Values Integrity first… - Do the right thing - Act fairly and honestly - Build relationships based on trust - Treat people with respect Accountability always… - Act like an owner - Recognize your authority and embrace responsibility - Deliver what you promise

14. 13 Supply Chain - overview Rayonier Values Quality in everything we do… - Understand your customer expectations and deliver value - Provide products and services that are right and on time - Continuously improve People are the foundation for success… - Safety is everyone’s responsibility - Recognize excellent performance with opportunity - Use teams, tools and training to achieve results - Communicate information and freely share ideas - Foster innovation and creativity - Respect the importance of a balanced and productive life

15. Preferred Suppliers and Recognition Program

16. 15 Rayonier Confidential and Proprietary Information Supply Chain Vision To be a world-class sourcing organization that delivers the best overall value to Rayonier Mission Sourcing will drive value through partnering with our customers and preferred suppliers, understanding our markets, and flawless contract execution

17. 16 Roadmap for success Partnering with our customers and suppliers First understand, then exceed our customers expectations Utilize a preferred group of suppliers Leverage market knowledge Become experts in our commodity markets Leverage supplier expertise Flawlessly execute strategy Efficiently drive contract implementation Drive value creation and business innovation Use metrics to drive continuous improvement

18. 17 Preferred suppliers Definition of a preferred supplier Share similar values Focused on safety Compliant to Rayonier supplier requirements Strengths align with Rayonier’s needs –Product or service singularly fills need Excels at execution, customer service and value creation

19. 18 Preferred supplier strategy Benefits for Rayonier and supplier Consolidates the supply base –Longer term agreements –Opportunity for more business (less suppliers) –More competitive business offering Leverages expertise –Opportunity to drive business innovation –Opportunity to drive value creation Improves execution –Challenges each other in all aspects of our business relationship Creates “win - win” for both Rayonier and supplier

20. 19 Rayonier Supplier Recognition Program Guiding principles Must be aligned with preferred supplier strategy Aligned with our engagement philosophy Designed to create value for suppliers Collaborative with our customer base

21. 20 Performance requirements - safety Rayonier’s vision is to be the safest company in the forest products industry Supplier must finish the year with NO recordables It is expected that our suppliers share our focus on safety to protect our most valuable assets, our employees

22. 21 Recognition Program Requirements People - What level of service does your company provide? Quality - Does your product or service exceed expectations? Accountability - Does your company deliver what they promise? Do you exceed our internal customer’s expectations? Performance requirements - customer survey

23. 22 Performance Requirement - value creation Value Exceed Rayonier’s expectations and or contract requirements Other examples –Products  Substitutions; less cost or more efficient  Longer product life  Reduced maintenance (downtime)  Repair cost less than new  Standardization –Services  Reduced rates  Improved methods  Discount payment terms

24. 23 Moving forward Program will have three major categories: Chemicals and Energy MRO Supply Contract Services While our desire would be to select a supplier from each category, in the end, we will select the three best overall performing suppliers regardless as to which category. Annual recognition dinner with senior leadership

25. Materials Reliability and Systems

26. 25 Reliability Model “Operating our equipment and processes efficiently, effectively, without interruptions from scheduled outage to scheduled outage”

27. 26 Materials reliability approach Definition Right product when needed Inventory Management Model Mill - Focus on the need Supply Chain - Focus on filling the need –Sourcing –Storeroom –Supplier/Manufacturer

28. 27 Materials reliability approach  Starts with SLA (Service Level Agreement) Maintenance Operations Engineering  Improved safety, quality, and environmental performance  Inventory management Location(s)

29. 28 System CMMS - Computerized Maintenance Management System Designed to track assets and form the basis of maintenance system ShawWare selected in 1980’s EAM - Enterprise Asset Management Whole life optimal management of the physical assets of an organization to maximize value Improve return on the investment Advantis.Pro

30. 29 System Improved communications through B2B portal RFQs Purchase orders and change request Order acknowledgements and ship notices  All items will be in the purchasing catalog (PCI) Bar coding Warranty tracking Contract services managed through contractor module Rates sheets Daily time and expense submittal

31. 30 Keys to success Management and supplier commitment Joint ownership of reliability excellence in operations, maintenance, engineering, supply chain and supply base Culture change from reactive to proactive Measurement systems in place to sustain the practices over time

32. Logistics and Markets

33. 32 Value proposition Customer Expectations Right product in the Right quantity to the Right destination in the Right condition at the Right time with the Right documentation at the Right cost Logistics and Customer Service are core to our value proposition

34. 33 U.S. export market - containers only TEU’s Top container exporters  American Chung Nam (wastepaper)  Koch Industries  IP  Weyerhaeuser  Newport CH International  Rayonier

35. 34 We are in a great location for access to shipping markets 20102011

36. 35 Market drivers Balance of trade/currency exchange rates GDP Security and Regulation Market capacity Labor, fuel, capital Market conditions Vessel overcapacity controlled to restrict supply Global shortage of containers Imports are down and exports are up Issues and Regulation Antitrust immunity Security Financial stability Jones Act Cargo liability Port infrastructure 35 Ocean container drivers and conditions

37. 36 Market drivers GDP growth, CPI/PPI Market consolidation Labor, fuel Market conditions Shrinking supplier base Declining availability of drivers and equipment Issues and Regulation Driver hours of service FMCSA Weight limits Infrastructure investment and funding 36 Truck market drivers and conditions

38. 37 Market drivers GDP growth, CPI/PPI Labor, fuel, capital Market conditions Limited competition Aging and declining equipment supply Issues and Regulation STB reauthorization Toxic Inhalation Hazardous (TIH) Positive train control Antitrust High speed passenger rail 37 Rail drivers and conditions

39. 38 Customer feedback Corrective action systems Partnership meetings Survey Monthly measurement and reporting On time delivery Package condition Customer feedback (Promise Pack) Customer service