1. 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.”

2. 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

3. 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

4. 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

5. 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

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

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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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)

14. Gantt Chart: 100 Day Plan

15. 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

16. 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

17. 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

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

19. Full Container Pricing

20. 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

21. 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

22. Cubic Meter Pricing - Overflow

23. 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

24. 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

25. 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

26. Current Deconsolidation Centers

27. Potential Deconsolidation Network

28. Potential APLL Cross Dock Locations

29. Example of Domestic LCL Consolidation

30. 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

31. 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

32. 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

33. 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

34. 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