1. Leadership Accomplishment Challenge: The vice president of logistics for Hilti US approached me and indicated that our drywall screw line occupied too much floor space in the National Distribution Center. He challenged me with significant reductions of product in Tulsa and improved service level to our customers. This task had not been accomplished before at Hilti.

2. Safely reducing inventory without jeopardizing service could only be accomplished by: Safely reducing inventory without jeopardizing service could only be accomplished by: Reducing Lead Time from Taiwan Reducing Lead Time from Taiwan Reducing transportation time to distributing warehouses Reducing transportation time to distributing warehouses Shifting inventory to increase stock at Hilti Distribution points while reducing stock held in the National DC Shifting inventory to increase stock at Hilti Distribution points while reducing stock held in the National DC Increasing sales (temporary reduction) Increasing sales (temporary reduction)

3. Product arrived in the port at Long Beach California. The containers were loaded on to trucks, which were delivered to Tulsa, Oklahoma. Product was stocked in Tulsa until the distribution network needed it. Distribution Center stock was replenished from this central location. Product arrived in the port at Long Beach California. The containers were loaded on to trucks, which were delivered to Tulsa, Oklahoma. Product was stocked in Tulsa until the distribution network needed it. Distribution Center stock was replenished from this central location.

4. Click to illustrate shipping Scheme

5. Distribution Center locations Distribution Center locations Visalia, California Visalia, California Seattle, Washington Seattle, Washington Denver, Colorado Denver, Colorado Dallas, Texas Dallas, Texas Minneapolis, Minnesota Minneapolis, Minnesota Albany, New York Albany, New York Atlanta, Georgia Atlanta, Georgia Birmingham, Alabama Birmingham, Alabama Jacksonville, Florida Jacksonville, Florida Frederick, Maryland Frederick, Maryland South Bend, Indiana South Bend, Indiana Plus three Canadian locations Plus three Canadian locations

6. Research uncovered: Research uncovered: A California based vendor who was willing to pool purchase volumes in order to take advantage of price discounts. A California based vendor who was willing to pool purchase volumes in order to take advantage of price discounts. This vendor had a warehouse in Beuna Park, California, a short distance from Long Beach, where this product docked. This vendor had a warehouse in Beuna Park, California, a short distance from Long Beach, where this product docked. The vendor had surplus warehouse space in his Buena Park Warehouse. The vendor had surplus warehouse space in his Buena Park Warehouse.

7. I negotiated a cross-dock program with the vendor where product would be delivered to the port, trucked to his warehouse, stored temporarily, and then sent to nine of the twelve Hilti distribution points in the US. I negotiated a cross-dock program with the vendor where product would be delivered to the port, trucked to his warehouse, stored temporarily, and then sent to nine of the twelve Hilti distribution points in the US.

8. Click to illustrate intermediate shipping Scheme

9. Additional research uncovered the vendor distributed products throughout the US as well. I negotiated an agreement where our product would be shipped rail “piggyback” along with our vendors goods—saving considerable freight costs. Additional research uncovered the vendor distributed products throughout the US as well. I negotiated an agreement where our product would be shipped rail “piggyback” along with our vendors goods—saving considerable freight costs. Eventually, I negotiated a binding contract where our product was stored in five of their warehouses Nationwide. Eventually, I negotiated a binding contract where our product was stored in five of their warehouses Nationwide. The vendor retained ownership of the product at his location until a distribution point required additional product and I released a purchase order. The vendor retained ownership of the product at his location until a distribution point required additional product and I released a purchase order. This reduced our lead time from 90(+) days to within a week, allowing us to significantly reduce our safety stocks. This reduction took place at not only the National Distribution Center, but also, the satellite distribution warehouses as well. This reduced our lead time from 90(+) days to within a week, allowing us to significantly reduce our safety stocks. This reduction took place at not only the National Distribution Center, but also, the satellite distribution warehouses as well. The vendor warehouses, distributing product were located in: The vendor warehouses, distributing product were located in: Fullerton, California Fullerton, California Houston, Texas Houston, Texas Atlanta, Georgia Atlanta, Georgia Chicago Illinois Chicago Illinois Houston, Texas Houston, Texas

10. Click to illustrate final shipping Scheme

11. The benefits, to Hilti, of this program: The benefits, to Hilti, of this program: Reduced inventory at the National Distribution Center (the driver of this project). Reduced inventory at the National Distribution Center (the driver of this project). Reduced inventory at all satellite distribution centers Reduced inventory at all satellite distribution centers Reduced handling and administrative costs. Reduced handling and administrative costs. Freight cost reduction Freight cost reduction Lead times reduced from over 100 days to within one weeks. Lead times reduced from over 100 days to within one weeks. Lower carrying costs, calculated at cost of inventory * 1% per month Lower carrying costs, calculated at cost of inventory * 1% per month The net result saved Hilti over $150,000 annually, by reducing lead times and therefore reduced inventory. This projected savings also incorporated components of savings due to warehouse space that was not necessary to rent and additional manpower used to warehouse and ship the product. Transportation cost and product cost savings were not included in this calculation. The net result saved Hilti over $150,000 annually, by reducing lead times and therefore reduced inventory. This projected savings also incorporated components of savings due to warehouse space that was not necessary to rent and additional manpower used to warehouse and ship the product. Transportation cost and product cost savings were not included in this calculation. Increased Service level at the Distribution Center level, increasing from 82% to an average around 94-95%, eventually topping at 97%. Increased Service level at the Distribution Center level, increasing from 82% to an average around 94-95%, eventually topping at 97%.

12. MonFriThuWedTue5 day Routed w/MTD SFS-C 10/31/20 05 10/28/20 05 10/27/20 05 10/26/20 05 10/25/20 05TotalStock% Primar y Count27520723027028612680 Line Count2882182562892991350 Primar y %95.49%94.95%89.84%93.43%95.65%93.93%93.82% PGr SalesPrimManu ItemMaterial Material Desc OrderCust On Hand Safety Stock INT QTY INT DATE Documen tPlantCodeQtyOrder@ loc U31151837026110 1010231 10-12 X 2 1/2 HWH TAPFAST 6,000 0 U31 51065848 9600031010263 Drywall screw 8X3/4 PTH S LATH 20,000 031,324

13. Hilti Annual Leadership Finalist Award, 2001