Prepared for““Creating operating and capital efficiencies that generate strong Creating operating and capital efficiencies that generate strong cash flow to fund dividends, strategic acquisitions, capital cash flow to fund dividends, strategic acquisitions, capital

investment and technology development.”investment and technology development.”

March 24th 2004

Supply Chain Management

Presentation to Emerson

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 DriversVISIBILITY 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

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Supplier & Division Origin Portsqingdao

shanghaipusan

shenzhen

taiwanhong kong memphis

manila san diego

bangkok

kualal lumpur

singapore

Deconsolidation Cross DockFCL Carriers: APL, Maersk, P&O, ZIM (NVOCC unknown)MCC Carrier: APL

Distribution: Overnight ExpressMCC flowSCC flow or groupage US Customs Broker: Menlo Worldwide

kuala lumpur

Current Product Flow

APLL/Emerson achieved savings of over 35% with current consolidation program

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Supplier & Division Origin Portsqingdao

shanghaipusan

shenzhen

taiwanhong kong southaven

manila carlsbad

bangkok

kualal lumpur

singapore

Deconsolidation Cross DockFCL Carriers: APL, Maersk, P&O, ZIM (NVOCC unknown)MCC Carrier: APL

Distribution: Overnight ExpressMCC flowSCC flow or groupage US Customs Broker: Menlo Worldwide

kuala lumpur

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 PlanActions Status Need Phase Who Due dateReview/confirm APL rates In progress I Dave Hill, Rick

Moradian

Monday, Mar 15

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,

Rick Moradian

Monday, Mar 15

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,

Dave Hill, Bob

Bodee

Tuesday, Mar 16

Deconsol - Torrance, meet with Cat Logistics re: Southaven I Chris Corrado Apr 12

SCT: review SOW and implementation I Brigitte Wagner,

Rob Haney

Mar 22

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 (weight,dims,carrier)

II Cliff Wright, Chris

Corrado, Bob

Bodee

Aug 1 (tentative)

Set up airfreight process (import and export) II Dave Hill, Kevin

Jones

May 1

Asia to Europe: Manage Consol/SCC, LCL II Jesper Nielsen,

Dave Hill

TBD

Review SCT capability for 4PL foreign-foreign, Europe-US II Brigitte Wagner,

Dave Hill

Aug 1

Meet with Carmichael re: managing broker design/plan Broker list, entry volume, rates

II or IIIDave Hill, Paul

Woolley, Bob

Bodee, Jorge

Longa

Aug 11 (tentative)

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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

Jorge Longa

Project Manager

Larry KremerVice President

Raymond Choy

APLL North Asia

Cliff Wright

APLL Solutions Engineer

Carlos Camara

See Change Services

Pam Evans

APLL Customer Support

Tracy Wong

APLL South Asia

Chris Nalbantyan

Transportation Analyst

Maria McCafferty

EDI Implementation

TBD

APLL Customer Support

Will Warne

Client Manager

Bob Bodee

Business Development

Rick MoradianVice President

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 PlanID Task Name Duration

1 Emerson Electric 100 day Implementation Plan 100 days

2 Formalize Agreement 16 days

3 Review contract 15 days

4 Sign contract 1 day

5

6 Standardized On-Boarding Documents 15 days

7 Standard Logistics Procedures 5 days

8 Standard Purchase Order Upload Format 5 days

9 Training Manual 5 days

10

11 Prioritize the implementation of remaining divisions 10 days

12 Analyze origin destination volumes, other factors 3 days

13 Preliminary ranking of div isions 2 days

14 Discuss with div isions, assess readiness 3 days

15 Develop schedule for on-boarding 2 days

16

17 Deliver recommendations for supply chain improvement 32 days

18 Analyze shipment data 10 days

19 Visit division HQ & DCs 10 days

20 Present interim report 1 day

21 Model and compare scenarios 10 days

22 Present final recommendations 1 day

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24 On-board division 1 30 days

25 Review current logistics procedures 1 day

26 Establish report criteria 2 days

27 Exchange mapping documents & define components 1 day

28 Complete APLL IT request for services 4 hrs

29 Reaffirm onboarding parameters 6 hrs

30 Notify trading partners 6 hrs

31 Review LP with origins and customer support and customer 5 days

32 Amend Letters of Credit 2 days

33 Origin review with Emerson overseas personnel 5 days

34 Establish consensus on operational requirements 3 days

35 Identify process improvements 2 days

36 Draft APLL Final LP version 3 days

37 Draft AIS update instructions 3 days

38 Origin sign off on final LP version 1 day

39 Upload LP to APL Intranet 4 hrs

40 Distribute final LP to client 4 hrs

41 Obtain Emerson vendor list & overseas contacts 1 day

42 Contact vendors, set VEP schedule for vendors and Emerson personnel5 days

43 Conduct Origin Manufacturer Conference 2 days

44 Commence Operations 3 days

45 Repeat for 2 more divisions 60 days

3/28 4/4 4/11 4/18 4/25 5/2 5/9 5/16 5/23 5/30 6/6 6/13 6/20 6/27 7/4 7/11 7/18 7/25 8/1 8/8 8/15 8/22April May June July August

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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

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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

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Origin City Destination City

CHIWAN LOS ANGELES

MEMPHIS

FUZHOU MEMPHIS

HONG KONG CARLSBAD

LOS ANGELES

MEMPHIS

KAOHSIUNG LOS ANGELES

MEMPHIS

KEELUNG LOS ANGELES

MEMPHIS

SOUTHAVEN

LAT KRABANG MEMPHIS

MANILA NORTH HARBOR CARLSBAD

LOS ANGELES

MEMPHIS

SHANGHAI CHICAGO

LOS ANGELES

MEMPHIS

SOUTHAVEN

SHENZHEN CARLSBAD

MEMPHIS

SINGAPORE MEMPHIS

TAOYUAN MEMPHIS

YANTIAN CARLSBAD

LOS ANGELES

MEMPHIS

HONG KONG MEMPHIS

LAEM CHABANG MEMPHIS

QINGDAO MEMPHIS

SHANGHAI CHICAGO

MEMPHIS

YANTIAN MEMPHIS

KAOHSIUNG MEMPHIS

Analysis of Data Provided

Sample Data Summary

Size 20’ 40’ 40HC 45’

Units 644 869 358 117

Tier 1 Tier 2

Emerson ocean spend $2,638,666 $2,638,666

APLL contract rates $2,576,622 $2,379,293

Immediate Savings $62,042 $259,372

Percentage 2% 9%

Observations: Good potential to reduce the number

of 20’ containers Increase savings by APLL negotiating

future Tier 2 contracts

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Full Container Pricing

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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

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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

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

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Potential Deconsolidation Network

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Potential APLL Cross Dock Locations

Ultimate Destination Current Los Angeles Chicago Newark Dallas Current Miles Minimum ChangeHartselle, AL Southaven, MS 1,960 619 945 723 202 202 0Memphis, TN Southaven, MS 1,761 525 1,091 468 13 13 0Mt. Juliet, TN Southaven, MS 1,991 492 864 697 238 238 0Shelby, NC Southaven, MS 2,337 744 660 1,010 584 584 0Southaven, MS Southaven, MS 1,814 546 1,098 466 0 0 0Tampa, FL Southaven, MS 2,503 1,204 1,148 1,124 837 837 0Durham, NC Southaven, MS 2,487 805 489 1,182 735 489 246Florham, NJ Southaven, MS 2,738 797 12 1,546 1,087 12 1,075Markham, On Southaven, MS 2,507 559 525 1,488 1,002 525 477Newport News, VA Southaven, MS 2,665 897 413 1,371 912 413 499New York, NY Southaven, MS 2,774 837 34 1,582 1,123 34 1,089Pittston, PA Southaven, MS 2,683 721 121 1,508 1,049 121 927Randolph, MA Southaven, MS 2,989 1,026 237 1,800 1,341 237 1,104Wilmington, NC Southaven, MS 2,570 960 614 1,225 802 614 188McCarran, NV Carlsbad, CA 226 1,746 2,532 1,214 313 226 87Portland, OR Carlsbad, CA 998 2,113 2,899 2,137 1,055 998 57San Francisco, CA Carlsbad, CA 416 2,124 2,910 1,735 473 416 57Carlsbad, CA Carlsbad, CA 87 2,057 2,836 1,382 0 87 -87Austin, TX Southaven, MS 1,388 1,094 1,737 198 659 198 461Colorado Springs, CO Carlsbad, CA 1,044 1,058 1,785 727 1,132 727 405Houston, TX Southaven, MS 1,520 1,088 1,624 251 639 251 388McAllen, TX Southaven, MS 1,563 1,403 1,987 507 968 507 461Wichita, KS Southaven, MS 1,451 705 1,390 365 588 365 224Delaware, OH Southaven, MS 2,224 382 541 1,079 620 382 238Florence, KY Southaven, MS 2,182 306 646 923 476 306 170Ironton, OH Southaven, MS 2,247 447 598 1,014 555 447 108Louisville,KY Southaven, MS 2,052 318 736 848 389 318 71Mansfield, OH Southaven, MS 2,280 351 493 1,121 662 351 312Maysville,Ky Southaven, MS 2,189 380 668 957 498 380 118Menominee, MI Southaven, MS 2,189 278 1,057 1,187 806 278 529Sidney, OH Southaven, MS 2,181 276 610 1,057 579 276 304

Average Miles 1,936 866 1,074 1,061 656 349 307

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Example of Domestic LCL Consolidation

DATE: 2/28/04 DECONSOLIDATION POINT: SOUTHAVEN

CONTAINER FINAL DEST ZIP CBM KG LBS LBS LTL MILES $/MI LINEHAUL STOP TOTAL SAVINGSAPLU7905119 Hartselle, AL 35640 13.39 6,150 13,555 APLU7905119 Hartselle, AL 35640 5.36 2,000 4,408 APLU7905119 Hartselle, AL 35640 2.68 1,230 2,711 APLU7905119 Hartselle, AL 35640 13.39 6,150 13,555 APLU7905119 Hartselle, AL 35640 5.36 2,000 4,408 APLU7905119 Hartselle, AL 35640 2.38 1,080 2,380 41,016 $861CRXU9055785 Durham, NC 27702 5.29 810 1,785 CRXU9055785 Durham, NC 27702 3.919 675 1,488 CRXU9055785 Durham, NC 27702 1.564 270 595 3,868 $533

44,884 44,884 $1,394 776 $1.26 $978 $50 $1,028 $366

TRUCK

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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

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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

Year

Number of Brokers

Average Charge per Entry

Estimated Annual Entries

Total Brokerage Charges

Cumulative Savings

1 34 $120 15,000 $1,800,000 $02 30 $115 15,000 $1,725,000 $75,0003 25 $110 15,000 $1,650,000 $150,0004 20 $105 15,000 $1,575,000 $225,0005 15 $100 15,000 $1,500,000 $300,000

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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

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Exceptions

TMS

3PL/Forwarder

ERP/OMS

Vendor Packing List /

ASN

User

User

UserReports

Search

WMS/Deconsolidation

Orders/Product

Inventory

Our Model: Create Quality Connectivity

Shipments/Equipment

Carriers/Customs

Truckers/Rail

In Transit

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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