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“What Got You Here……” Greg Smith, Industry Director, Freight and Logistics, Oracle Corporation

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Logistics Service Providers – Key Industry Processes

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Logistics In the Coming Decade…

“The next ten years will be all about mobile communication’s and real time data.”

Noel PerryManaging Director, FTR Associates

ITLC 2010 Conference

LSPs Are Becoming Supply Chain Orchestrators

Timeline

Cor

e C

ompe

tenc

e

BusinessStrategy

Strategy

Planning

Coordination

Execution FreightTransport

Ware-housing

Contract Logistics

Lead Logistics/ 4PL(Decision Making)

Customer

Customer

Customer

FreightTrans-port

Ware-housing

ValueAddedSvcs

FreightTrans-port

3PL

Ware-housing

3PL

ValueAddedSvcs

3PL

Customer

SupplyChain

Coordination(Strategy)

Transport-ation

VAS

Warehousing

Engineering

Sourcing

Mfgr / Assy

PlanningSupplyChain

Manager

Traditional 3PL Lead Logistics/4PL Supply Chain Services

Shippers want LSPs to support more and more supply chain functions LSPs are driving growth and profitability through service expansion

Growth Through Service Expansion Is Forcing Structural Changes In The LSP Industry…..

• GEOGRAPHY: Local, Regional to National and Global

• MODES: Single Mode to Multiple Modes of Transportation

• SERVICES: Single Service to Multiple Services to Bundled Services

• CUSTOMER MIX: Fewer customers with larger spend/customer

• EMPLOYEE MIX: More positions, More specialized

• IT LANDSCAPE: Single Operational Platform to Multiple Platforms

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Almost 30 years ago….

“Information about the package is as important as the package itself…”

Frederick W. Smith, Chairman and CEO

SPEAKER PPT TEMPLATE_M.PPT7

Index of Logistics Costs as a Percent of GDP 1986 - 2007

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30

50

70

90

110

1986 1990 1995 2000 2005 2007

InventoryTransportationTotal

Domestic Vendor

FactoryOff Shore

Vendor

Cross Dock

Supplier

Supplier

Supplier

Supplier

Supplier Supplier

ScheduledCollection Runs

CONFIDENTIAL: All capabilities and dates are for planning purposes only and may not be used in any contract 8

“ I need to optimize my loading”

Logistics Business Required CapabilitiesTransportation From Shipper To Consignee

“I need to optimize my milk runs” “ I need to select most cost effective transportation move”

“I want to increase my capacity”

“ I want to improve planners productivity.”

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Management Excellence:The Next Competitive Edge

Time

CompetitiveAdvantage

OPERATIONAL EXCELLENCE

MANAGEMENT EXCELLENCE

Cost – Lean and MeanQuality – Six Sigma, TQMSpeed – Real-time, JIT

Smart – Deep InsightAgile – Decisive Aligned – Across the enterprise

Leaders will make information technology a strategic differentiator by using a platform strategy…

LSP Leaders Will …

• Automate to scale the business and improve profitability• Leverage technology to speed time to market• Customize solutions without customizing processes and IT • Collaborate… with customers, partners, employees• Measure to drive improvement• Have one version of the truth

Service 1

Service 2

Service 3

Client 1

Client 2

Client 3

What LSPs Want: An Open Flexible Platform to Support Logistics Planning & Execution…

Rationalize and modernize applications, data repositories, and infrastructure

Link systems using SOA to create a business process platform that drives key processes such as quote-to-cash, procure-to-pay

Streamline collaboration with customers, partners, suppliers, regulatory authorities through collaboration hubs

Platform characteristics• Supports best-of-breed solutions• Can be configured • Leverages legacy applications• Supports industry standards• Expandable, scalable

Enterprise Logistics Planning & Execution

Legacy Applications, Data Hubs, Infrastructure

Transportation Mgt, Warehouse Mgt, Global Trade

Enterprise SOA, Workflow Mgt, Event Mgt

A Scalable, Sustainable, Differentiating Platform … the Technology Exists Today!

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An Example……..

• Today, transportation is being shared as companies work together to load trucks and minimize costs.

• Candy makers in the mid-west have now banded together to not only share transportation but also share warehousing and warehouse labor expenses.

• Shipment patterns, delivery volumes, routing schedules are all coordinated to minimize costs of distribution to final retail site.

• Result is over 500,000 miles saved by just one candy maker in one region for one product in one year.

Business can expect more and more of this kind of thinking. These kinds of savings are too large to be

ignored.

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Transportation in a Capacity Short Environment…

• As load requests and shipment requests are coming in, they will be checked against “Network Value” before a load is accepted

• Pricing• Commodity• Empty Miles• Available assets• Profitability

• Route Optimization and Fleet Optimization for Profit• Tools to do this, exist today• Shipment patterns, delivery volumes, routing schedules are all

coordinated to minimize costs of distribution to final retail site.

Business can expect more and more of this kind of thinking. These kinds of savings are too large to be ignored.

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Fuel Savings and the Primary Cause

• From 2007 to today, America is using roughly 25% less diesel fuel, while hauling more freight

• What factors are going into this dramatic change ?• More use of intermodal• Tractor and trailer streamlining• Wide tires and tire pressure sensors• Speed governors • Others?

• While all of the above factors have something to do with the fuel savings, industry experts believe most of the savings are coming from optimization

• Fleet optimization• Route optimization• Shipment optimization

Business can expect more and more of this kind of thinking. These kinds of savings are too large to be ignored.

Summary

Revenues

• The leading LSPs in the industry understand that IT is strategic and make Technology a central pillar in their corporate strategy.

• Adopting a platform strategy will lower TCO, increase agility and adaptability by supporting multiple clients and multiple services on a single platform.

• LSPs who integrate their processes across the enterprise can expect to see 3-5% revenue improvement, 5-7% reductions in cost and a 30% reduction in DSO

Cos

ts

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Thank You!