Barkawi India Business Case Logistics Saurabh Nigam

Logistics and Supply Chain
Business Case – Barkawi India
Saurabh Nigam
June 15, 2009

Barkawi Logistics Practice – Key Findings
Barkawi Logistics Practice Business Case Details
Logistics Industry in India
Logistics Value Chain
Sample Business Cases and Key KPIs
Saurabh Nigam: Profile and Background
Saurabh Nigam: Sample Engagement Deliverables
Appendix: Other supporting details
Key Findings1
 India’s organized logistics outsourcing market is estimated at ~ Rs 78,400 Cr, which

is only ~14% of the total logistics market. Organized logistics market is growing at
~25% creating ample opportunities for new businesses. Warehousing is expected to
grow the fastest at 35-40% followed by road transportation at 20-25%
 India’s logistics spend is ~13% of GDP , which is amongst the highest in large
economies and which signifies high scope for logistics process optimization and
growth of organized sector
 A conservative estimate of 0.2% as consulting spend means addressable target

market size of ~Rs. 150 Cr for Barkawi’s logistics practice
 Barkawi’s logistics and supply chain practice can also target supply chain functions –
both supply chain planning and execution and procurement- within various industries
– capital goods, automotive, Telecom, Pharma etc.- in which case the addressable
market will be much bigger
Source:
1. Details included in subsequent sections of the presentation
Saurabh Nigam/ 3
Key Findings1
 To begin with Barkawi India can target LSP, Express, Courier, Warehousing, 3 PL
Service Providers, Trucking, Air Freight, Road Freight, Rail Freight, Ports and
Shipping companies for its Logistics and Supply Chain Service Offering (list included)
 India’s logistics and supply chain consulting market is extremely competitive with
several smaller players – ECS, Universal consulting, LCA logistics consulting, i-
maritime, Aqua MCG, Avalon Consulting – along with established Multinational
Consulting firms – Mckinsey, BCG, Accenture, Deloitte, E&Y, KPMG vying for market
share
 Barkawi’s blue chip reference list, global talent pool and experience with global
supply chains and logistics would differentiate it with its competitors and help it obtain
leadership in the Indian market
 A sound engagement methodology and pricing is key to Barkawi’s success in India
Source:
1. Details included in subsequent sections of the presentation
Saurabh Nigam/ 4
Key Findings1
 Barkawi India should adopt value based selling approach to build Outside-in
perspective and prognosis, using publicly available information of companies at
BSE / NSE to acquire net new customers. Optimizing sales effort with progress in
sales cycle through well thought sales methodology is key to high ROI in sales
process
 Barkawi has the unique opportunity to benchmark Logistics KPIs in the Indian market
which completely lacks process maturity and benchmark measures
 Non existent warehousing standards in India is another key area to target for Barkawi
 Barkawi can partner and tap into various India based resources to strengthen its
roots in Inda - India Infrastructure, India Supply Chain Council, Supply Chain
Management Review, CXO Today
Saurabh Nigam/ 5
India’s Logistics Industry
Five year’s perspective 2006- 2010
F-06 (Rs.) F-10 (Rs.)
India’s total logistics market 3.3 trillion 5.6 trillion

(330000 Crores) (560000 Crores)
Organized logistics outsourcing Market 198 billion (6%) 784 billion (14%)
Unorganized 3102 billion (94%) 4816 billion (86%)

!!
Growth of logistics industry in India
CAGR (2006–2010)
India’s total logistics market 10 – 12 %
Organized logistics outsourcing market 25%
Unorganized logistics market 9 – 11 %
3 PL 35 %
Higher growth is expected in organized logistics market

Source : SSKI & Edelweiss Report, Nov’06
Saurabh Nigam/ 7
Segment specific expected growth of Logistics Industry
Logistics segment CAGR ( Est.) – Next 5 Yrs.
(%)
Transportation 20 - 25
Rail 10 - 15
Container Rail 15 - 20
Container EXIM 20 - 25
Courier 20 - 25
XPS 20 - 25
Warehousing 35 - 40
CFS 15 - 20
Shipping 10 - 15
Saurabh Nigam/ 8
Consultative approach to Sales
Barkawi should adopt a Consultative approach to Sales, forming initial prognosis, using publicly
available information in financial statements, before pitching consulting services. Optimizing sales
effort with progress in sales cycle through well thought sales methodology is key to high ROI in
sales process
Benefit Model
Peer Analysis
Trend Analysis
Saurabh Nigam/ 9
Target Customers and Partners
LSP
. AFL Pvt Ltd Road Express
 Balmer Lawrie .  Gati
 Dynamic Logistics Ltd  Safexpress

 Gati
 TNT (Speedage)
 Lakshmi Cargo Company Ltd
 TCI
 NECC Logistics Ltd
 Om Logistics Limited Air Express

 Reliance Logistics Pvt Ltd .  Bluedart
 Total Logistics India Pvt Ltd
 Gati
 Transport Corporation of India Ltd
 Safexpress
 TVS Logistics
 V Trans Ltd Courier Industry

 Patel Integrated Logistics
.  Firstflight
 AFL
 DTDC
 Overnite
 Professional couriers
Saurabh Nigam/ 10
Warehousing 3 PL Service Providers
. 
CWC
. DHL
DHL logistics

AFL


Om Logistics
 Schenker-BAX
Safex


Gateway Distri Parks  SembCorp
Container Corporation of India

Food Corporation of India

Sical Distriparks
 Panalpina

Balmer Lawrie andCompany


Allcargo  Agility
Global Logistics

Trucking
.  Delhi Assam Roadways
 Patel Roadways
Air Freight
.  National Aviation Company of India
 Jet Airways
 Blue Dart Express
Saurabh Nigam/ 11
Rail Freight Ports
. Container Corporation of India .  Chennai Port Trust
(Concor)
 Cochin Port Trust
 Gateway Distriparks
 Ennore Port
 Sical Logistics
 Jawaharlal Nehru Port Trust
 Arshiya International
 Kandla Port Trust
 Kolkata Port Trust

Road Freight
 Mormugao Port Trust
.  Transport Corporation of India
 Mumbai Port Trust
 Patel Integrated Logistics
 New Mangalore Port Trust
 Gati
 Paradip Port Trust
 Delhi Assam Roadways Corporation
 Tuticorin Port Trust
 Visakhapatnam Port Trust
 Non-Major Ports
Saurabh Nigam/ 12
Shipping
. Shipping Corporation of India
 Great Eastern Shipping
 Mercator Lines
 Essar Shipping Ports and Logistics
 Varun Shipping
Saurabh Nigam/ 13
Potential Partners and Resources
India Infrastructure: Publishing house targeted at the very top decision makers and financial managers
in infrastructure segments (http://www.indiainfrastructure.com/mags.html)
India Supply Chain Council: Has a good presence in India and organizes events (http://
www.supplychains.in/)
Supply Chain Management Review: Globally renowned, well read in India (http://www.scmr.com/)
Onesource: A one stop store for company information (http://www.onesource.com/)
CXO Today: Has good presence in India (http://www.cxotoday.com/cxo/jsp/home.jsp)
Saurabh Nigam/ 14
Apart from the Big 5, Barkawi faces stiff competition from
the incumbent boutique consultancy firms in SCM area
Found in 1994, specializes in Found in 1989,

Logistics and Supply Chain specializes in multiple
verticals
Recently set up office in India.

Strong presence in Supply
Chain area across Asia Found in 1993, are India’s
leading marine consultants
Backed by a strong
leadership team specializes Strong client base
in Supply Chain
Saurabh Nigam/ 15 Very good presence in India

Barkawi can leverage its strong presence in Germany and
global talent pool to extend its logistics and supply chain
offering to India
Barkawi Portfolio of Services
Development of global supply chain strategies
Design of global purchasing, production and distribution

networks
Identification, evaluation and selection of suppliers and logistic

providers
Set up of a professional supplier management
Optimization of inbound logistics
Selection of ideal production and distribution sites
Development and realization of efficient distribution concepts
Development of logistic ratio and reporting systems
Reduction in operative supply chain costs
Reduction in working capital (inventories, receivables and

payables)
Improvement of ability to supply
Selection and realization of IT solutions for supply chain

processes
Saurabh Nigam/ 16
Barkawi India- proposed engagement methodology
Value
Define Discovery and Execution Transfer
Validation
Activities
 Validate/ confirm  Understand/  Execute solution  Transfer the new
executive validate company/ recommendation process to the
alignment on BU strategy and and value organization
engagement pain points through proposition  Ongoing support
scope, approach, targeted interviews
timeline,  Develop data
objectives and request to create a
deliverables business case
 Identify key  Analyze operational
business areas of and financial data
focus and pain to estimate
points where can potential cost
help unlock savings and
business value revenue uplift
opportunities
 Finalize solution
recommendation
and value
Saurabh Nigam/ 17
proposition
Barkawi Benchmarking – Proposed approach
 F to exchange metrics and best practices

 Build one of the largest benchmarking programs in India
 Can be developed in conjunction with users groups such as India
supply chain council
 Surveys applicable to all industries
 KPIs finalized in conjunction with Barkawi logistics partners, user
groups and industry experts
 Multiple peer group comparison options
 KPI and best practice correlations
 Relevant for businessAllows continuous process of
benchmarking with extensive validation
 Provides recommendations for improved performance
 Participants receive customized and confidential benchmarking
comparison against peers
Saurabh Nigam/ 18
LSP Business Segments
Mail & Courier Freight Contract Carrier Ports /

Infrastructure
Express Parcel Forwarder Logistics / 3PL
 Road / Trucking  Airports
 Pick, sort, haulage, sort  Organizing transport  Warehousing
and last mile delivery of and monitoring  Sea Carrier  Seaports
 VAS
mail and packages execution  Container  Rail Infrastructure
 Distribution
 Hub & spoke network  Sea  Bulk
 Spare Parts Logistics
 Air  Air (Cargo) Carrier
 Reverse Logistics
 Road  Rail Cargo
 Multi-modal
 Customs clearance 4PL / LLP
 Transportation  Monitor and Manage
Insurance the supply chain
(information manager)
Saurabh Nigam/ 20
Key trends are driving change in the LSP Industry
Increasing customer demands and complexity are driving the need for constant
change
Globalization Rising customer Shrinking product Shareholder New technologies

expectations lifecycles & mass value orientation
customization
 Companies are  Customers are  Some mobile  Even the best  New fulfillment
sourcing, becoming more producers are LSP have Days models (e.g.
producing and demanding and launching up to 20 Sales Outstanding Global Sourcing,
selling globally sophisticated in new products a (DSO) that are Build-To-Order,
managing their year; Major 30 – 120% higher Direct Ship)
 LSP need to
logistics partners retailers are than best-in-class
integrate all  Open platform for
handling more companies from
parties and  Industrialize easy integration,
than 20’000 SKU other industries
synchronize processes to adoption of new
execution deliver consistent  System to  Reduce DSO with processes and
performance at manage multitude one system from ready for new
low price of (product) order entry till technologies (e.g.
specific workflow financial RFID, Mobiles)
settlement
Saurabh Nigam/ 21 Refer speaker notes for details

on four points
What does this mean for Logistics Service Business?
Typical executive issues

 Can I gain market share in an economic recession?
 How do I retain profitable business and reduce costs?
 How do I establish a more constant relationship with
my clients?
 Howdo I meet the advanced IT needs of my clients for
Supply Chain Event Management and Visibility?
 How do I help my client’s changing supply chains and
rapidly shifting logistics needs?
 How do I see problems from my client’s perspective?
Saurabh Nigam/ 22
The need for constant innovation
is affecting LSP’s Business Models
LSP’s need flexible business models in order to quickly respond to changing

customer demand / situation
 Conduct business in multiple currencies, multiple languages and multiple financial / tax
environments
Globalization  Match supply chains’ expanding geographic reach and sophistication by door-to-door
services
 Ability to integrate fast new companies and partners
 Industrialize and integrate core processes

Rising customer  Integrate processes and data with shippers, partners and vendors
expectations  Increase operational visibility and enable collaboration with all parties
Shrinking product  Define core service offering for each industry you as LSP serve
lifecycles & mass  Develop additional value added services and niche solutions
customization  Enable rapid configuration of “custom” solutions from predefined service bundles
 Provide real-time financial transparency to manage costs

Shareholder value  Analyze service level and profitability by segment / channel /service
orientation  Instill KPIs and accountability
 Seamless integration across enterprise Back Office, Core Operations and Customer
New technologies Service
Saurabh Nigam/ 23
Global Logistics Industry
Global logistics industry US$ 3500 billion in 2005
US logistics industry US$ 900 billion in 2005
India’s logistics industry US$ 85 billion in 2005
India is in a formative stage of logistics revolution
Source : Reference to World Bank Report in SSKI & Edelweiss Report, Nov’06
Saurabh Nigam/ 24
Country’s spending on logistics management
Country Logistics spend 3rd Party Logistics

Activities
(% of GDP) (% of total movement)
US 9.50 % 57 %
Japan 10.50 % 80 %
UK 11.00 %
Canada 12.00 %
Germany 13.00 %
China 18.60 % < 10 %
Argentina 22.00 %
Peru 24.00 %
India 13.00 % < 10 %
Lower the % of logistics spent to GDP, better is the logistics management
Higher % of 3PL shows a higher share of organized players
Developing countries spend excess on logistics management
India is poised for logistics revolution. Opportunity for substantial improvement in

efficiency
Source : Reference to World Bank Report in SSKI & Edelweiss Report, Nov’06
Saurabh Nigam/ 25
Transportation costs are significant and are expected to
rise Globally
-Logistics and Transportation Cost
- Transportation Costs are Trending Upward -
-as % of Sales by Industry -
Other
Warehousing
12% 11.7% Inventory Carrying
10% Transportation
8% 8.5%
7.8% 7.7%
6%
4% 5.3%
2%
0% 4.6%
3.3% 3.0% 3.0% 2.1%
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Source: Georgia Tech Logistics Institute
Freight pricing pressure expected to continue due to fuel costs, port and rail capacity
constraints, driver shortage and supplier consolidation
Saurabh Nigam/ 26
India’s Logistics Industry
Five year’s perspective 2006- 2010
F-06 (Rs.) F-10 (Rs.)
India’s total logistics market 3.3 trillion 5.6 trillion

(330000 Crores) (560000 Crores)
Organized logistics outsourcing Market 198 billion (6%) 784 billion (14%)
Unorganized 3102 billion (94%) 4816 billion (86%)

!!
Growth of logistics industry in India
CAGR (2006–2010)
India’s total logistics market 10 – 12 %
Organized logistics outsourcing market 25%
Unorganized logistics market 9 – 11 %
3 PL 35 %
Higher growth is expected in organized logistics market

Saurabh Nigam/ 27
India’s Logistics Industry: Key Segments
Saurabh Nigam/ 28
Break-up of India’s Logistics Industry by Modes
Modes of Transport Mn tons Rs. Bn.
Road 1560 1495
Rail 667 365
Port 573 172
Air 103 123
--------- ---------
Gross Total 2,903 2,155
Source : SSKI Report, Nov’06

Saurabh Nigam/ 29
India’s Logistics Industry: Key Segments and Dominant
Players
Saurabh Nigam/ 30
Segment specific expected growth of Logistics Industry
Logistics segment CAGR ( Est.) – Next 5 Yrs.
(%)
Transportation 20 - 25
Rail 10 - 15
Container Rail 15 - 20
Container EXIM 20 - 25
Courier 20 - 25
XPS 20 - 25
Warehousing 35 - 40
CFS 15 - 20
Shipping 10 - 15
Saurabh Nigam/ 31
India’s Logistics Industry, Demand Side Growth Drivers
Automobile
India has emerged as one of the most preferred destinations for MNCs to outsource their manufacturing
activities: and for India, a multi‐billion dollar opportunity.
Third party logistics providers will play a greater role in the automotive industry in the future than merely
transporting goods. They will be required to provide end‐to‐end supply chain logistics services for which
they will have to develop requisite competencies and asset‐based networks.
Automobile manufacturers such as Hyundai, Nissan and Renault, and others such as the Nippon Yusen
Kaisha (Japan) and the GBA Group (UK) are also themselves constructing a multi‐level car park facility
inside the Chennai port —a port out of which over 100,000 cars are currently exported
.
The Rs 500 million facilities to park around 6,000 cars are likely to come up in the next few months at the
Chennai port's existing North Quay.
Electronics Goods Market

Technology drives exports sky high. Driven by a low‐cost, highly‐educated and skilled workforce, more
and more multinational manufacturers are setting up Indian operations. Other massive producers, like
Nokia, ABB and Siemens, have all committed to Indian manufacturing.
Source : Mckinsey Quarterly

Saurabh Nigam/ 32
Retail
Retailing, which today makes up less than 4 percent of the overall market, is expected to grow to $60 Bn
& increase the overall retail market by CAGR of 21.8 percent by 2015. Organized retailing is poised to
take‐off as:
Significant mall development occurs. By 2010, there will be 600 malls and 300 million square feet,
respectively.
Reliance plans to open 4,000 stores and hypermarkets with a target of $22.3 billion in sales by 2011
Wal‐Mart and Bharti have form a joint retailing venture
Pantaloon aims to grow its stake hoping to top $6 billion by 2011 by opening an additional Big Bazaars
Others specialize.
Tata group, in a joint venture with Woolworths, plans to double outlets by the end of 2009.
RPG Enterprises plans to open over 450 MusicWorld stores covering 4 million square feet by 2010.
Birla , through its Trinethra acquisition, opened around 220 stores last year alone.
Rahejas plans to add 55 ‘Hypercity’ hypermarkets.
Source : Mckinsey Quarterly

Saurabh Nigam/ 33
Pharmaceutical Market
India's pharmaceutical industry is one of the fastest growing sectors in Indian economy with an average
annual growth rate of 11.42 percent during 2001‐2007. The industry crossed $ 6.5 billion in 2007. Indian
pharmaceutical industry has the potential to reach $ 25 billion by 2010.
Logistics is regarded as a crucial part of the pharmaceutical industry since the activities are highly time
sensitive. In addition, pharma products need temperature controlled storage and distribution.
Saurabh Nigam/ 34
Impact of Globalization
Why globalization is compelling us to adopt Transport

Management Solutions and Best Practices?
Logistics Cost US China India
as % of final product 7.80% 10% 15 - 20%

Saurabh Nigam/ 35
Impact of Globalization
Why globalization is compelling us to adopt Logistics Best Practices?

Constituents of Total Logistics India
Cost
Transportation 35%
Warehouse & Handling 9%
Inventory 25%
Packaging 11%
Customers & Shopping 6%
Transit Losses 14%
Technology cost <1%
Substantial opportunity to save on Transportation and in-

transit losses with the adoption of suitable Technology.

Saurabh Nigam/ 36
Key Challenges
 Geographical Coverage. Lack of distribution channels in India makes it difficult to reach consumers or
distribute products nationwide.
 Limited physical infrastructure. India has one of the largest road networks in the world, yet less than half
of the roads are paved and less than 2000 km are express highways, a significant difference when
compared to China’s 30,000 kims. The poor condition of roads translates directly to shorter vehicle
lifespan ,which increases operating costs and reduces efficiency.
 Over burdened ports. India has a long coastline, but its port system isn’t well utilized. Seventy percent of
the seaborne trade is handled by 2 of its 12 major ports, while 185 minor ports go virtually unutilized.
 Non existent warehouse standards. While infrastructure covering roads, airports and seaports remain the
focus area for investment, warehousing as a facilitator for the agricultural sector has failed to keep pace
with rising farm output. There is virtually no complex distribution center set‐up, no standards for suppliers,
and little vendor compliance Unorganized trucking operations. Two‐thirds of fleets have less than five
vehicles, making it difficult for shippers to manage the plethora of carriers required to handle shipment
volumes.
Saurabh Nigam/ 37
Key Challenges
 Limited technology basis. Firms don’t use technology to plan, execute or communicate logistics
operations. Only an estimated 30,000 commercial vehicles have tracking systems
 Skill Gaps. The core issue is Poor image / lack of attractiveness for new recruits arising from poor working
conditions and relatively lesser attractive pay and progression incentives in turn arising from the
fragmented and unorganized nature of the industry
 Benchmarking and operating efficiencies. Since logistics market is highly unorganized it brings in lot of
inefficiencies. With entry of international players in Indian logistics market, operating efficiencies and
benchmarking with best players will be key to succeed in logistics market
 Though VAT (Value Added Tax) has been implemented since April 1, 2005, failure in implementation of a
uniform VAT structure across different states has let the problem persist even today
 A vehicle that costs USD 30,000 pays USD 7,500 per annum in the form of various taxes, which include the
excise duty on fuel. This is why freight cost is a major component of the cost of a product in India
Saurabh Nigam/ 38
Challenges of Globalization
 Competition from the international logistics service providers
 Organizing themselves for offering integrated logistics solutions
 Look for innovative ideas like dedicated trucks, back freighting, multimodal options as an
alternative to traditional transportation
 Rapid capturing of international trade in India
 Invest in changing the entrepreneurs mindset favorably towards Technology Solutions
 Integrated IT infrastructure up to grass-root level including in-transit visibility through GPS

based Telematics
 Skill and Trained manpower deployment
Saurabh Nigam/ 39
Challenges of Globalization
Cost competitiveness:
 Minimization of cost of distribution (Transportation) in the cost of finished product

 Save on secondary / tertiary packing, pilferage & theft losses
 Save on inventory management cost
Service Competitiveness:
 Real time IT infrastructure

 Better Asset utilization
 Adapting international systems, process & procedures
 Customer Service support
 Skilled manpower
Quality Competitiveness:
 Global Sourcing
 Multi-location manufacturing with identical quality
Saurabh Nigam/ 40
India’s Logistics & Transport Industry
Summary
 India’s Logistics & Transport Industry is poised for rapid growth

momentum
 Organised logistics & Transportation industry will witness accelerated

growth
 3PL will gain the most from this growth
 Unorganized cargo movement market will shrink
 SEZs will be catalysts to India’s growth momentum
 Investment momentum will build infrastructures
Saurabh Nigam/ 41
Sample Freight Process Overview and Involved Parties
Order Taking Outbound Terminal Outbound or Inbound Gateway Inbound Terminal
LSP Strategic
Contract Contract
Freight Contract
Contracts
Negotiation
Operations
Shipment Freight Shipment

Booking
Request Order Order
LSP
Shipment
Operations Freight
Shipment Order
Order
Confirmation
Confirmation
Customer
House B/L MasterB/L
LSP Routing and Consolidation and

Freight Calculation
Engines Scheduling Optimization
Ocean Ocean
Shipping
Carrier Booking
Instructions
Haulage
Pre-carriage Order
Carrier
Saurabh Nigam/ 43
Transportation Management and Multi-level ordering/booking
Ordering Party (Shipper) Order Confirmation

Orders Shipment from
Source to destination
by Ocean
Shipment
Shipments
Request
3PL
• Organizes complete shipment for customer Shipment Order FUs / Activities
• Executes pre-carriage
Shipment Order
Confirmation
Orders Main Leg by Ocean
plus import and final
Haulage to Destination
Shipment
Shipments
Request
Freight Forwarder
• Organizes on-carriage for customer Freight
• Executes ocean leg with consolidation FUs / Activities Tour
Order
Freight Order
Confirmation
Orders final
Haulage to Destination
Freight
Shipments
Request
Carrier
• Executes on-carriage of consolidated freight
FUs / Activities Tour Vehicle
Saurabh Nigam/ 44
Warehouse Management
Receiving
Yard Mgmt
Unloading
Replenishment
Unpacking
Putaway Strategies RF Technology
• Supports incentive pay
Interleaving
Task & Resource Mgmt

Inventory
Picking Strategies
Inquiry
Packing
Loading
Ship Confirm
Delivery Split
Rough Workload Estimates
Printing Labels
Shipment Update
Saurabh Nigam/ 45
Warehouse Management Functions
Outbound Shipment
Inbound Shipment
Supplier
ASN RFID Other Partners / ASN BOL HUM
Stores
Warehouses
Yard Management Delivery
VAS Billing
Unload & Receive
Tracking & Tracing
Quality Control
Warehouse Monitoring
Cross Docking
Outbound Monitoring
Asset Management
Deconsolidation
Inventory Picking, Packing

Management & Shipping
Splitting Replenishment
Bundling
Rearrangement
Wave Management
Interleave Management
Slotting & Concepting
Order Creation Shipments

Workforce Management
Task and Resource Management Mobile Data Entry (Barcode, Voice, RFID)
Saurabh Nigam/ 46
WMS Execution – Processes
Execution Monitoring
Complaints and Purchase Order

Returns Processing
Inbound Processing and Receipt
Processing Confirmation (New merchandise
and returned merchandise)
Billing incl. Invoice
Corrections
and Entitlement Quality Assurance and
Management Analytics Control (New parts and
returned parts)
Warehousing
Transportation and Storage
Management
Physical Inventory
Cross Docking
Outbound
Processing Execution
Collaboration
Saurabh Nigam/ 47 Supplier Store Third Party Service Provider

Supply Chains are sophisticated and inter-linked
All parties are operating like nodes in a business ‘network’
Logistics and Transportation not central to that network
LSP’s a commodity Lack of holistic view


 Customer
Customer retention
retention Implications

 More
More bids,
bids, more costs ■ Business decisions made with narrow view vs. full enterprise view.

 Easily
Easily replaceable
replaceable (optimize planning, finance, assets, GTS, all costs)

 Only
Only Yield
Yield management
management ■ I don’t know so I can’t tell my customer
■ Can’t properly judge profitable business
Logistics not plugged into

business network
■ LSP’s not strategic to their
customers. (An operational
“afterthought” in the minds of
shipper’s execs) Advanced IT beyond Data Needs
■ Transportation and SCEM not ■ Real time visibility and SCEM
properly considered in shipper’s
■ Inability to adapt in real time to execution
supply chain planning
issues
■ LSP’s engage customers at low
■ Poor customer service levels
operations level, not at the
executive level ■ In-transit inventory not aligned with
production
IT Landscape ■ Consignees lack of awareness
Homegrown and Best of Breed, Many Custom Interfaces
Saurabh Nigam/ 48
Shippers face significant transportation challenges in
managing extended global supply chains
Raw Source Suppliers Shippers are facing

Manufacturers
increasing capacity
constraints in ports,
Contract Mfg rail and TL
(EMS)
OEMs
Distributor
Component Mfg Customer

expecting shorter
Sub Assy
Mfg and more time-
Retailers definite lead-times
Retail from
shippers
Configure VAR
& Package
In today’s pull-based
replenishment
environment, internal
Customer
and external customers
Carriers
require granular and Distributors
real-time visibility to
shipments
Rising fuel costs and
reduce negotiation
power with carrier
consolidation pressuring
freight rates
Saurabh Nigam/ 49
Streamlined LSP Operations
Financial Close Supply Chain Event Management Warehouse Management

 Streamline financial close cycle  Ensure compliance with regulations  Minimize duplicate goods movements
 improve period-end closing cycle time  Ensure customer satisfaction  Optimize flow of goods inbound to
 Increase finance productivity  Reduce costs, time to action outbound and shorten routes
 Automate receivables, invoicing, and cash  Manage by exception  Optimize internal movements and storage
reconciliation processes – improving  Provide transparency & control performance of goods
order-to-cash cycle time  Plan and execute physical inventory or
cycle counts
Enterprise Performance
Management Customer Sales &
 Improve control, accuracy, and speed
of group-close activities
Customer Service
 Improve collaboration and enterprise- Management
wide alignment of strategy  Drive customer satisfaction
 Increase customer retention
 Address new business
Talent Management,  Provide new and innovative
Workforce Scheduling and service offerings and delivery
model
Optimization
 Get real-time insight into the workforce
 Hire and keep the best talent’s
Manage Risk and
 Skill up resources Compliance
 Align the goals  Manage internal control risk
 Measure workforce contribution
 Compliant with changing regulations
Transportation Management  Streamline and automate
sanctioned-party screening and
 Optimize shipments, assign carriers to shipments, and tender trade compliance processes
shipments  Rapidly deploy system access
 Consolidate orders and optimize shipments from a centralized controls to mitigate
location or distributed business units segregation-of-duties risks
 Select carriers, calculate freight costs, settle shipment costs,
IT Landscape
and print documents
Single Business Process Platform  Use denied-party and embargo lists for international shipping
Saurabh Nigam/ 50
XXX Estimated Annual Benefits of $66.6M – $99.7M1
and One-Time Benefits of $23.1M – $27.8M
Potential Annual Benefits Potential One Time Benefits Conservative
Conservative Estimate
Estimate
Likely
Likely Scenario
Scenario
$66.6 M $99.7 M $23.1 M $27.8 M
One-time
One-time benefit
benefit
Supply Chain Planning

Warehouse Management Transportation Management
$16.0 M - $24.6 M
Reduced
Reduced inventory
inventory levels
levels
through $23.1
$23.1 M
M Improved
Improved warehouse
$6.5
$6.5 M Reduced
Reduced direct
direct material
material $4.8
$4.8 M
through integrated
integrated warehouse spend
spend through
through increased
increased
planning
planning && forecasting
forecasting productivity
productivity
$27.8
$27.8 M
M $11.7
$11.7 M strategic
strategic procurement
procurement $7.2
$7.2 M
M
processes
processes (one
(one time)
time)
Reduction
Reduction in
in BD&L
BD&L duedue to
to $3.3
$3.3 M Reduced
Reduced off-contract
off-contract
Inventory
Inventory carrying
carrying cost
$4.4
$4.4 M
M indirect
$8.3
$8.3 M
cost improved
improved Warehouse
Warehouse indirect spend
spend through
through
reduction
reduction $5.3
$5.3 M
M Management
Management Efficiency
Efficiency $4.1
$4.1 M
M better
better sourcing
sourcing ,,
$10.3
compliance,
compliance, andand efficiency
efficiency $10.3 M
M
Reduced
Reduced lost
lost sales
sales through
through Reduced
Reduced transportation
transportation &
&
reduced
reduced Stock-outs,
Stock-outs, $1.6
$1.6 M
M $11.4
$11.4 M
M
logistics
logistics costs
costs through
through
reduction
reduction in
in delayed
delayed improved
improved route
route planning
planning
shipments,
shipments, and
and enhanced
enhanced $2.3
$2.3 M
M and
and optimization
optimization between
between
$14.3
customer
customer satisfaction
satisfaction Plant
Plant and
and Warehouses
Warehouses $14.3 M
Reduced
Reduced BD&L
BD&L through
through
better
$7.9
$7.9 M
M Improved
Improved transportation
better supply
supply chain
chain transportation
planning
planning and
and improved
improved planning
planning && vehicle
vehicle $6.1
$6.1 M
inventory
inventory visibility
visibility
$13.1
$13.1 M
M scheduling
scheduling FTE
FTE productivity
productivity
(excludes
(excludes FTE's
FTE's for
for store
store $8.2
Reduced
Reduced manufacturing
manufacturing delivery)
$8.2 M
M
delivery)
expenses
expenses from from better
better
production
production planning,
planning,
$1.9
$1.9 M
M XXX Validated Benefits
improved
improved inventory
inventory
visibility,
visibility, improved
improved loadload $23.1
$23.1 M
M
leveling,
leveling, and
and ability
ability to
to One-Time
One-Time Benefits
Benefits
implement
implement six six sigma $3.7
$3.7 M
M
sigma $27.8
$27.8 M
M
methodology
methodology
$0.2M
$0.2M $22.1
$22.1 M
M
Reduced
Reduced Trade
Trade Promotion
Promotion Annual
Annual Benefits
Benefits
expense
expense $0.2M
$0.2M $34.2
$34.2 M
M
1 Excludes One Time Benefits
Saurabh Nigam/ 52
Supporting Details for $6.5M-$11.7M Annual Benefit from
“Improved Warehouse Productivity”
Conservative
Estimate
Value Drivers
Likely
Likely Scenario
Scenario
Improved warehouse productivity: right product at the
right place at the right time, and elimination or
Move
Move from
from daily
daily
$1.5
$1.5 M
M reduction of non-value added, high human-error
physical
physical to
to Cycle
Cycle count
count $1.7
$1.7 M
M activities
Improved
Improved warehouse
warehouse
$6.5
$6.5 M
M Improved
Improved warehouse
warehouse $2.5
$2.5 M
M 1. Replace total daily physicals with efficient cycles for nearly
productivity productivity
productivity in
in "Receiving
"Receiving
productivity $11.7 80% reduction in time spent by generally one FTE per
$11.7 M through
through Put
Put Away"
Away" process
process $5.0
$5.0 M
M
warehouse. Plus process increases accuracy.
Improved
Improved warehouse
warehouse $2.5 M
M 2. Fix 24 to 72 hour inventory recognition lag with immediate
productivity
productivity in
in "Picking
"Picking
$5.0 internal transfer or external delivery receipt matching and
through
through Shipping"
Shipping" process
process $5.0 M
M
immediate discrepancy handling. Affects dock door “data
entry” personnel also on BD&L inventory handling.
Damages and mismatches addressed immediately, to
Tangible Benefits allow manufacturing and supplier to correct inventory
levels.
Value Source Baseline Improvement % 3. Efficient system directed putaway replaces “let’s see
what’s open” time loss, plus goods are located most
 Move from daily physical to $1.9M1 80-90%
effectively for reorganization and movement by date code.
Cycle count
4. Ability to system direct overnight reorg by product mix and
date code to prepare for next day’s pick. Currently not
 Improved warehouse $99.5M2 2.5-5% done, except for 1 FTE “cleanup” resource assigned in
productivity in “Receiving
warehouse.
through Put-away” process
5. Link POD fill request to efficient picking strategy,
 Improved warehouse $99.5M2 2.5-5% optimized truckload planning, more efficient returns and
productivity in “Picking through pick area re-placements vs “I think that’s where it is”, “yes
Shipping” process this is oldest date I think”, and “this would be a good load
strategy”.
6. Eliminate date code recognition human error- expected to
increase with number of SKU’s and collaboration partners
Assumptions:
like Campbell’s.
1. Assumes 6 hours of a FTE is required for every 40 FTEs in a warehouse
based on North Metro warehouse data
2. Assumes 95% of Production Warehouse Labor, 25% of Sales Center
Warehouse Labor, 25% of Sales Center Truck Loading, 25% of Sales
Center Contract Labor Cost. Labor used in full physical excluded
Saurabh Nigam/ 53
Transportation Spend Profile: XXX Company
Average Transportation Spend by Mode Company’s Transportation Spend by Mode
Saurabh Nigam/ 54
Transportation : Closing The Performance Gap Could
Result in Significant Benefits for Company
Performance Results – Key Metrics Potential Benefits: Value of Closing the Gap
Type Metric Company Peer Group
Avg. Q1
Effectiveness On-time Delivery
Performance (in %) 96.0
96.0 89.6
89.6 97.9
97.9
Trailer Utilization (in %)

Efficiency: Reduce Transportation Spend ($M)
100.0
100.0 73.7
73.7 93.0
93.0
Efficiency Out-bound Expediting

0.1 6.7 0.8
0.1 6.7 0.8
(% of spend)
Shipment Cycle Time (in 8.0
8.0 8.6
8.6 2.3
2.3
days)
Transportation Spend
(% of revenue) 4.8
4.8 4.7
4.7 2.0
2.0
Transportation
Management Process 0.2
0.2 1.6
1.6 0.4
0.4 Gap to Q1
Costs (% of spend)
Gap to Average
Below Average Between Average and First Quartile
First Quartile Outlier
Key Observations
 XXX’ On-time Delivery Performance, which is an important customer facing metric, is between average and first quartile. Developing transportation
forecasting and planning capabilities and integrating it with transportation execution processes will help to improve on time delivery further
 XXX’ transportation spend (% of revenue) is below average indicating scope for identifying savings by leveraging analytics tools for transportation spend
opportunity analysis
 XXX shipment cycle time is between average and first quartile levels indicating a scope for integration of transportation with internal processes like
warehousing, manufacturing and finance as well as with the customers to reduce in-bound and out-bound cycle time
Peer Group – Consumer Product Companies
Saurabh Nigam/ 55
Best Practices Adoption:
Transportation Management Function Maturity
Performance Results – Best Practices Peer Comparison Key Observations

 Best practice adoption is lower than average on 3 of the 6 process
areas
 Transportation Sourcing  Adopting best practices should increase the overall effectiveness and
 Transportation Forecasting efficiency of the transportation management operations
 Transportation Execution  XXX has the biggest internal gap around transportation analytics
and Visibility  There is a high difference between first quartile peer group coverage
and company coverage for the following areas:
 Transportation Analytics
 Transportation Charge Management
Recommendations based on the gaps are as follows:

 Transportation Planning
 Utilize consistent set of metrics to measure the holistic performance of
 Transportation Analytics
the transportation function to help improve transportation analytics
 Transportation Charge
 Improve carrier rate storage by enabling system to codify and
Management electronically store complex, multi-dimensional carrier rate structures
and associated accessorial charges
 Enable system to create booking request and transmit it electronically to
carriers to improve transportation execution
Below Average Between Average and First Quartile First Quartile
Saurabh Nigam/ 56
Performance Improvements Driven by Key Value
Drivers
Expected What moving the needle could mean

Bottom Quartile Average Top Quartile Benefit to the Company:
4.8
4.8 Transportation Spend improvement
Transportation Spend
$ 6.2M - $ 173.3M potential to top quartile: $173.3M
(% of revenue)
10.0 4.7 2.0
On-time Delivery 96.0

96.0 On-time Delivery performance
Performance-to-Request improvement potential to top quartile:
(in %) 75.9 89.6 97.9 NA - 2.0% 2.0%
58,333
58,333 Shipments delivered per load planner
Shipments Delivered
improvement potential to top quartile:
per Load Planner
9,182
9,182 49,175
49,175 158,979
158,979
NA - 172.5% 172.5%
172.5%
Below Average Between Average and First Quartile First Quartile Outlier
Saurabh Nigam/ 57
Performance Drivers: Best Practice Adoption
Average Best Practice Rank by Function
4 4
3.8 3.7 3.6
3.3 3.4
3 2.9 3
2.7
2.4 2.4
2.2
2
0
Transportation Sourcing Transportation Planning Transporattion Transportation Transportation Transportation Charge
Forecasting Analytics Execution and Visibility Management
Avg Coverage - Peer Group Q1 Coverage - Peer Group Company Coverage Company Importance
Saurabh Nigam/ 58
Best in Class Warehouse Management Key KPIs
Performance Results – Key Metrics (Color Coding as per Wholesale Distribution benchmarks)
Type Metric XXX Overall WSD Potential Benefits: Value of Closing the Gap
Averag Q1 Averag
e e Effectiveness: Reduce Inventory Carrying Cost ($M)
Effectiveness Order fill rate(%) 94.3%
94.0% 94.4% 99.2%
% error in lines shipped 1.5%
1.0% 4.4% 1.0%
Inventory accuracy 93.1%
99.0% 95.5% 99.4%
Effectiveness: Increase free cash flow – One-time ($M)
Inventory turns per year 4.8
4.0 8.5 18.3
Inventory carrying cost 2.5%

(% of Revenue) 3.0% 3.9% 1.2%
Efficiency/ % of inbound shipments 51.6%
Effectiveness with ASN 0.0% 48.2% 93.8%
% of total inbound 3.5% Efficiency: Improve Overall Productivity ($M)
shipments that are 0.0% 21.0%
5.6%
cross-docked
Efficiency Customer order cycle 3.1
time (days) 4.0 5.5 1.4
Dock-to-stock cycle time 28
(hours) 24.0 16 1 Gap to Average
Total Warehouse FTEs 50.2
per $100M of revenue 63.1 19.6 2.6 Below Average Between Average and 1st Quartile
Saurabh Nigam/ 59
WMS – Best Practices adoption
Performance Results – Best Practices Key Observations

 Cross - Docking  Best practice adoption is worse than average on 6 out
of 15 best practices
 Receiving
 Returns Processing  Adopting best practices should increase the
 Warehouse monitoring effectiveness and efficiency of warehouse
 Shipment management systems
 Yard Management  Based on internal gap following are some
 Packing recommendations:
 Warehousing Strategy  Optimize warehouse processes based on ship times
 Put-Away
 Inventory Management  Resource assignment should be optimized and the
 Slotting system should raise alarm in case of exceptions
 Value Added Services  There should be real time enterprise wide visibility to
 Order Picking inventory
 Replenishment
 Warehouse Analytics
Below Average Between Average and 1st Quartile
First Quartile Data not available
Saurabh Nigam/ 60
Business Value of Moving The Needle
Q4 Average 1st Quartile Expected What moving the needle could

Benefit
mean to XXX
63.1
By reducing staffing levels to average
Warehouse FTE / benchmark, at an average annual FTE cost of
50.2 $0.3M
$100M of Revenue $22.5K XXX could gain $0.3M in productivity-
related benefits
94.0%
Increasing order fill rate will improve customer

Order fill rate 94.3% service and increase sales, while decreasing
backorder related costs
3.0%
XXX could save up to $0.5M by reducing the

Inventory Carrying 2.5% $0.5M inventory carrying cost to average levels
Cost (% of Sales)
4.0
13% Increasing inventory turns to average levels
will reduce XXX’ working capital investment
Text
Inventory
PO Error Turns
Rate 15.16%
4.8 1.5% 15 – 20%
$4.0M
by $4M
Saurabh Nigam/ 61
Warehouse Management: Improved best practices
adoption drives value capture
Avg Q1 XXX XXX
6
Areas with largest Internal Opportunity Areas

Gap
Shipment -Warehouse process should be optimized based on ship times
Warehouse Monitoring -Optimize resource assignment

-The system should raise alarm in case of exceptions
Slotting -There should be real time enterprise wide visibility to inventory
Saurabh Nigam/ 62
Move the Needle – XXX vs. Peers
Peer Worst Peer Average Peer Best

9.0%
Revenue Growth 16.7
CONCOR 2.5% All Cargo
2006-07,TTM1 %
76.4%
Cost of Sales as 64.9
Gateway Distriparks 90.7% All Cargo
% of Revenue %
8.6%
- 19.1
Operating Margin Gateway Distriparks CONCOR
2.3% %
45
Days Sales Outstanding days 21
CONCOR 61 days All Cargo
(DSO) days
What Moving the Needle Could Mean to XXX Company:

 Every additional percent point in Revenue Growth = AUD 0.3M in operating earnings
 Every one percent improvement in COGS (as % of Revenue) = AUD 2.6M in operating earnings
 Every day of improvement in Days Sales Outstanding = AUD 0.9M in free cash flow
Note 1: Trailing twelve month (TTM) data has been used wherever available
Peer group included in this comparison are: Western Power & Equipment, Finning International, Toromont and United Rentals
All benefit figures are in Australian Dollars (AUD) unless specified otherwise
Source: 2006-2007 Annual and Quarterly Company Reports for peers; News Reports;
Saurabh Nigam/ 63
Key Opportunities to Improve Business Processes and
Deliver Tangible Benefits
Key Value Drivers
One source of orders, one planning system, one inventory
Full integration of planning to order management (upstream) to manufacturing
1. Supply Chain Planning (downstream) to distribution
Integration of POS Data
Reduce schedule volatility and firefighting with increased planning consistency, visibility
and accuracy
2. Demand Fulfillment & Enhance linkage between schedule, materials, etc.
Execution Increase visibility to materials and goods availability/substitution
Improve Visibility and accuracy of Available to Promise inventory
Consolidate requirements to better leverage spend
3. Sourcing &
OPPORTUNITIES
Increase real-time monitoring to reduce maverick spend

Procurement Increase efficiency through end-to-end process integration
Reduced downtime, increased yields, lower maintenance labor & overhead

4. Asset Tracking & Proactively manage, plan, and execute preventive & corrective maintenance activities
Utilization to avoid unexpected equipment failures
Optimize maintenance activities based on resource availability and qualifications
KEY
Increase service levels to reduce lost sales and lost margin

5. Sales Execution & Reduce administrative and follow-up burden placed on sales and delivery
Customer Service Reduce process burden of multiple systems
Increase timeliness and accuracy of order status
Increase collaboration with key customers and vendors in product development

6. Time-To-Market Simulate potential product demand for launch and post launch
Reduce complexity and cost of IT infrastructure

Scalable, robust applications and platform to support dynamic business objectives
7. Information Achieve clean, consistent data across the enterprise
Technology Reduce manual effort to convert and duplicate data
Achieve lower total cost of ownership
Accurately track initial stock up and repeat sales for new products
8. Go-To-Market Manage Inventory aging, returns, and BD&L
Manage product exit strategies
Saurabh Nigam/ 64
Transportation Management Opportunities
 Order-to-Delivery cycles times have decreased 53% from ’99 to ‘04 (Source: GMA)
Decreasing cycle-times and  Transportation costs increased 14.1% from ’04 to ’05 (Source: CSCMP)
rising transportation costs  Import / Export growth leading to port and rail capacity constraints. Forecasted driver
expected to continue shortage of 100,000 by 2014 (Source: Global Insights) and Hours of Service (HOS) rules
will create similar situation in trucking.
 Consolidation in LTL by Yellow, Fed-ex and UPS changing negotiation leverage
 “71% of companies that have a formal Transportation Management process and

system have experience annual transportation spend savings of 6% or more”
(Source: The Georgia Tech Logistics Institute)
Analysts are in agreement  “The Best in Class are more likely to have better visibility to transportation costs, are
twice as likely to be sharing tactical capacity forecasts with carriers and are two
times more likely to be doing daily transportation score-carding” (Source: Aberdeen)
Saurabh Nigam/ 65
Transportation Pain Points – Global Context
Pain Points Key Observations

Higher Freight Rates  Meeting growth and offshore sourcing objectives requires evolution of facility locations and LSP
due to Difficulties in relationships. To maximize responsiveness, companies must accelerate changes to LSP base
Managing Carrier  Shippers, who often award contracts to the low-price carriers because of lack of alternative metrics, can
Relationships experience lower customer service and higher inventory due to poor carrier performance
 Manual and time consuming nature of freight opportunity analysis and freight contract re-bidding
process inhibits freight rate reduction opportunities
 Inability to capture and electronically codify contract terms (e.g., detention, demurrage, surcharges and
accessorials) minimizes optimization opportunities as those charges are not visible to planning engine
 Lack of electronic freight contract repository allows maverick “off-contract” freight contracting
Rising Freight Spend  Consolidation in Less-than-Truckload (LTL) carrier base reduces the shippers potential for negotiation
due to Carrier Capacity leverage, making codified SLAs and performance tracking capabilities paramount
Constraints  Reduced capacity in Truck-load (TL) freight due to national driver shortage as well as reduced capacity
in rail due to the rise in international inter-modal, can leave shippers paying significant premiums (or
risking customer service issues with delays). Without freight requirements forecasting and carrier
collaboration, you can not be assured that adequate capacity will be there to meet your needs.
Transportation  Legacy facility-centric transportation system structures provide limited visibility to logistics movements
Planning Inefficiencies that can be leveraged across facilities (e.g., drop-offs, zone skips)
 Lack of an effective shipment optimization analysis tool limits consolidation opportunities (e.g., Less-
than-Truckload (LTL) to Truckload (TL) consolidation)
 Lack of network-wide delivery visibility limits ability to capitalize on backhaul and continuous move
transportation opportunities
 Out of date product master data (e.g., weight, cube) as well as transportation master data inhibits
optimized mode selection
 Lack of automated shipment tender response scoring inhibits optimized carrier selection
 Limited vehicle scheduling capabilities lowers private fleet asset turns (i.e., more assets required for a
given shipment volume)
Saurabh Nigam/ 66

Higher Inventory due  Limited visibility to inbound shipment delays (especially international inbound) limits ability to take
to Limited Visibility proactive action, leaving purchasers with high lead-time variability and high safety stock inventory
Ineffective Customer  Inability to prompt user with accurate shipment options and associated costs at time of order
Service  Inability to provide delivery date estimates to customer at time of order
due to Lack of  Limited visibility to outbound shipments delays creates significant customer service issues as shippers
Integration and are often last to know when a customer order is delayed
Visibility  Inability to capture rail-car Car Location Messages (CLMs) limits customer service experience given lack
of order status that can be provided to customers
Manual Freight Costing Excessive freight costs are often passed on by carriers who fail to adjust surcharges as fuel prices drop
& Settlement  Without accurate freight cost estimating capability (including estimation of accessorial charges and
surcharges), it is difficult to identify and correct erroneous accessorial charges
 Without automated freight invoice verification, the administrative burden associated with costing and
settlement (matching costs to invoices) prevents transportation labor resources from focusing on more
value-add activities (e.g., analyzing high-volume lanes and re-bidding freight contracts)
 Given global and distributed nature of fulfillment, passing freight accruals on to customer may cause
customer service issues (e.g., customer should not be responsible for cost delta if fulfilled in Penang,
Malaysia versus San Jose, CA). Need ability to charge customers differently than freight costs.
Lack of Analytics  Lower profitability due to inability to capture and “tie-back” freight accruals to customer orders which
Impairs Performance inhibits total-cost-to-serve metric calculations by customer, channel and product category
Improvement  Limited ability to identify and communication cross-facility best practices without network wide visibility to
Initiatives shipment performance metrics in each facility
 More IT resources required to connect, transfer, map and translate operational transportation data to an
executive level transportation performance dashboard
Saurabh Nigam/ 67

Inefficiencies in  Manual tendering processes consume a significant amount of transportation resources, limiting the
Manual Transportation amount of freight opportunity analysis and carrier optimization work that can be done
Execution  Increased transportation expense due to freight forwarder fees associated with ocean container capacity
booking
Excessive  Lack of predictive analytics translates to more unnecessary service orders (consuming labor and spare
Maintenance Costs for parts) as well as more unscheduled down-time (limiting asset turn-over)
Transportation Assets  Limited maintenance order management, guided procedures and procurement capabilities drives up
manual labor expense
 Lack of procurement compliance and network-wide spares visibility drives up maintenance spend as well
as maintenance asset inventory levels
Saurabh Nigam/ 68
Saurabh Nigam/ 69
Saurabh Nigam: Professional Highlights in Supply Chain
Area
Key Projects Completed
Overall 8 years of experience with 7 years of experience in Customer Service, Supply Chain Planning,
Supply Chain Execution and Utilities Demand Planning areas
6 month onsite project with Coca Cola

 Successfully executed and led 6 months project with Coca Cola in Atlanta to develop a business case of
pan America warehousing and SKU level supply chain planning strategy
Key projects with Walmart and Home Depot

 Led and executed benchmarking based business cases with Walmart and Home Depot US
Education
 MBA (Dean's List,
3 months projects each with Lifenet and Encompass Groups Rank 8/276) in core
 Comprehensive supply chain business case development terms, Topper of the
batch in 3/8 terms,
Finance and Marketing,
Onsite Implementation of Customer Service process for HBG holland ~ 1yr Indian School of
Business, May 04 –
 Implemented customer service processes with HBG Holland May 05
 B. Tech. (Metallurgy
Onsite Implementation of Utilities Demand and Supply Planning system ~2yr and Mat. Science ),
Indian Institute of
 Implemented Gas network demand and supply planning system at NGT UK.
Technology, Bombay,
Jul 96 – Jul 00
Other key customer engagements include
 Boeing
 Canadian Tire
 Patterson
 General Dynamics
 Unisys
 National Grid Transco UK
Saurabh Nigam/ 70
Saurabh Nigam/ 71
Value Engineering Assessment: Approach
May June 11– Aug 6 Aug 9 – October 13 October 13
Alignment & Value

Validation Preliminary Findings
Scope Discovery
Activities
 Validate/ confirm  Understand/  Validate findings,  Present
executive validate company/ refine business preliminary XXX
alignment on BU strategy and case NABU SCM
engagement pain points through  Develop high level business case to
scope, approach, targeted interviews benefit estimates SC Leadership
timeline,  Develop data Team
 Finalize solution
objectives and request to create a  Discuss next
deliverables recommendation
business case and value steps
 Identify key  Analyze operational proposition
business areas of and financial data
focus and pain to estimate
points where can potential cost
help unlock savings and
business value revenue uplift
opportunities
Saurabh Nigam/ 72
Significant Participation from XXX
Identify Business Challenges, Pain Points, and Implications
XXX Leadership Team Interviews

Esat Sezer SVP, CIO Ed Sutter VP, Supply Chain Ron Lewis VP, Procurement
Dave Katz VP, Customer Supply Chain Dave Jones VP, S.C. Ops. Excellence Pat Yaduaga VP, S.C. Ops & Quality
& Strategy
Customer Supply Chain SC Operational Excellence SC Operations & Quality

 Scott Figura- VP, National Fulfillment  Winston Richards- Technology Manager  Tom Conti- VP, Supply Chain West
 Rodney Leonard- Director, WH Fulfillment  Dave Glancy- Director of Operational  Pete Duessel- National Quality Manager
Excellence  Thalya Gulley- Regulatory Compliance
 Tom Seifert- Operational Excellence Manager
Manager  Casey Hodgson- Director of SC Planning
 Tim Hyatt- Operational Excellence Manager  Jeff Otto- VP, Engineering
 Chris Janke- Mgr, Supply Chain Planning
 Frank McDermott- VP, Supply Chain
Southeast
 Tom Sanborn- Director, Manufacturing
 Lalen Duty- Director of Product Availability
BIS Human Resources

 Mike Wright- Director of NA Deployment  Mark Kastner- Corp Mgr of Org
 Anthony Nuzzo- VP, Global Deployment & Effectiveness
Development
Saurabh Nigam/ 73
XXX’s Goals & Objectives
 Continue to strengthen position in each beverage category

by growing the value of existing brands
Strengthen Brand  Strategically broaden presence in fast growing beverage
Portfolio groups (non-carbonated, bottled water, etc.)
 Leverage powerful relationship with TCCC, which is
Drive dedicated to expanding product portfolio
Shareholder
Value
 Transform go-to-market model in order to improve
customer service and in-store execution while embracing
Transform Go-to- the most effective distribution channels for each product
Market Model And  Drive improved consistency and best practices across the
Improve Efficiency organization
and Effectiveness  Continue to implement, restructure and transition programs
to maximize operating effectiveness and efficiency and to
reduce cost
Primary focus of the quantified value proposition
 Attract, develop, and retain a highly talented and diverse

workforce in order to further establish a winning and
inclusive culture
Commitment to  Develop clear, concise job responsibilities, with goals that
People are clearly understood, and improve communication to
share best practices effectively
 Provide people with the right tools and right products to
win in the marketplace
Source: XXX Interviews & 2006 Annual Report
Saurabh Nigam/ 74
A Unique Opportunity to Address Existing and Emerging Supply
Chain Challenges in Light of Changing Consumer Preferences
Strategic Objectives Challenges Uncovered During Assessment

Align with Shopper  New customer service models must be developed to ensure profitability in every
Demand segment
 XXX cannot leverage POS data to segment and manage accounts
 Lack of ATP capability at order entry results in retail stock-outs and customer
dissatisfaction
Increase Productivity and  Growth through M&A has resulted in non-standardized and non-optimized
Standardize Operations operations
 Poor forecasting techniques, not leveraging demand signals, and a push based
supply network results in supply chain waste and inefficiency
 Lack of tools, disconnected systems, and spreadsheet based processes create
significant challenges in achieving lean operations
 Limited or no visibility into the location and utilization of assets, poor project
tracking, no real time reporting, no real business intelligence, and poor call
tracking and routing
Balance Exacting  Lack of planning and execution excellence preventing sharing of best practices
Execution and Continuous and continuous improvement
Improvement  Variations in process compliance are preventing improvement
 XXX requires a mindset shift from “do as I say” to “do better”
 XXX must develop and foster a culture which embraces change and continuous
improvement, not one that resists it
Source: XXX Interviews
Saurabh Nigam/ 75
What XXX is saying….
“ Supply chain operates with very little process and procedure”
“Without execution excellence, planning excellence doesn’t work”
“XXX is a “hero system” – don’t have great core processes – but rather highly
variable performance (that is) dependent upon how dynamic/strong the leader of
the group is”
“Innovation is part of managing flow”
“Everyone is doing things differently”
“I need procurement issues, DRP issues, and traceability issues solved now.
This is what’s killing me”
“(We need to) move to a demand driven supply network, rather than a ‘push
“
and pray’ network
Saurabh Nigam/ 76
XXX SC Discovery: Common Themes
Category Individual Comments Heard From Several XXX Executives
More Pull from Customer  Need at achieve a demand driven supply network
vs.  Need to improve forecast accuracy, manage pull demand, and tightly control
Push from Bottling product flow.
 Replenish based on true demand.
 Increase use of retailer signals like POS, EDI, RFID, etc.
Increase Technology in  Install RF devices and more data entry and lookup points.
Operations to Increase  Lack of inventory visibility across system including private bottlers and affiliates.
Efficiency and  Eliminate inefficient daily physical inventory counting.
Effectiveness  Simplify numerous data entry points and many analysts and clerks who support
these complex entry points.
Standardize and Optimize  Regularly identify and remove slow moving products (revenue management).
operations  Need centralized planning to achieve line and budget efficiencies.
 Better visibility of all maintenance projects.
 Reduce BD&L of approximately $82m annual; 50% which is old stock in stores
and warehouses.
 Forward traceability for bad lots and swift response to market actions.
 Identify and mitigate operational risks.
Source: XXX Interviews
Saurabh Nigam/ 77
Key Opportunities to Improve Business Processes and
Deliver Tangible Benefits
Key Value Drivers
 One source of orders, one planning system, one inventory
 Full integration of planning to order management (upstream) to manufacturing
1. Supply Chain Planning (downstream) to distribution
 Integration of POS Data
 Reduce schedule volatility and firefighting with increased planning consistency,
visibility and accuracy
2. Demand Fulfillment &  Enhance linkage between schedule, materials, etc.
Execution  Increase visibility to materials and goods availability/substitution
 Improve Visibility and accuracy of Available to Promise inventory
 Consolidate requirements to better leverage spend
3. Sourcing &
OPPORTUNITIES
 Increase real-time monitoring to reduce maverick spend

Procurement  Increase efficiency through end-to-end process integration
 Reduced downtime, increased yields, lower maintenance labor & overhead

KEY
4. Asset Tracking &  Proactively manage, plan, and execute preventive & corrective maintenance
Utilization activities to avoid unexpected equipment failures
 Optimize maintenance activities based on resource availability and qualifications
 Increase service levels to reduce lost sales and lost margin

5. Sales Execution &  Reduce administrative and follow-up burden placed on sales and delivery
Customer Service  Reduce process burden of multiple systems
 Increase timeliness and accuracy of order status
 Increase collaboration with key customers and vendors in product development

6. Time-To-Market  Simulate potential product demand for launch and post launch
 Reduce complexity and cost of IT infrastructure

 Scalable, robust applications and platform to support dynamic business objectives
7. Information  Achieve clean, consistent data across the enterprise
Technology  Reduce manual effort to convert and duplicate data
 Achieve lower total cost of ownership
 Accurately track initial stock up and repeat sales for new products
8. Go-To-Market  Manage Inventory aging, returns, and BD&L
 Manage product exit strategies
Saurabh Nigam/ 78
XXXNA Estimated Annual Benefits of $66.6M – $99.7M1 and
One-Time Benefits of $23.1M – $27.8M
Potential Annual Benefits Potential One Time Benefits Conservative
Estimate
Likely
Likely Scenario
Scenario
$66.6 M $99.7 M $23.1 M $27.8 M
One-time
One-time benefit
benefit
Supply Chain Planning Demand Fulfillment & Execution Sourcing and Procurement
$16.0 M - $24.6 M $27.3 M - $38.3 M $13.1 M - $17.5 M
Reduced
Reduced inventory
inventory levels
levels
through $23.1
$23.1 M
M Improved
Improved warehouse
$6.5
$6.5 M
M Reduced
Reduced direct
direct material
material $4.8
$4.8 M
M
through integrated
integrated warehouse spend
spend through
through increased
increased
planning
planning && forecasting
forecasting productivity
productivity
$27.8
$27.8 M
M $11.7
$11.7 M
M strategic
strategic procurement
procurement $7.2
$7.2 M
M
processes
processes (one
(one time)
time)
Reduction
Reduction in
in BD&L
BD&L duedue to
to $3.3
$3.3 M
M Reduced
Reduced off-contract
off-contract
Inventory
Inventory carrying
carrying cost
$4.4
$4.4 M
M indirect
$8.3
$8.3 M
M
cost improved
improved Warehouse
Warehouse indirect spend
spend through
through
reduction
reduction $5.3
$5.3 M
M Management
Management Efficiency
Efficiency $4.1
$4.1 M
M better
better sourcing
sourcing ,,
$10.3
compliance,
compliance, andand efficiency
efficiency $10.3 M
M
Reduced
Reduced lost
lost sales
sales through
through Reduced
Reduced transportation
transportation &
&
reduced
reduced Stock-outs,
Stock-outs, $1.6
$1.6 M
M $11.4
$11.4 M
M
logistics
logistics costs
costs through
through
reduction
reduction in
in delayed
delayed improved
improved route
route planning
planning
shipments,
shipments, and
and enhanced
enhanced $2.3
$2.3 M
M and
and optimization
optimization between
between
$14.3
customer
customer satisfaction
satisfaction Plant
Plant and
and Warehouses
Warehouses $14.3 M
M
Reduced
Reduced BD&L
BD&L through
through
better
$7.9
$7.9 M
M Improved
Improved transportation
better supply
supply chain
chain transportation
planning
planning and
and improved
improved planning
planning && vehicle
vehicle $6.1
$6.1 M
M
inventory
inventory visibility
visibility
$13.1
$13.1 M
M scheduling
scheduling FTE
FTE productivity
productivity
(excludes
(excludes FTE's
FTE's for
for store
store $8.2
Reduced
manufacturing delivery)
$8.2 M
M
delivery)
expenses
expenses from from better
better
production
production planning,
planning,
$1.9
$1.9 M
M XXX Validated Benefits
improved
improved inventory
inventory
visibility,
visibility, improved
improved loadload $23.1
$23.1 M
M
leveling,
leveling, and
and ability
ability to
to One-Time
One-Time Benefits
Benefits
implement
implement six six sigma $3.7
$3.7 M
M
sigma $27.8
$27.8 M
M
methodology
methodology
$0.2M
$0.2M $22.1
$22.1 M
Reduced
Reduced Trade
Trade Promotion
Promotion Annual
Annual Benefits
Benefits
expense
expense $0.2M
$0.2M $34.2
$34.2 M
M
1 Excludes One Time Benefits
Saurabh Nigam/ 79
XXXNA Estimated Annual Benefits of $66.6M – $99.7M1 and
One-Time Benefits of $23.1M – $27.8M
Potential Annual Benefits1 Potential One Time Benefits Conservative
Estimate
Likely
Likely Scenario
Scenario
$66.6 M $99.7 M $23.1 M $27.8 M
One-time
One-time benefit
benefit
Sales Execution and Customer

Time to Market IT
Service
$0.8 M - $1.2 M $1.6 M - $2.5 M
$0.4 M - $0.7 M
Improved
Improved Call
Call Center
Center Improved
Improved revenue
revenue
productivity: $0.4
$0.4 M
M $0.8
$0.8 M
M
Reduced
Reduced number
number of
of legacy
legacy $0.6
$0.6 M
M
productivity: lower
lower call
call contribution
contribution from
from faster
faster systems
systems and
and related
related
volume
volume attributable
attributable to to time-to-market
time-to-market and
and integration $1.0 M
integration costs
costs
improved
improved order
order fulfillment
fulfillment improved
improved market
market $1.2
$0.7
$0.7 M
M $1.2 M
M
rate
rate penetration
penetration
Reduced
Reduced application
application
$0.4
$0.4 M
M
development
development costs
costs $0.6 M
Improved
Improved business
business
Asset Tracking and Utilization $0.6
intelligence
intelligence due
due to
to more
more $0.6 M
M
$7.4 M - $14.9 M timely
timely data
data capture,
capture, master
master
data
data mgmt,
mgmt, and
and real-time
real-time
Reduced
manufacturing
reporting
reporting across
across the
the XXX
XXX $0.9 M
cost $7.4
$7.4 M
M landscape
landscape
cost due
due to
to Improved
Improved
Overall
Overall Equipment
Equipment
Efficiency
Efficiency (OEE)
(OEE) && Asset
Asset $14.9
$14.9 M
M
Utilization
Utilization
1
Excludes One Time Benefits
Saurabh Nigam/ 80
Supporting Details for $6.5M-$11.7M Annual Benefit from
“Improved Warehouse Productivity”
Conservative
Estimate
Value Drivers
Likely
Likely Scenario
Scenario
Improved warehouse productivity: right product at the
right place at the right time, and elimination or
Move
Move from
from daily
daily
$1.5 M
M reduction of non-value added, high human-error
physical
physical to
to Cycle
Cycle count
count $1.7
$1.7 M
M activities
Improved
Improved warehouse
warehouse
$6.5
$6.5 M
M Improved
Improved warehouse
warehouse $2.5
$2.5 M
productivity productivity
productivity in
in "Receiving
"Receiving 1. Replace total daily physicals with efficient cycles for nearly
productivity $11.7
$11.7 M
M through
through Put
Put Away"
Away" process
process $5.0
$5.0 M 80% reduction in time spent by generally one FTE per
warehouse. Plus process increases accuracy.
Improved
Improved warehouse
warehouse $2.5
$2.5 M
productivity
productivity in
in "Picking
"Picking 2. Fix 24 to 72 hour inventory recognition lag with immediate
through
through Shipping"
Shipping" process
process $5.0
$5.0 M internal transfer or external delivery receipt matching and
immediate discrepancy handling. Affects dock door “data
entry” personnel also on BD&L inventory handling.
Tangible Benefits Damages and mismatches addressed immediately, to
allow manufacturing and supplier to correct inventory
Value Source Baseline Improvement % levels.
3. Efficient system directed putaway replaces “let’s see
 Move from daily physical to $1.9M1 80-90% what’s open” time loss, plus goods are located most
Cycle count effectively for reorganization and movement by date code.
4. Ability to system direct overnight reorg by product mix and
 Improved warehouse $99.5M2 2.5-5% date code to prepare for next day’s pick. Currently not
productivity in “Receiving done, except for 1 FTE “cleanup” resource assigned in
through Put-away” process
warehouse.
 Improved warehouse $99.5M2 2.5-5% 5. Link POD fill request to efficient picking strategy,
productivity in “Picking through optimized truckload planning, more efficient returns and
Shipping” process pick area re-placements vs “I think that’s where it is”, “yes
this is oldest date I think”, and “this would be a good load
strategy”.
Assumptions: 6. Eliminate date code recognition human error- expected to
1. Assumes 6 hours of a FTE is required for every 40 FTEs in a warehouse increase with number of SKU’s and collaboration partners
based on North Metro warehouse data like Campbell’s.
2. Assumes 95% of Production Warehouse Labor, 25% of Sales Center
Warehouse Labor, 25% of Sales Center Truck Loading, 25% of Sales
Center Contract Labor Cost. Labor used in full physical excluded
Saurabh Nigam/ 81
XXX Benchmark
Metric All Respondents Benefit on closing Benefit on closing

gap (Q1)1 gap (Avg)2
Q1 AVG
Purchase Order Error Rate 0.6% 9.5% 16.7% 0.5%

PO Processing Cycle Time 0.358 days 1.217 days 43.3% 54.0%
(in days)
Time for Developing & 1.8 9.3 33.3% 7.5%
Implementing a New Supplier
Contract (in weeks)
Lost Discounts 0% 5.6% NA 28.8%
Order Fill Rate 98.13% 75.40% 0.6% 12.0%
Transportation Spend as a % of 0.49% 3.14% $1.7B $1.2B

Revenue
Saurabh Nigam/ 82
XXX Benchmark

Q1 AVG
Percent of Freight Invoices that 0.4% 4.0% NA 12.5%

are Duplicated
Percent of Freight Invoices with 0.8% 12.2% 12.5% 64.8%
Erroneous Accessorial Charges
Shipment Cycle Times (in days) 1.6 8 NA NA
Increase Inventory Turnover 12.1 6.7 NA NA

(CoGS/Inventory)
Improve Inventory Accuracy 99.6% 95.2% 0.1% 1.3%
Saurabh Nigam/ 83
XXX Benchmark

Q1 AVG
% of Orders Requiring Expediting 1.1% 9.13% NA 14.7%
% of Orders Delivered On Time 98.6% 87.9% NA NA
Accounts Payable ( FTE’s per $B 3 10.8 $23.6M $107.3M

of Revenue)
Accounts Payable ( Cost as a % 0.018% 0.065% $11.2M $63.7M
of Revenue)
Inventory Days of Supply (Days) 27 74 $7.1B NA
Saurabh Nigam/ 84
Project SCORE Estimated Project Costs
Cost Category 2007 2008 2009 2010 2011 2012 Total
Software $7,085,000 - - - - - $7,085,000
Hardware $654,000 - - - - - $654,000
Project Labor $108,965,00 $27,700,000 - - - - $136,665,00

0 0
Expensed Items $2,285,300 $390,000 - - - - $2,675,300
Store Based Training - 6,500,000 - - - - 6,500,000
Additional Headcount - 4,500,000 4,500,000 4,500,000 4,500,000 4,500,000 $22,500,000
Software Maintenance $552,500 $1,105,000 $1,105,000 $1,105,000 $1,105,000 $1,105,000 $6,077,500
Total Costs $119,541,800 $40,195,000 $5,605,000 $5,605,000 $5,605,000 $5,605,000 $182,156,800
Saurabh Nigam/ 85
Project SCORE Timeline
2007 2008
Task Nam e Start Finish Duration Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Integration Test 1 7/20/2007 10/4/2007 11w
Mock Conversion 2 7/24/2007 10/8/2007 11w
Mock Conversion 3 10/8/2007 11/23/2007 7w
Performance Test Cycle 1 11/5/2007 12/28/2007 8w
Performance Test Cycle 2 1/28/2008 2/29/2008 5w
Cutover Mock 1 12/3/2007 1/11/2008 6w
F&R Solution Validation Prep 12/31/2007 1/25/2008 4w
F&R Solution Validation 1/28/2008 2/29/2008 5w
Cutover Mock 2 1/21/2008 2/15/2008 4w
Production Cutover 2/25/2008 3/21/2008 4w
2 Store Pilot 3/24/2008 5/16/2008 8w
All Store Rollout 5/18/2008 9/26/2008 90d
Release 2 - Deferred Item s

Blueprint 11/26/2007 12/21/2007 5w
Build (SAP Dev. EAI, Legacy) 12/10/2007 2/8/2008 9w
DEV FUT 1/21/2008 2/29/2008 6w
Integration Test 3/31/2008 6/6/2008 10w
Change and Learning Dev 4/14/2008 6/27/2008 11w
Release 2 Go Live 6/30/2008 6/30/2008 1d
Saurabh Nigam/ 86
Yearly Cost & Benefit Analysis (Likely Scenario)
5-Year Project Economics

Investment Cost & Benefits Flow ($Millions)
NPV $186.3M
ROI 182%
Payback 22 Months
Saurabh Nigam/ 87
Best in Class Warehouse Management Key KPIs
Performance Results – Key Metrics (Color Coding as per Wholesale Distribution benchmarks)
Type Metric XXX Overall WSD Potential Benefits: Value of Closing the Gap
Averag Q1 Averag
e e Effectiveness: Reduce Inventory Carrying Cost ($M)
Effectiveness Order fill rate(%) 94.3%
94.0% 94.4% 99.2%
% error in lines shipped 1.5%
1.0% 4.4% 1.0%
Inventory accuracy 93.1%
99.0% 95.5% 99.4%
Effectiveness: Increase free cash flow – One-time ($M)
Inventory turns per year 4.8
4.0 8.5 18.3
Inventory carrying cost 2.5%

(% of Revenue) 3.0% 3.9% 1.2%
Efficiency/ % of inbound shipments 51.6%
Effectiveness with ASN 0.0% 48.2% 93.8%
% of total inbound 3.5% Efficiency: Improve Overall Productivity ($M)
shipments that are 0.0% 21.0%
5.6%
cross-docked
Efficiency Customer order cycle 3.1
time (days) 4.0 5.5 1.4
Dock-to-stock cycle time 28
(hours) 24.0 16 1 Gap to Average
Total Warehouse FTEs 50.2
per $100M of revenue 63.1 19.6 2.6 Below Average Between Average and 1st Quartile
Saurabh Nigam/ 88
India Logistics Growth Drivers Supply Side

Saurabh Nigam/ 90

Saurabh Nigam/ 91

Saurabh Nigam/ 92
Intelligent Transport System (ITS) for
India
With mushrooming growth in the economy and subsequently in logistics,

it is becoming increasingly evident that the logistics set up in the
country needs to become “intelligent” to get the following benefits:
 Online vehicle tracking

 Automatic collection / payment for various taxes, levies including toll, octroi, parking
 Vehicle authentication
 Increase in safety in vehicular movement (emergency contact, accident detection, over-speed
monitoring, remote immobilization & black box probing),
 Increase in visibility of asset leading to removal of buffer in operation & cost reduction,
 Commuter convenience through Passenger Information System,
 Remote diagnostic of vehicle
 Implementation of comprehensive emergency support system including - Security support,
medical support & breakdown support.
 Creation of information platform of Road / weather surveillance & sharing of such information
on commercial basis to the service providers.
 Highway traffic monitoring and decongestion
Saurabh Nigam/ 93
Telematics is emerging here……
Telematics offering - new cross industry opportunities
Cross Industry
Radio / TV Apps
Broadcasting Public Sector
 Information  Insurance  Crash Data
 Entertainment  Fleet Management  DOT
 Traffic  Medical  TREAD
OEM
Customer Service
Service Provider  Traffic, Toll
 Emergency  Diagnostics
Assistance  Prognostics
 Logistics  Parts catalogue
 Maintenance info
OEM
Information Marketing
Brokers  Marketing info
 Maps  Product News
 News & Weather  Customer info
 Stock Info
Home or Dealer
 Remote diagnostics
Company Office  e-mail
 Early failure warning
 Documents
 Calendar
A new Eco System is evolving around Telematics

Saurabh Nigam/ 94
An end-to-end Telematics
system
Front end Devices Carrier Gateway GIS & Client Content

Network Applications
 The front end device is the conduit for data and applications delivered to and from the
remote equipment/vehicle. Complexity of the device varies depending on the
implementation
 The Carrier Channel includes the wireless gateway and possibly temporary storage, and
provides the connectivity between equipment/vehicles and gateway
 The gateway is a middleware component that aggregates data, content and applications
 The Applications provide the functionality stakeholders seek, using content from a variety
of sources.
 The content is the data source for applications or the data captured by the remote
equipment/ in-vehicle device.
Saurabh Nigam/ 95
Telematics – Market Potential in India
Saurabh Nigam/ 96
Telematics Growth Issues
 Low awareness of technological application in Indian Logistics & usage of other no cost or low cost
manual alternatives.
 Highly fragmented & complex nature of the Transportation industry.
 Existing skill-set at operational level.
 Insufficient & costly data transmission & networking techniques.
 Publicly available insufficient GIS database of India.
 Lack of Technological standards for RF based application
 Lack of existence of Emergency Support infrastructure alongside highways.
 Absence of single window interface to the end users for emergency service.
 Lack of Location base information on Highway Traffic Conditions
 Lack of electronics component base in India resulting high import dependency and higher product
cost.
 Lack of initiative in rationalizing custom duty on critical components like GPS, GPS antenna and
any kind of GPS devices.
Saurabh Nigam/ 97
Impact ………
 Traffic congestion,
 Vehicle-Load imbalance,
 Low productivity of commercial rolling stock,
 Lower vehicle life,
 High fuel consumption & increasing air pollution,
 Unsafe driving condition for crew, cargo or passenger.
 Manual revenue collection leading to exploitation & corruption,
 Less turn around time of vehicle
 Poor customer service
Saurabh Nigam/ 98
Suggestions
 Long term strategy & formalizing agreements & policies about usage of other
country / consortium location satellites and ensuring availability of the same.
 Govt. initiatives & encouragement in supporting technologies (GIS, Satellite based

communication, RFID, increase in cellular network alongside highways etc).
 Govt. initiatives for encouraging components industries for RF, Microwave Frequency
and GPS base components.
 Govt. initiatives for rationalizing custom taxation on critical components like GPS
Receivers, GPS antenna and GPS based Tracking system. This should be brought as
IT component.
 Govt. initiative towards automated & centralized revenue collection & disbursement as
per state-wise, body-wise usage.
 Creation of comprehensive emergency support system with Govt. & Pvt. Initiatives.
 Co-ordination between road & weather surveillance agencies & creation of single
window Information platform.
 Invite private participations to bridge the gap in existing surveillance level.
Saurabh Nigam/ 99
Indian Automotive Industry Profile
The Indian automotive industry mainly consists of the Commercial Cargo /Passenger Vehicle segments &
Private Vehicle segment.
The commercial segment is fragmented in terms of ownership. The industry is characterized by the lack of
adoption of technology and any sort of Telematics systems, hence is in the absence of knowledge of its direct
and indirect benefits.
Commercial segment amounts to more than 62 Lacs vehicles that consists of 36 Lacs Cargo vehicles and 26
Lacs Commercial buses, taxies & utility vehicles.
The Private automotive segment mainly consists of 4-wheeler (57 Lacs) & 2-wheelers (414 Lacs). These
segments are growing at more than 10% p. a.
Vehicles and containers have a low degree of lading that is approximately 75%.
Telematics technological initiatives by Transport companies across the globe have revealed that by using
automotive Telematics such as Vehicle Tracking Systems and in vehicle communication system, the degree of
lading was raised from the 70% range to above 90%.
Saurabh Nigam/ 100

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Logistics and Supply Chain

Business Case – Barkawi India

June 15, 2009

 India’s organized logistics outsourcing market is estimated at ~ Rs 78,400 Cr, which

 A conservative estimate of 0.2% as consulting spend means addressable target

 A sound engagement methodology and pricing is key to Barkawi’s success in India

India’s total logistics market 3.3 trillion 5.6 trillion

Unorganized 3102 billion (94%) 4816 billion (86%)

Higher growth is expected in organized logistics market

Logistics segment CAGR ( Est.) – Next 5 Yrs.

Source : SSKI & Edelweiss Report, Nov’06

 Dynamic Logistics Ltd  Safexpress

 Om Logistics Limited Air Express

 V Trans Ltd Courier Industry

 Blue Dart Express

 Kolkata Port Trust

 Visakhapatnam Port Trust

 Great Eastern Shipping

 Essar Shipping Ports and Logistics

Onesource: A one stop store for company information (http://www.onesource.com/)

CXO Today: Has good presence in India (http://www.cxotoday.com/cxo/jsp/home.jsp)

Found in 1994, specializes in Found in 1989,

Recently set up office in India.

Saurabh Nigam/ 15 Very good presence in India

Design of global purchasing, production and distribution

Identification, evaluation and selection of suppliers and logistic

Set up of a professional supplier management

Optimization of inbound logistics

Selection of ideal production and distribution sites

Development and realization of efficient distribution concepts

Development of logistic ratio and reporting systems

Reduction in operative supply chain costs

Reduction in working capital (inventories, receivables and

Improvement of ability to supply

Selection and realization of IT solutions for supply chain

 F to exchange metrics and best practices

Mail & Courier Freight Contract Carrier Ports /

Globalization Rising customer Shrinking product Shareholder New technologies

Saurabh Nigam/ 21 Refer speaker notes for details

Typical executive issues

LSP’s need flexible business models in order to quickly respond to changing

 Industrialize and integrate core processes

 Provide real-time financial transparency to manage costs

Global logistics industry US$ 3500 billion in 2005

US logistics industry US$ 900 billion in 2005

India’s logistics industry US$ 85 billion in 2005

India is in a formative stage of logistics revolution

Country Logistics spend 3rd Party Logistics

India is poised for logistics revolution. Opportunity for substantial improvement in

Source: Georgia Tech Logistics Institute

India’s total logistics market 3.3 trillion 5.6 trillion

Unorganized 3102 billion (94%) 4816 billion (86%)

Higher growth is expected in organized logistics market

Modes of Transport Mn tons Rs. Bn.

Road 1560 1495

Rail 667 365

Port 573 172

Air 103 123

Gross Total 2,903 2,155

Source : SSKI Report, Nov’06

Logistics segment CAGR ( Est.) – Next 5 Yrs.

Source : SSKI & Edelweiss Report, Nov’06