Johnson & Johnson (J&J) & Logistics Management Solutions (LMS) Health & Personal Care Conference April 12, 2011

Johnson & Johnson Overview Founded in 1886 in New Brunswick, NJ World’s most comprehensive & broadly-based manufacturer of health care products Over 110,000 employees Selling products in over 175 countries Facilities in over 50 countries Over 210 decentralized operating companies

Consumer Products

GTO Overview Function like an “Internal 3PL/Shared Service” with responsibilities for Transportation activities across the enterprise Product Portfolio Consumer Products Medical Devices Pharmaceuticals Scope In / Out / Within North America Modes of Transportation Air Ocean Truckload LTL Intermodal Cold Chain

Global Transportation Organization Mission Statement

GTO Team Structure Managing Internal J&J Relationships Gaining Exposure / Subject matter expertise to different J&J Operating Companies Driving Issue Resolution with Carriers Leading Cost Improvement Programs Operations Managing Carrier Performance Negotiating & Maintaining Contracts Planning & Executing Sourcing Events Maintaining Strategic View for All Modes of Transportation Sourcing & Supplier Performance Managing the TMS System Leading Technology Improvement Programs Focusing on Transportation planning processes Transportation Technology Providing HazMat Training for Internal Customers Keeping Pace with Emerging Regulation and Legal Requirements. Simplifying and Standardizing Import & Export Compliance Int’l Transportation & Trade Compliance Developing a Multi-layer Cross-sector Security Approach that provides maximum coverage and protection. Driving Global Security alignment and ensuring communication of security. Transportation Security

J&J – LMS Relationship

Relationship Overview In 2007 we sought out a partner to: Provide tactical level support in several areas, including: Freight Payment bill resolution Track & Trace Initial value proposition enabled: Continued GTO growth within J&J with available resources Continued focus on key areas of competency including Sourcing & Supplier Performance International Trade Compliance Operations Relationship with a partner with a demonstrated track record of service and performance in the Transportation space

Growth & Expansion As value was demonstrated early on additional opportunities were identified, including: Project based support work Trade Customization / Display tactical support On-site load planning at remote distribution centers Compliance review / filing Call Center Operations Off-hours support for CPFR functions

Integration into the business On-site account management played a key role in relationship development Detailed understanding of J&J business & requirements Immediate / visible support when needed Continued discussions on business and any challenges allows a collaborative problem solving approach SAP / TMS Upgrades Freight Payment enhancements As value was demonstrated marketing became easy, both within GTO and J&J

Integration into the business Master Service Agreement (MSA) provides a clear understanding of rules of engagement as it outlines: Pricing structure Supply of services Confidentiality agreements Indemnification Employment practices Subcontracting Audit functions Severability Insurance Data Safeguards Dispute resolution process

Keys to success: Ensure requirements are clearly documented Ensure KPI’s are established upfront Develop a shared understanding of success Quarterly business reviews enable visibility to total business relationship and provide an opportunity for higher level visibility of relationship Maintain open lines of communication On-going involvement of leadership from both sides

Keys to success: Leverage best practices of both organizations: Training & development Technology Market Intelligence Invest the time in developing the relationship Ensure roles & responsibilities are clearly understood (co- employment)

Thank you!

 Information-based 3PL  Established in 1996 in St. Louis, MO  21 On Site Command Centers in North America  Transportation Management Services & Software LMS Company Overview

 January of GTO RFP for Tactical Logistics Support TMS Support Export and Compliance Support Freight Payment Resolution and Support Shipment Tracking & Tracing Call Center / Transportation Planning  Provided On and Off Site Personnel based on business need  Dedicated Account Manager  Initial team of 5 providing tactical support Partnership Engagement

 Started with tactical non strategic roles.  Initial engagement allowed for LMS to learn the complexities of the JJ organization as well as the role of the GTO.  Inclusion of Account Manager and team members in business planning meetings allowed LMS and JJ to identify additional opportunities for our partnership.  Created a transparent pricing model that eliminated negotiations and allowed for scalability.  Developed processes to expedite opportunities in order to react quickly to the dynamic needs of JJ. Partnership Evolution

 Communication is Key  Continual Evaluation Ongoing Identification of Opportunities to: Lower Cost Provide Better Service Augment Current Process with Technology Provide a platform that allows for easy expansion and contraction based on JJ business partner needs Manage to KPI’s and Pay for Performance Better back up Creative Solution Development Partnership Optimization

 Quarterly Business Reviews – Critical  Definition and agreement on performance metrics – distributed regularly to team and management  Value driven mind set vs. Short term win mind set  Jointly created goals - short and long term  Inclusion of 3pl in project planning and business changes (SAP implementations; Upgrades; Acquisition implementations etc)  Defined processes to handle new opportunities (SOW) and issue resolution  Trust and transparency in the relationship Partnership Best Practices

 Learn the landscape and adapt to it!  Do not under or over estimate your value  Quick fixes do not work – take the time to do it right  Be creative with solutions and processes  Always be flexible  Be open to new and different ways of working together – embrace change!  Trust and communicate at all levels Partnership Lessons

Coming together is a beginning. Keeping together is progress. Working together is success. - Henry Ford