1 Getting Your Business Ready for RFID Western Pallet Association January 23, 2006 AND

2 Introduction Pat Winters –Executive VP and Founder at Hunter Paine Enterprises –Working diligently to bring Lexite™ to market –Recently developed the SmartStick™ for RFID enabled pallets –Excited to introduce IBM and the pallet industry’s first On Demand Solution for RFID enabled pallets Mike Sorensen –Member of the IBM Global Services Group –On Demand technology provider for all aspects of Hunter Paine –High tech solutions provider with a passion for solving customer problems and creating unique solutions –Industry leader in the implementation of RFID business solutions

3 Discussion Agenda Lexite™ and SmartStick™ Overview IBM and RFID On Demand Business Model Implementing On Demand RFID Solutions Next Steps

4 Lexite™ Update HPE is working diligently to develop the manufacturing capabilities necessary to bring Lexite™ to the market in quantity Recent test results show Lexite™ consistently outperforms wood Lexite™ will enhance pallet pool performance and increase value of legacy pallet assets

5 The RFID Enabled Pallets New patent pending technology from Hunter Paine Enterprises Creates value for the logistics and transportation industries Quick, inexpensive, reliable, and permanent method of mounting RFID tags to pallets Meets customer requirements for RFID compliance The SmartStick™

6 Why RFID enabled pallets? Creates an additional revenue stream for the pallet manufacturer Enhances your credibility with your customer base Opens a new market and additional sales potential Broadens your product base Provides a viable RFID solution to your customer IBM provides the infrastructure to make RFID enabled pallets and the SmartStick™ viable

7 Questions and comments I’ve heard from you... How can I make money with RFID? Where am I going to get the money to get started? RFID is way too complicated to understand and it is changing every day EPC can’t get their act together with a defined direction I’m only the pallet provider. Why do I have to drive RFID to the market? I can’t imagine an Industry Provider taking responsibility for implementing the solution for pallets

© 2006 IBM Corporation Radio Frequency Identification (RFID) for the Pallet Industry Mike Sorensen IBM Global Services

© 2006 IBM Corporation 9 RFID capabilities at IBM On Demand Business Model Implementing On Demand RFID Solutions in the Pallet Industry IBM, HPE and YOU - Next Steps

© 2006 IBM Corporation 10 Why am I here?  IBM is a leader in the commitment to RFID implementation  Infrastructure from the pallet manufacturer is essential  IBM needs a solid foundational block for future success  We want to apply the RFID solution to the pallet industry  We have the know how and resources to make it work

© 2006 IBM Corporation 11 IBM’s RFID Capabilities  End-to end design, deployment and maintenance  Services, hardware and software  Business case justification  Strategy and roadmap development  Solution design, choice of technologies and standards  In house state of the art RFID test facilities  Pilot testing  Enterprise deployment  Hosting and outsourcing  On demand business model  Financing

© 2006 IBM Corporation 12 IBM On Demand Business Model  Access to expertise of IBM and RFID industry leading technology  One stop shop – IBM handles it all  Hardware, software and middleware design and implementation solutions are the responsibility of IBM  Pallet logistics and tracking are your responsibility  With the right business model, IBM can help finance  You pay for the RFID system as you use it  Upfront initiation fee  Pennies per month per pallet IBM manages the technology, you manage the pallets

© 2006 IBM Corporation 13 Data Integration (Data Warehouse) Data Integration (Data Warehouse) Pallet Manufacturers RFID Infrastructure Providers RFID Infrastructure Providers Fortune 1000 Pallet Users (FMCG) Fortune 1000 Pallet Users (FMCG) RFID Enabled Pallet Framework

© 2006 IBM Corporation 14 Logistics Model Your Customer A Your Customer B Your Customer C (You) Pallet Manufacturer/ Aggregator Model Driver: Everyone Needs to Make Money Your Customer D Your Customer A HUB 1 Your Customer A HUB 2

© 2006 IBM Corporation 15 Logistics Model Your Customer A Your Customer B Your Customer C (You) Pallet Manufacturer/ Aggregator HUB Data Collection Model Driver: Everyone Needs to Make Money Your Customer D Your Customer A HUB 1 Your Customer A HUB 2

© 2006 IBM Corporation 16 Logistics Model Your Customer A Your Customer B Your Customer C (You) Pallet Manufacturer/ Aggregator HUB Data Collection Model Driver: Everyone Needs to Make Money Your Customer D Your Customer A HUB 1 Your Customer A HUB 2

© 2006 IBM Corporation 17 Logistics Model Your Customer A Your Customer B Your Customer C (You) Pallet Manufacturer/ Aggregator HUB Data Collection Model Driver: Everyone Needs to Make Money Your Customer D Your Customer A HUB 1 Your Customer A HUB 2

© 2006 IBM Corporation 18 Logistics Model Your Customer A Your Customer B Your Customer C (You) Pallet Manufacturer/ Aggregator HUB Data Collection Model Driver: Everyone Needs to Make Money Your Customer D Your Customer A HUB 1 Your Customer A HUB 2

© 2006 IBM Corporation 19 Benefits to you and your customer from RFID Source: IBM Business Consulting Services analysis, Auto-ID Center Cost Revenue Operational Effectiveness Improved product visibility Improved asset & labor visibility Improved data accuracy Reduced handling requirements Greater temperature & rotation capability Improved planning, forecasting & allocation Reduced labor costs Lower shrink costs Lower inventory costs Reduced reconciliation costs Reduced returns costs Improved product availability on shelf Increased cross channel selling opportunities Enhanced ‘point of decision’ sales capabilities Illustrative Increased Profitability

© 2006 IBM Corporation 20 What IBM needs from the pallet industry:  Your logistics and industry expertise  Closed loop durable pallet pools from your customer base  For RFID implementation, we need to be able to track the pallets  We need solid shipping platforms that will last (Lexite™)  Understand the value  We need to know what it is worth to you and your customer  to know what is on that pallet and  to know where the pallets are  We need to develop a financially sound business model

© 2006 IBM Corporation 21 What IBM needs from the pallet industry:  Access to end users  We need to use your relationships and customer base  We need Fortune 1,000 companies with committed RFID initiatives and a budget to move forward  Warehouse to warehouse local implementation  Formal and informal pallet industry organizations to integrate for national distribution  Commitment  We need a commitment to move forward together over a period of time. RFID implementation will not happen overnight.  We need a commitment from you to provide the industry expertise  Start Small – Grow Quickly Everyone needs to make money!

© 2006 IBM Corporation 22 Call me... So we can learn and implement RFID together Mike Sorensen IBM Global Services 4000 Executive Parkway, Suite 300 San Ramon, CA (925)