Addressing the “Capacity Crunch” Health and Personal Logistics Conference By Curt Metzler

Transportation Capacity The driver shortage is real It is a key factor in the tightening capacity situation There is no near term fix The industry will be forced to pay more Higher costs will be reflected in pricing “Service on demand” is a luxury of the past 72 hours advance notification is the new norm Planning and communication with carriers is critical At the same time, trucking activity has risen 4.1 percent from 658 million loads in 2013 to 685 million this year, according to FTR. - See more at: http://mibiz.com/item/21898-trucking-industry-capacity-constraints-raise-concern-over-driver-shortage#sthash.KvnawrWb.dpuf Source: http://mibiz.com/item/21898-trucking-industry-capacity-constraints-raise-concern-over-driver-shortage Don Ake, FTR Vice President of Commercial Vehicles, commented “The trailer market remains very vibrant. The van OEM’s are finishing up filling Q3 production. Many Q3 orders remain speculative, but fleets are optimistic about 2015. Cancellations were up, but that often happens at the beginning of the year when fleets take a closer look at their requirements. With backlogs very high, order patterns should start to follow a more traditional pattern." Source: http://www.ftrintel.com/news/january-trailer-orders-fall-to-normal-range "Next, capacity is finally being added to the marketplace just when the HOS rollback is being implemented. Truck ordering activity at the major builders hit 375,000 units in 2015, well above the 295,000 units that they actually produced. Those units will spill over into 2015 as carriers add or replace the trucks in their fleets. Lastly, spot market data from truckstop.com highlights that the market has returned to normal this year following a very capacity-constrained winter and spring in 2014. That will make year-over-year comparisons look much worse until late in the year. Despite these worries, the market is still running pretty tight and economic growth is anticipated to stay at a solid pace. Look for truckers to be hit by both headwinds and tailwinds during 2015 but be able to stay the course.” Source: http://www.ftrintel.com/news/ftrs-trucking-conditions-index-continues-to-improve-in-december-primarily-impacted-by-lower-fuel-costs FTR reports December U.S. Trailer net orders at 45,500, the second highest month ever recorded, just 1.5% below October, 2014. Trailer orders for 2014 totaled over 360,000, by far the best order year ever. Source: http://www.ftrintel.com/news/december-trailer-orders-at-near-record-level

How Capacity is Affecting Alcon Scope: Manufacturing Yard and Dock Congestion Utilizing 400+ trailers and 100+ ocean containers between distribution centers, manufacturing, and local carriers Objectives: Reduce overall costs associated with detention charges Improve trailer visibility and management of assets across functional units Optimize inbound/outbound process through Cross Dock Projects: YMS Optimization Cross Dock Initiative With the above economic trends in motion it is more important than ever for Alcon to improve efficiency and collaboration both within the company and with carriers and suppliers Alcon's solutions to these economic issues involve decreasing costs while improving efficiencies.

Project: Yard Management System (YMS) Objectives of Project: Map entire local trailer network to provide visibility Reduce detention and rental payment charges by 50% Optimize information exchange between functional departments Increase inventory visibility Optimize trailer pull process Identified yard management as an area of cost savings for Alcon Provides opportunity for further inter and intracompany integration

Real-Time Data… www.pincsolutions.com Confidential Patented real-time location technology collects and combines feeds in the cloud from multiple sensor types “Meaningful” Internet-of-Things Sensor Network uses our patented location technology, making it the most accurate available RFID Plant GPS Yard Telematics Cellphone Road Vehicle

Operational Challenges www.pincsolutions.com Confidential High Detention or Demurrage Charges Poor Asset Utilization High Safety Stock Levels Inefficient Operations High Driver Wait Times Poor Collaboration Lack of Empty Trailers on hand Lost or Misplaced Trailers

Advanced Yard Management Operations www.pincsolutions.com Confidential Scan Tag at Gate Affix Temp Tag to Inbound Trailer Yard Truck with touch-screen Computer Reads Tags Trailer Locations Captured and displayed in application

Visual Map Of Facility with Trailer Status www.pincsolutions.com Confidential GPS based mapping displays accurate location and status of assets in the yard.

Gate Guard – Web Gate View www.pincsolutions.com Confidential Unleashes the check-in / check-out process from the pc at the gate to browser capable devices with internet access anywhere Full support for sites with shipments enabled RFID tag read support for gates with fixed external readers and / or internal readers for temporary RFID asset tagging

Whiteboard for Dock Door / Trailer Status www.pincsolutions.com Confidential Whiteboard View Shows dock doors Configurable attributes displayed Initiate moves directly Whiteboard is a very powerful tool providing visual status at a glance and enabling move generation and tracking in the same screen

Advanced Features and Reporting www.pincsolutions.com Confidential 100+ Standard KPI reports Custom reports Scheduled Exportable In addition to reporting in the system, clients can set up automated alerts and schedule transmittal of System and Custom Reports

Platform Designed for Collaboration & Insight www.pincsolutions.com Confidential Allowing carriers to manage appointments & assets online Schedule Appointments Streamlines communication View status of their assets Automate carrier dispatch to avoid demurrage/detention costs Repository for yard analytics Shipment arrivals & departures Driver Idle Time Spotter & Dock Door Efficiency Trailer Utilization Inventory

Operational Transparency Across Facilities www.pincsolutions.com Confidential Enterprise Visibility Suite Yard Management System Advanced YMS Advanced YMS Yard Management System Supplier 1 Customer DC 7016

Recognized Customer Value www.pincsolutions.com Confidential 30% 30% 20% 20% 10% 10% 90% 50% 40% 30% 30% 10%

Project: Yard Management System (YMS) Expected Benefits Improve intercompany visibility Increase process control Free up carrier assets Increase carrier pooll I am assuming the cost of system and integration at 500000 divided by 12 months based on contract starting in April, initial fee of 1500 for salaries involved in prep work and meeting time Savings based on sliding scale of time required to see benefits. Total costs per year estimated at 4.6 million. Lines represent cumulative savings and costs over time Would recommend providing graph of information regarding the benefits felt from this initiative since December

Project: Export Cross Dock Objectives of Project: Cost Savings of ocean container per diem (fuel, demurrage, drop and pick charges) Free up valuable Manufacturing dock space Cycle time improvement Alcon campus ocean container free Improved ocean container utilization FTZ duty reduction for imports Got information from cross dock proposal Objectives of the project are to decrease costs by improving organization and information

Project: Cross Dock Realized Benefits Order wait time reduced Optimized process flow 2.3% reduction in FTW ocean spend Improved container utilization Reduced demurrage Approx. 45,000 USD in cumulative net savings since December Minimization of storage and capacity risk due to product growth Reduction in container re-work Got financial numbers and some other benefits from the cross dock proposal PowerPoint. I divided the total savings by 36 then multiplied by 3 to get cumulative net savings since December

Projects: Cross Dock and Yard Management System Cumulative Project Benefit Projection Higher visibility and control over operations Enhanced communication between functional groups Real time information Increased independence Assumed start of YMS in April Assumed projected savings from both projects Assumed contract payments of equal value over a year starting in April Used cross dock approx. 15000 savings per month to calculate