1. Third Party Logistics Types of Third Party Providers Asset ‑ Based Services Offered Through Use of Supplier's Assets Often Dedicated Services (Contract Carriage, Warehousing) Management ‑ Based Non ‑ Asset ‑ Based Act as Coordinators/Consultants Strength is Information Integrated Asset ‑ Based Service Beyond Capacity of Assets Administrative Non ‑ Asset ‑ Based, Focus on Administrative Services Freight Bill Auditing/Payment Claims Management/Adjustment

2. Third Party Logistics Asset ‑ Based Third Party Providers Own Their Own Equipment Advantages Provide Name Recognition Financial Strength Equipment Availability Have In ‑ House Expertise Ability to Handle Emergencies Disadvantages Internal Politics Lack of Management Commitment from Parent Difficult to Ensure Customer of Neutrality

3. Third Party Logistics Management ‑ Based Third Party Providers Do Not Invest in Equipment Contract with Other Companies Advantages Flexibility in Dealing with Carriers Frequently Have Excellent Information Systems Neutral Provider Ensures Serving Customer's Best Interest Disadvantages Lack of Name Recognition Unknown Financial Stability Lack of Expertise Difficult to Handle Emergencies

4. Third Party Logistics Freight Bill Payment 43 5363 72 Shipment Consolidation43 4949 66 Direct Transportation Service 49 6156 62 Custom Brokerage 40 4167 62 Warehouse Management 56 5942 60 Freight Forwarding 44 4559 53 Carrier Selection 29 4351 51 Tracking/Tracing 3344 51 Measure Carrier Performance 47 Rate Negotiation 29 3747 38 Re-labeling /Re-packaging 21 2523 38 Order Fulfillment 24 3333 34 Product Returns 21 2523 30 Reverse Logistics 26 IT System Operation 20 16 21 Functions Outsourced to Third Party Providers Percentage of Firms Citing Usage Category 2000 2001 2002 2003

5. Third Party Logistics Buyers of 3PL Services# of 3PLs Used General Motors37 Wal-Mart Stores33 Ford Motor, Hewlett-Packard27 Procter & Gamble20 General Electric17 Georgia-Pacific, IBM16 Du Pont, Home Depot14 Altria Group, PepsiCo, Sears Roebuck13 Coca-Cola, Sara Lee, Target, Xerox12 General Mills11 Delphi, Safeway10 Colgate-Palmolive, Deere, Kroger, Lucent Tech9 Dow, Exxon, Honeywell, IP, Kmart, Weyerhaeuser8 Major Users of Third Party Logistics

6. Third Party Logistics Impact of 3PL Use on Firms Employee Morale 22 4533 Logistics Costs10 1477 Customer Satisfaction 6 2965 Systems Development 10 4743 Logistic Service Levels 1 1485 Supply Chain Integration 2 3563 Category Negative No ImpactPositive

7. Third Party Logistics 3PL Cost Benefits to Firms Percent of Respondents 3PL Service Reporting Benefits Warehouse Management 30 Rate Negotiation 16 Shipment Consolidation14 Freight Bill Payment 30 Direct Transportation Service 14 Fleet Management/Operations 8 Carrier Selection 6 Freight Forwarding

8. Third Party Logistics 3PL Service Benefits to Firms Warehouse Management 22 Order Fulfillment 11 Freight Bill Payment 9 Direct Transportation Service 9 Fleet Management/Operations 9 Tracking/Tracing 7 Percent of Respondents 3PL Service Reporting Benefits

9. Third Party Logistics Labor Cost Savings 2.08 1 Specialization 2.29 2 Reduce Asset Use 2.36 3 Inadequate Resources2.43 4 Transportation Cost Savings 2.54 5 Expanding Workload 2.54 5 Lack of Flexibility 4.07 7. 1= Most important; 5 = Least Important Reasons for Using Third Party Providers Category ImportanceRank

10. Third Party Logistics Loss of Management Control 1.62 1 Company Policy Dictate 3.44 2 Waiting for Industry Trends 3.59 3 Lack of Specialized Vendors 3.67 4 Organizational Resistance 3.74 5 Human Resource Problems 4.04 6 1 = Most important; 5 = Least Important Reasons for Not Using Third Party Providers Category ImportanceRank

11. Third Party Logistics Service Level Consistency3.33 1 Management Control 3.42 2 Customer/Vendor Relations 3.82 3 Company Policy Restraints 3.95 4 Company Employee Relations 4.10 5 Departmental Resistance 4.13 6 1 = Major Problem; 5 = Not a Problem Problems with Using Third Party Providers Category ImportanceRank

12. Third Party Logistics Develop key performance indicators and targets and incorporate them into the 3PL contract Carefully develop internal logistics costs before meeting with potential providers Seek broad company inputs at the RFP Stage Solicit multiple RFPs and closely check references Be sure the cultures of the two organizations are similar Don’t give up complete control of your supply chain to the provider Suggestions for First Time 3PL Users

13. Third Party Logistics Select only the services you really need Make sure you understand the technology issues before proceeding to the contract stage Prepare to change you assumptions after the startup Move slowly before signing the contract Retain your own links with carriers Manage your provider very closely Suggestions for First Time 3PL Users

14. Third Party Logistics Transit Time Reliability/Consistency 1.301 1 Door to Door Transport Rates/Cost1.405 2 Total Door to Door Transit Time1.551 3 Willingness to Negotiate Rates1.611 4 Financial Stability of Carrier1.8075 Equipment Availability1.878 6 Frequency of Service1.892 7 Pickup and Delivery Service1.8998 Freight Loss and Damage2.037 9 Shipment Expediting2.05410 Quality of Operating Personnel2.10811 Shipment Tracing2.11812 Willingness to Negotiate Services2.16213 Scheduling Flexibility2.26714 Line Haul Service2.38915 Claims Processing2.33816 Quality of Carrier Salesmanship2.63517 Specialized Equipment3.47618. Carrier Selection Criteria Importance Selection Criteria Score Rank