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>>Supply Chain Solutions that Deliver

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u Warehouse Product Offering

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Key Learning Points

• Value of Warehousing to UTi

• Value of UTi Warehousing to Customer

• Types of Warehousing and Risks/Benefits

• Preferred Sales and Marketing Strategy

• Managing Warehousing from a Line Management View

• Implementing EXE

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Market Size

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Outsourcing Growth

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Fragmentation

(1) Bear Stearns’ estimate

The UTi Opportunity

OceanFreight$100B

AirFreight$50B

Brokerage$5B

Top 15Companies Less Than 20% of Market(1)

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Warehousing$180B

15–20%Growth

Value of Warehousing to UTi

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Value of UTi Warehousing to Customer

• Provides opportunity to remove warehouse expense from company assets.

• As a non asset based provider, solutions are not focused on asset utilization, but rather optimized solution.

• Warehouse personnel issues are transferred to UTi.• Dollars spent on warehouse infrastructure can be

utilized to develop new products/markets/customers.

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Value of UTi Warehousing to Customer

• UTi can provide a global solution with same processes/systems.• UTi can implement best in class WMS in a consistent and global

basis.– Rapid Implementation– Less Costly– Better ability to integrate all supply chain information into

one pipeline.

• UTi can provide a “glass pipeline” of inventory information, in motion and at rest, globally.

• Existing relationship with UTi has proven partnership approach.

• UTi has committed to grow this market segment with large scale investment in technology.

• As “foundation customers” in warehouse offering, customer will enjoy high level of executive commitment.

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Warehouse Business Models With Risks and Benefits

Dedicated

Shared

Public Warehouse

One Customer Facility

A Few Key Customers

Multiple customers withmultiple terms

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Dedicated Business Model

Dedicated One Customer Facility

• Typically long term contract• Risk of capital is shared• Ability to have system connectivity is easier• Personnel are focused on one customer’s needs• Pricing typically open book, cost plus, or fixed variable.• Margins typically 10-15%• Best situation for UTi

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Dedicated Business ModelBenefits and Risks

Dedicated One Customer Facility

Benefits Risks

1. Both parties share risk2. Focused on productivity and partnership3. More flexible to handle change4. Allows for long term focus5. Keeps focus on one set of business issues6. Lower cost possible for customer due to

fixed/variable pricing approach7. Easier to gain synergies from integrated

systems.

1. Must have detailed contract2. Requires open relationship.3. Risk to customer if business falls dramatically4. Risk to UTi if customer fails

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Shared Business Model

A Few Key Customers

• Long term contract with keystone customer• Additional 1-2 customers that compliment keystone customer • Often market niche facility• Expanded enterprise supply chain• Systems connectivity more involved• Need to minimize capital risk - customer commitment• Priced fixed, variable with minimum commitments• Avoid per unit pricing due to fluctuation in volume• OK for UTi with proper pricing controls

Shared

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Shared Business ModelBenefits and Risks

A Few Key CustomersShared

Benefits Risks

1. Ability to develop market niche2. If structured properly, keystone

customer will share risk.3. Can continue to get fixed/variable

pricing4. Customer enjoys market niche expertise5. Works well in VMI concept.

1. Same business velocity creates capacity issues.

2. Per unit pricing still a challenge.3. System connectivity more

challenging.

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Public Warehouse Business Model

Multiple Customers with Multiple Terms

• Typically month to month pricing. UTi takes major capital risk.• Customer requirements may vary dramatically• Customers typically commodity price buyers. Service priced per unit. • Accuracy of unit activity critical and often not accurate from customer.• Empty space is an ongoing problem• Easier to sell• Pricing needs to factor in cost of planned empty space• Hard to integrate systems or additional services.commitment• UTi should avoid unless existing space. Then do so cautiously.

Public Warehouse

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Public Warehouse Business Model Benefits and Risks

Multiple Customers with Multiple Terms

Public Warehouse

Benefits Risks

1. Spread risk across multiple clients

2. Can generate high margins, if done correctly

1. Typically transaction priced2. Accurate information for pricing is

critical3. Volume swings create havoc4. Systems integration difficult5. Fixed costs at risk6. Difficult to differentiate7. Competition is often local

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Sales and Marketing Strategy

• UTi should focus on developing dedicated contract warehouse operations.

• Shared warehouse operations should be considered when there is a keystone customer who will share the risk/rewards of the extra space. Also could be considered for vendor hub or niche market warehouse.

• Public warehouse should only be considered when excess space is available. Business should be converted to contract as soon as practical and, as public, should carry higher margins for higher risk.

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Sales and Marketing Plan Customer Selection

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Customer Locations

Product Mix

Seasonality

Value Added

UTi Relationship

Capital Risk Sharing

Warehouse Strategy

Value Systems and Integrated Solution

Single Location and Local Multi location and Global

Hazardous or Specialized Minimal Special Requirements

Highly Seasonal Even Flow Of Goods

Bulk Commodities High Value Added

New Relationship Existing with Other Services

No Interest Understands Risk Sharing

Public Warehouse Dedicated Operations

Systems not Important Values Global System

1 42 3 5

Time FocusShort Term Contract Long Term Strategy

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Sales and Marketing PlanPerspective Customer Profile

• Large, multi national customer• Requirements include multiple sites in various

geographies.• Requires value added services difficult to obtain in

public warehouse environment• Values quality and information in comparison to

price.• Willing to share risk and rewards.• UTi already has an extensive and positive business

relationship.• Customer sees value in having dedicated space,

people and systems.• Focus on longer term gains as opposed to short

term solutions.

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Status of uWarehouse Implementation

• Asia Pacific- Melbourne Operational February 2001- Sydney Bowden Street March 2001 with Full RF- Plans to implement in Hong Kong for GN Netcom October

•Europe- Server and Software Installed in Reading June 2001

• North America- Newark Operational October 2001

• Sales- Included in solutions for GN Netcom, Owens Corning,GE Power Systems, Bristol Myers-Squibb, Bally Shoes

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A Line Management Perspective

Warehousing

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UTi Australia, Warehouse & Distribution

Philosophy

To take on Warehouse & Distribution where it is an element of the integrated international Supply Chain

Where we control the Supply Chain or

Where we can control the Supply Chain

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Some Operational Lessons - Melbourne

• New Facility• Start Up Issues - Customer reluctance to

commit or discuss their

business when we have nothing to show.

- Delays due to no WMS system or System implementation

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• Customer Service challenges in a WH that had not been capitalized (equipment) correctly

• Customer Service issues with no WMS

• Pricing models & levels for all Customers

• Complications arising when running a busy facility while installing a WMS

Some Operational Lessons – Sydney

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(1) PEOPLE : KEYo Develop a profile of personnel we should employ to run

these facilities.o Get the expertise – DON’T MAKE DO!

(2) FACILITYHave a clear policy on establishing a facility. Some

considerations / questions to be answered in this process:o must have a client base?o must have a base account?o systems must be in & ready with the building?

Major Points

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Warehousing - Implementation

Key Learning Points• Implementation process is all consuming & everything

else goes on hold– Totally inwardly focused– Customers, profitability, service come 2nd

Commercial performance impacted for an extended period (inward focus)

Group impact Annual effort Difficulties presented in a busy facility• Planning implications• People & cost issues• Focus

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Get the people/management right• Type of people we employ in the Warehouse &

Distribution areas• Commercially oriented• Operations• SalesSkill Development / Knowledge Transfer –

A New Company• Change managementKnow what the system does and doesn’t

do.

Warehousing - Implementation

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EXE • Comprehensive & accurate identification of field

operational requirements

• Criticality of detailed communication on functionality available from EXE

• Commercial impact of “Vanilla” version

• Commercial requirements must be identified & a strategy identified as an element of the implementation process

uWarehouse

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NEGATIVES Functionality & scope of product not well communicated E.C issues a major influence & not addressed in the project Absence of report writer tools Need to have bolt on products & the issues/complications that

this raises: ABS Loftware

Communication – over do it Poor understanding of work involved at the operational level to

achieve a satisfactory implementation Why we have the approach

uWarehouse

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uWarehouse

POSITIVES Product purchased now in place running with first class

corporate & EXE support Project Management & Technical skills of Tom Anderson Hardware process & support from Terry Marsh Great team effort: - Melbourne

- Sydney Knowledge transfer & skills base development well underway

- Major bonus Leading edge development Ozisoft

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EXE – Some Implementation Suggestions Allow a longer implementation timeframe

extended beyond the WMS process More training than the 3 days at EXE

Employ EXE experienced personnel Undertake specific console operator training

uWarehouse

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• This is a business we must be in• Learn by our experience & use the Australian

lessons• Growth speed are much greater than in

traditional environment• Re-engineers/Change execution• New people/skill sets• Marketing benefits

Summary