Industry Trends on Transportation Results from the 2015 GMA Supply Chain Benchmarking. Elfrun von Koeller, Principal

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2 Industry Trends on Transportation Results from the 2015 GMA Supply Chain Benchmarking Elfrun von Koeller, Principal

3 The discussion on transportation Truckload capacity shortages Port congestion Line haul rate increases Driver shortages Grocery less desired freight Fuel price volatility Intermodal service issues Long wait / check in times Over-the-road delays Shrinking lead time requirements

4 Challenges affect the entire industry Manufacturers Retailers Carriers Limited truckload carrier availability Driver recruitment / retention difficulty Up to 15% truckload price increases Rules and regulations limit eligibility Longer lead times on intermodal Service issues with suppliers Fewer trucks on the road Source: Survey data and interviews with ~50 Supply Chain leaders

5 Main challenges retailers / Manufacturers face Capacity shortages in truckload Increasing line haul rates in truckload 22% 32% Transportation supply Intermodal service issues 10% Delays due to congestion / weather 20% Environmental factors Long check-in times / unloading Trouble scheduling appointment Lack of transparency on order / shipping data 4% 2% 0% Challenges at interface with retailers Product supply constraints Other 2% 8% Other Source: Participant polling at the 2015 TPA Supply Chain Conference

6 Processes most in need of "fixing" Planning & scheduling of shipments 38% Order creation & order receipt 31% Delivery & receipt 25% Loading & shipping 6% Source: Participant polling at the 2015 TPA Supply Chain Conference

7 TPA has launched a Transportation Share Group Charter Trading Partner Alliance Project Charter and Status July 2015 Project Name GMA Transportation Task Force BUSINESS ISSUE: Capacity constraints, driver shortages, aging infrastructure, increased congestion and regulation are key challenges facing our transportation industry today. 83% of the supply chain leaders interviewed in a recent GMA benchmarking study cited transportation as a top of mind issue. 65% of CPG participants surveyed reported flat or increasing transportation costs vs Cost reduction and network redesign initiatives helped offset the impact for many manufacturers, but fundamental issues still exist with no real solutions on the horizon. Carriers are also under pressure to maximize their profitability, which often conflicts with supplier goals. Carriers are the recipient of deteriorating shipper and receiver practices. Long load times, inefficient load builds and long wait times at delivery are just a few examples of shipper and receiver practices that cause inefficiencies for carriers. The term Shipper of Choice is often used in industry. But what does that really mean and does it really exist? The objective of this task force is to leverage our collective knowledge and expertise to identify gaps that exist between the current and desired future state and develop industry solutions to jointly reduce costs, maximize profitability and improve service for all stakeholders. Suggested Areas of Interest: Alternative transportation modes o Intermodal & private fleet utilization Develop standard KPI s (ie. RAD, OTD) Improve visibility and synchronization to improve order cycle time Freight / asset utilization o Reduce turnaround times at pickup and delivery o Provide more transparency on predicted volumes and times o Provide a driver-friendly environment Cold chain o Best practices for temperature and time-sensitive products Leverage technology o Increase visibility to capitalize on new and missed opportunities BENEFITS: Improved customer service Supply chain processes simplification Increased collaboration between trading partners Best practice sharing BENEFITS: Improved customer service Supply chain processes simplification Increased collaboration between trading partners Best practice sharing SCOPE: Cross-functional team of suppliers, retailers and knowledge partners DSD is out of scope at this time SCOPE: Cross-functional team of suppliers, retailers and knowledge partners DSD is out of scope at this time OBSTACLES: Lack of standardized transportation KPI s in the industry (ie. definitions, methodologies) Limited use of technology and visibility across the entire Supply Chain Source: 2015 GMA Supply Chain Logistics Benchmarking Survey, 2015 GMA Benchmarking interviews, expert interviews, BCG analysis Volunteer at the end of the session if you want to join!

8 Our task today: Brainstorm solutions Discuss ideas for 45min Capture ideas on the worksheets Present the best ideas to the full group

9 Six topics we want to tackle today Becoming a shipper / receiver of choice How can manufacturers and retailers work with their carriers to become more attractive for freight? Using technology to break through bottlenecks Which under-utilized technologies could support a break-through and how can they be advanced? Creating better orders / planning collaboratively? What are the best practices on ordering / planning and how can they become more common? Driving higher predictability through better scheduling and communication What are the best practices in communication and how can they become more common? Finding and keeping the right talent What can the industry do to make logistics an attractive field? Securing food safety through the supply chain How can handovers be optimized to secure end-to-end quality control?

10 The Carrier Perspective: Customer of Choice & Scorecards Spencer Frazier Sr. Vice President of Sales

11 Scorecard History Started 2013 Measure all shippers & receivers Why? Improve driver productivity Evolved from internal to external Continue to refine actionable KPI s 11

12 12 Customer Utilization Scorecard

13 13 Scorecard Trends

14 Scorecard Next Steps Refine actionable KPI s Increase visibility Quantify value of changes 14