The document summarizes an upcoming event on in-sourcing versus outsourcing in logistics. The event will include presentations on Asda bringing logistics operations in-house, the benefits and drawbacks of insourcing for a building materials company, and how third-party logistics providers can add value for customers rather than just reducing costs. A panel discussion will follow the presentations.

1. Is in-sourcing the new outsourcing? 12 th May 2009

2. Programme 0930 hrs Coffee and Registration 1000 hrs Welcome, Introductions and Forum survey results Gwynne Richards FCILT O&P Forum Chairman 1030 hrs The pros and cons of in-sourcing – has logistics become a core competence again? Ian Stansfield Distribution Director Asda Walmart 1115 hrs Coffee 1130 hrs Having outsourced could I be tempted back to running my own fleet? Matthew Woodcock CMILT Logistics and Distribution Manager Aggregate Industries, Building Materials 1200 hrs Are we adding value and justifying our management fee in our customers’ eyes? – A Third Party Logistics View John Boulter FCILT Managing Director DHL Home & Specialist Retail 1230 hrs Panel discussion 1300 hrs Lunch and networking 1400 hrs Close

4. In-sourcing v outsourcing “ Outsourcing has been the dominant trend in logistics over the past two decades and examples of contracts being taken in-house are rare. The fact that the UK's largest retailer believes it can manage logistics operations more profitably and efficiently itself is particularly noteworthy”. “ As the economy tightens, companies are taking a hard look at areas they maybe really should be keeping internal, and actually, maybe shouldn't have outsourced in the first place (or maybe out sourced to the wrong firm). In these times, companies need service providers (both internally and externally) that fully understand the company's needs”. “ At a time when companies are trying to convert fixed costs into variable costs to gain scalability I don't think there was ever a time when outsourcing made more sense”. “ the outsourced logistics industry is poised for strong expansion because of the growing trend toward outsourcing by manufacturers so they can focus on their core competencies”. “ It is easier to outsource than to define the problem and solve it”. “ The global contract logistics market grew at 5% in 2008 according to the latest report published by Transport Intelligence, Global Contract Logistics 2009 . This represents a significant weakening of the market after several years of growth of around 10%”.

5. Third party penetration in UK retail industry (number in % volume) Source: IGD 2007 report; IGD 2008 report; IGD 1998 report, cited from Pach é , 1998 1998 2007 RETAILER Warehousing Transport Warehousing Transport Asda 64 64 4.1 - Boots 50 (2003) 100 (2003) 10 100 Iceland 45 45 100 100 Sainsbury 64 74 51 51 Somerfield 50 100 100 100 Tesco 38 0 19 41 The Co-operative 11 (2004) 12 (2004) 6.5 6.5 Waitrose 48 48 46.5 42 Wilkinson 0 100 0 100

6. Results of Outsourcing Questionnaire 2009 Comparison with 2008 survey

7. What % of your supply chain activities do you currently outsource?

8. What % of your supply chain activities do you currently outsource?

9. How have these figures changed over the past 5 years?

10. How have these figures changed over the past 5 years?

11. How are these figures likely to change over the next 5 years?

12. How do you see your outsourced logistics provider? "A necessary evil“ “ They are only in it to make money these days”. “ Deliver poorer service for disputed financial advantage”.

14. Has the length of your outsourced contracts increased or decreased over past 3 years? 2008 Maximum = 7 years; Average = 2.65 years; Median = 3 years 2009 Maximum = 10 years; Average = 3.57 years; Median = 3 years

15. Which of the following do you prefer in your transport outsourcing relationship?

16. Which of the following do you prefer in your transport outsourcing relationship?

17. Which of the following do you prefer in your warehousing outsourcing relationship?

18. Which of the following do you prefer in your warehouse outsourcing relationship?

19. Which of the following do you prefer in your Warehouse outsourcing relationship?

20. Benefits of outsourcing Advantage Position 2009 (2008) % % Cost reduction 2 (1) 21.5% 15.3% Access to greater expertise 1 (2) 16.9% 16.8% Concentration on core competencies 4 (3) 15.4% 8.4% Flexibility 3 (4) 12.3% 11.6% Less risk 7 (5) 4.6% 3.7% Less capital expenditure 5 (-) >3% 7.9% Variable costs 6 (-) >3% 5.3% Consolidation - (8) 3.1% <3% More professional - (9) 3.1% <3% Effective resource management 8 (10) 3.1% 3.2% Improved service 8 (-) <3% 3.2% Access to new technology etc 8 (-) <3% 3.2% Others e.g. ‘One stop shop’; purchasing power 20% <20.0% Someone else to blame! Challenging the status quo None No need for consultants!

21. Outsourcing or In House? ? Old question…New Era...Same answers

22. Grangemouth (Always In-house) Wakefield (Always In-house) Dartford (Christian Salvesen) Wigan RDC (Glass Glover/Wincanton) Lutterworth ADC (W/H = Tibbet & Britten, T/P = Lloyd Fraser) Lutterworth RDC (Lloyd Fraser) Bristol (Tibbet & Britten) Warehouse 28% Asda The Original Asda Network Transport 28% Asda

23. Grangemouth (Always In-house) Washington (Glass Glover/Wincanton) Wakefield (Always In-house) Dartford (Christian Salvesen/Wincanton) Wigan (Glass Glover/Wincanton) Lutterworth ADC (W/H = Tibbet & Britten, T/P = Lloyd Fraser) Lutterworth IDC (Always In-house) Chepstow (Lloyd Fraser) Didcot (Always In-house) RE-SITE 2009 Rugby Relief (Always In-house) PROPOSED CLOSING Warehouse 100% Asda Current Network - ADC Transport 97% Asda

24. Current Network – GM,Imports and New Business Doncaster (Wincanton) Teesport (always in-house) Ollerton (CLIPPER) Liverpool (DAMs) Warehouse 50% Asda 50% 3PL Transport 20% Asda 80% 3PL Warehouse 100% 3PL Transport 100% 3PL GM New Business

25. Falkirk (Always In-house) Washington (Always In-house) Wakefield (Always In-house) Erith (Always In-house) Skelmersdale (Always In-house) Lutterworth (Was Lloyd Fraser) Bristol (Was Tibbet & Britten) Bedford (Always In-house) Larne (Wincanton) Warehouse 89% Asda Current Network – CDC Transport 88% Asda Transport from UK to Northern Ireland 100% 3PL

26. NDL – Christian Salvesen/ Norbert Dentresangle Warehouse 100% 3PL Current Network – Asda Service Centres Transport 100% Asda Falkirk (NDL) Washington (NDL) Wakefield (NDL) Lutterworth (NDL) Bedford (NDL) Erith (NDL) Skelmersdale (NDL)

27. Washington (Always In-house) Lymedale (Was DTS) Brackmills (Was Tibbet & Britten) Warehouse 80% Asda Current Network - Clothing Transport Trunk 100% 3PL Store 100% Asda Teesport - Boxed Darlington (CLIPPER)

28. Current Network - Petrol Aberdeen (1 truck) Grangemouth (5 trucks) Stockton (2 trucks) Immingham (5 trucks) Nottingham (1 truck) Purfleet (10 trucks) Birmingham (3 trucks) Eastham (1 truck) Milford Haven (3 trucks) Plymouth (2 trucks) Avonmouth (3 trucks) Transport 100% 3PL Dedicated national contract managed by DHL

29. Consolidation Network Wakefield (International Produce) Boroughbridge (Reed Boardall) Sheerness (International Produce) Spalding (Freshlinc) Fresh Produce Chilled Foods Frozen Foods Ambient Warehouse 100% 3PL Transport 20% Asda 80% 3PL Zeebrugge (2XL) Corby (Ceva) Manchester (NFT) Stockport (Fowler Welch) Leicester (Pall-ex) Daventry (NFT)

32. Doncaster National GM Hub - Wincanton

33. Lutterworth ASC & Returns Centre - NDL

34. Darlington Clothing Deconsolidation Centre – Clipper Logistics

35. NBD Overview Service partners

37. 15 minute coffee break

38. Having outsourced could I be tempted back to running my own fleet? Matthew Woodcock CMILT Logistics & Distribution Manager, Aggregate Industries IS IN-SOURCING THE NEW OUT-SOURCING?

46. CAN I BE TEMPTED TO GO BACK INTO RUNNING MY OWN FLEET? NO…. BUT MAYBE ONE DAY

47. ‘ Are We Adding Value and Justifying our Management Fee in our Customers’ Eyes?’ Outsourcing and Procurement Forum John Boulter, Managing Director, Non Food Retail, DHL Supply Chain Asda Lutterworth, May 12 th 2009

49. How Logistics Providers have Developed Page Outsource Method Contract Services Logistics Outsourcing Integrated Supply Chain Management 1985-1995 1995 - 2000 2000 + Period Mass Production Retailer Dominance EU Harmonisation Demand ‘Push‘ Customisation Far East Production E-commerce Demand ‘Pull‘ The business environment is constantly changing………. Business Trends Collaboration Reduced Risk Transformation Cash Services Relationships Reach Competitive Landscape Competencies Buyer Value Increased Integration Strategic Partnerships Global, door to door Large Alliances and niche providers Knowledge Based Optimised cost/service Single Function Transactional Local, Regional Fragmented Asset Heavy Cost Reduction Multi-functions Longer Term Multi-regional Consolidation/Alliance Information based Cost avoidance …… . Logistics Service Providers adapt their services to support these changes Outsource Characteristics

50. The Current Market Challenges Page Increased choice and channels – same customers = Cost and service pressures. Globalisation = internal cultural challenges in traditional mature markets. Business focus more on growth in new countries Effects Inflation pressures from commodity price volatility - Less ability to pass on these costs with high impact on discretionary spend Increased focus from Pressure groups, Governments and Business Reduced customer confidence; Cost down approaches; reduced investment in supply chain Globalisation = multiple geographies, creating complex buying, merchandising and planning challenges, E2E management Multi-Channel Retailing Growth in Mature Markets The Challenge Price Volatility Corporate and Social Responsibility Agenda Financial Market Turmoil End-to-End Market Environment Regulation Competitive Pressures Impact To survive and thrive businesses have to constantly change and adapt to current challenges…… … . Supply Chains will not be immune from this constant change… … . you will need to ensure that your Supply Chain is providing maximum value… Creating value from your supply chain is a way of addressing market challenges…... ……… and using an experienced Supply Chain Operator can make the difference

51. Inhouse v Outsource? Page Outsourcing can deliver significant business benefits…… …… ..but the level of value will vary depending upon the circumstances Service Capability Expertise Experience Cost Efficiency People The Benefits of Outsourcing Capability and Resource to Deliver Level of Business Change High High Low Low Stay Inhouse Outsource When should you outsource?

52. The Value Gained from Outsourcing Page ‘ The opportunities for cost reduction are finite, there are only 100 cents in every dollar. However, the opportunities for enhancing customer value are infinite – we are only limited by our imagination. (Laura Ashley) Strategic relationships will deliver more value…. … .however they will require greater investment and commitment Value Haulier Integrated Supply Chain Partner Logistics Provider Services Provided Courier Freight Forwarder

53. Defining the Outsourcing Relationship + Choosing the Right Partner Page Outsourcing Needs? Solution Criteria Outsourcing Needs? Integrated supply chain service Service Capability Single Service; Local Service Strong credit and substantial financial strength Financial Stability Credit Challenges; Lower Financial Depth Integrated; Leading the industry; Visibility IT Capability Limited; Little Integration Seen as an asset to the business Cultural Alignment Cost based service Longer term; balanced structure; risk & reward Commercial Stance Short term viewpoint; tariff pricing; no incentivisation Common goals, Board level position Strategy Separate goals, some alignment Strategic partner; Openness & Trust Relationship Treated as commodity supplier Joint KPI Management; Bonus/reward process Performance Annual Review; Penalty charges for poor service Commodity Based Partner Integrated Strategic Partner … to ensure you select your best Logistics Provider Defining upfront your outsourcing needs is critical…..

54. Outsourcing Survey Results Page 3.6 years 2.7 years Average Contract Length 91% 88% Maintain or Increase in Warehouse Operations in next five years 65% 72% Warehouse Services 94% 83% Transport Services 2009 2008 Outsourcing Activity Year Year Through its First Choice Programme, DHL survey’s it own Customers Annual Customer Surveys started in 2006 We ask how we are doing? We invite our Customers views on Service, Loyalty, New Services and Account Management for example …… . 94% of businesses outsource their transport services and 96% of Customers renew their business with DHL Do we justify our fee?.....

57. Case Study Business Continuity, Buncefield Page

60. CHALLENGING TIMES John Boulter, Managing Director, Non Food Retail, DHL Supply Chain Outsourcing could be your Solution Thank you!

61. Question Time

63. Lunch and networking