Delivering Lowest Total Cost

Integrated Supply Solutions

Agenda/Expectations

• AFFLINK the Organization• AFFLINK’s Integrated Supply Solutions

Program:– Vendor Consolidation– Standardization– E-commerce– Continuous Improvement

• Next Steps

Track Record

AFFLINK is the largest distribution organization in North America, delivering “lowest total cost”

to multi-unit customers.

Packaging Solutions

Integrated Packaging Solutions

• 520 Distributor Locations• $5+ Billion Annual Sales

Who we are…

• Industrial Shipping/Packaging• Safety Supplies• Paper Products• Sanitary Maintenance

Chemicals• Janitorial Products• Food Service Supplies• Healthcare Supplies• Office Papers

• Building Maintenance• Manufacturing• Healthcare• Retail• Foodservice

Market Segments

• Lodging• Leisure• Food Processing• Transportation• Entertainment

Products

Globalization

Scott Kus Strategic Account Manager527 Essex AvenueGloucester, MA 01930(978) 281-4210E-fax: (208) 692-3744Voice Mail: (800) 222-5521 x 4625E-Mail: skus@afflink.com

John PizzolaStrategic Account Manager4809 Kensington AvenueRichmond, VA 23226(804) 334-3060Efax: (804) 484-6290Voice Mail: (804) 261-4310 x 1310E-Mail: jpizzola@afflink.com

Charlie PalmoreStrategic Account ManagerOffice Building / Maintenance 2 Flower Tuft CourtThe Woodlands, TX 77380(281) 362-7034E-fax: (281) 362-7034Voice Mail: (800) 222-5521 x 4650E-mail: cpalmore@afflink.com

Rick Smith Strategic Account Manager2840 East Bay Street Port Angeles, WA 98362(360) 457-8623E-fax (888) 726- 9931Voice Mail: (800) 222-5521 x 4610 E-Mail: rsmith@afflink.com

Dan Heck Strategic Account Manager7557 Koby CourtWhite Lake, MI 48383(248) 421-4425E-fax: (800) 787-4945Voice Mail: (800) 222-5521 x 4604E-Mail: dheck@afflink.

Tom O’ConnellSenior Strategic Account Leader1400 AFFLINK PlaceTuscaloosa, AL 35406(205) 344-4152E-fax: (305) 768-7920Voice Mail: (800) 222-5521 x 4152Email: toconnell@afflink.com

Retail / Transportation / OtherNational

Office Building / MaintenanceNational

AFFLINK Global AccountsNational Account Coverage

Manufacturing - EastManufacturing - Central

Manufacturing - West

FoodserviceNational

HealthcareNational

Daron Babcock Healthcare Development Manager1400 AFFLINK Place Tuscaloosa, AL 35406 (205) 345-4180Efax: TBAVoice Mail: TBAE-mail: dbabcock@afflink.com

Who we are…

Products• Industrial Bags• Shrink & Stretch Film• Plastic & Steel Strapping• Protective Packaging Products• Corrugated• Shrink & Stretch Equipment• Safety Supplies • Equipment• Palletizing Equipment• Case Sealing & Erecting

Equipment• Adhesive Application

Equipment

Services• E-commerce Your Way• Certified Packaging Specialists• Factory Trained Technicians• Systems Integration• Package Design and Testing• iSYS-Integrated System

• $5+ Billion Annual Sales, $1.5 Billion Packaging Sales• 520 Worldwide Locations, 170 Dedicated Packaging Locations• Division of Performance Food Group

•-Fortune: 100 Fastest Growing Companies• Fortune: 2nd Most Admired Company • Forbes: 400 Best Big Companies

Acquisition

Possession

Cost Drivers in Procurement Process

Product presentationsSampling/testing

ProposalsSelection

considerations

InterviewsProposals

TestingSet-up

Proposal reviewCost analysis

Product match up

DevelopmentProduct descriptions

Pricing Updates

CreateMail, phone, fax, electronic

Follow –up

Dock time/spaceLabor

POD administrationStorage

Space Reorder points

Number of days supplyObsolescence, Pilferage

Match Receiver to P.O.Reconcile pricing/invoice/terms

Payment authorizationIssue check

ProductSearch

Vendor Selection

Price Negotiations

Catalog Maintenance

Purchase Order

$ $ $ $

Receiving Inventory Payment

$ $

Distributor

Distributor

Distributor

Distributor

Distributor

Distributor

Distributor

• Product Search Product Search $$• Price Negotiations Price Negotiations $$• Purchase Orders Purchase Orders $$• Order Placement Order Placement $$• Invoices Invoices $$• Error Resolution Error Resolution $$

Customer

Current Procurement Single Location Sourcing

$ $ $ $

ProductSearch

Vendor Selection

Price Negotiations

Catalog Maintenance

Purchase

Order

Receiving Inventory Payment

$ $$ $$ $$ $

Cost Drivers in Procurement Process

*Multiple Products, Multiple Locations* Acquisition

Possession

$ $ $ $$ $ $ $$ $ $ $

DistributorFMC 4

Orders

Invoices

Distributor

Distributor

Distributor

Distributor

Distributor

Distributor

$$

$$

$$

$

$$

$$

$$

$

FMC 5

FMC 6

FMC 7

FMC 3

FMC 2

FMC 1

$$

$$

$$

$

$$

$$

$$

$

$$

$$

$$

$

$$

$$

$$

$

$$

$$

$$

$

Current Procurement Multiple Location Sourcing

Integrated Supply Solutions

Procurement Features

Benefits AFFLINK Solution

Vendor Reduction

Product Standardization

E-Commerce Ordering

E-Commerce Reconciliation

Continuous Improvement

•Leverage volume

•National pricing

•Fewer orders/payables

•Fewer receivers

•Less overhead dedicated

•National coverage

•Local service

•Vendor relationships/leverage

•Single contact•Leverage volume

•Lower pricing potential

•Standard product quality

•Best practices

•Vendor knowledge

•Market knowledge

•Best practice audits

•Customized catalog

•Accurate pricing

•Reduced ordering cost

•Electronic data history

•Flexible electronic ordering

•Best in-class e-commerce

•Web ordering, EDI, KML, FTP

•Punch-out technology

•References – bricks/click

•Accurate invoices

•Electronic data history

•Reduced processing costs

•Consistent terms

•Electronic invoices

•Summary billing

•Audit invoices for accuracy

•Process invoices electronically (LOEB, EDI, KML, FTP, e-mail, Excel)

•Billing your-way•Best practices

•Industry upgrades

•Application cost reduction

•Customized reporting

•Category reviews – best practices

•Electronic reports – budgeting comparative data

•Application cost reduction tracking

•Account service team

•Quarterly review

FMC1

FMC2

FMC3

FMC4

FMC5

FMC6

FMC 7

Distributor

Distributor

Distributor

Distributor

Distributor

Distributor

Distributor

OneConnection

Application CostsCost-in-Use Improvement: Stretch film Increase Pre-stretch from 150% to 250% Current New 150% Stretch 250% StretchCost $43.08 $45.76Revolutions 10

10Cost/load $.421 $.232Loads/year 80,000 80,000

Annual Cost $33,680 $18,560

Savings/Plant $15,120 (55%)

x 8 plants

Total Savings = $120,960

Application CostsStrapping Conversion - Steel to Polyester Steel Std Duty Polyester Size ½ x .020 ½ x .030 Lbs sold 99,000 -0- Ft/Cl 2940 6500 Cl/Wt 100lbs 53lbs Cost/Cl $39.59 $50.65 Cost/Ft $.01346 $.00779

SAVINGS =$16,554 (42%) x 8 Plants TOTAL SAVINGS = $132,432

Benefits: Reduces packaging costs Fewer coil changes Reduces cost of disposal Easier to handle Better packaging integrity Fewer back injuries

Lowest Total Cost

Totals for all products/processes

Strapping Conversion $132,432Stretch Process $120,960

Total $253,393

How AFFLINK Reduces Application Costs

Certified Packaging Specialists • Product Audit• Process Audits

• Downtime/uptime• Throughput• Automation• Time to market• Freight cost• Worker productivity

• Continuous Improvement Recommendations

Cost Savings

Productivity Health &Safety

Image

Preferred Suppliers

Customer

b

Preferred Suppliers

E-Commerce

Distributors

Integrated Supply Solutions Value Proposition

How AFFLINK Manages Opportunity

iSYS or Integrated SystemPowerful, Web-based, collaborative tool that gathers detailed product-usage data, manages activity and drives resultsat each location.

iSYS generates reports for each location detailing:• Process improvement opportunities • AFFLINK activities• Cost savings

Plant 1

Plant 2

Plant 3

Plant 4

Plant 5

Plant 6

Plant 7

Distributor

Distributor

Distributor

Distributor

Distributor

Distributor

Distributor

OneConnection

Integrated Supply Solutions…

Delivering Lowest Total Cost

Geographic CoverageProven E-Commerce CapabilitiesCommitment to Supply Chain ExcellenceCustomized Ordering/Reporting SystemContinuous ImprovementFocused Implementation ModelProven Track Record

Integrated Supply Solutions

Multi-plant Customer

• TODAY’S CURRENT STATE– Spend not leveraged nationally– Hundred’s of supplier’s nationally– Inconsistency of “Best Practices”– Multiple operating systems nationally– No reporting on spend at national level– Excessive inventory in many locations– Inconsistent terms and invoicing from suppliers

WHY AFFLINK?

• Packaging is our “Core” business– 189 Packaging Locations– Flexibility of Servicing Locations “Nationally”– In Excess of $1.5 Billion in Packaging sales– Certified Packaging Specialists “CPS”– Focused only on “Cost Savings”– Cost Savings programs backed by iSYS

TARGETING COSTS

• ACHIEVING OUR “TARGETED” GOAL– Leverage overall spend with Afflink and set

baseline price against current pricing– Target product categories for “Standardization”– Leverage categories with supply partners– Identify best products & practices– Implement practices through iSYS– Monitor & Report “ongoing” progress

IMPLEMENTATION

• ACHIEVING OUR “TARGETED” GOAL– 30-60 Day implementation period– Work by division to establish commonality of

products– Establish template and best practices to be

followed by remaining divisions– Monitor Ongoing Progress