Introductory Session 21 May 2014

1. “ SCS architect high performance; low cost, supply chain solutions” Introductory Session 21 May 2014

2. “ SCS architect high performance; low cost, supply chain solutions” Who Are We And What Do We Do Supply Chain Solutions is a completely New Zealand owned enterprise - owned solely by Brad and Michelle Lindsay and Brad’s father, Deryck Watts(ex owner M10 KeriKeri) Supply Chain Solutions opened for business in 2001 with five staff and during that time has evolved from a 3PL to a 4PL, and now includes 5PL Offerings and Advisory services. To give an indication of current size, SCS started with one 300 pallet account. We now have over 120 accounts and manage over 25,000 pallet positions in Auckland and Christchurch with over 140 staff during peak season. We have pioneered a number of innovations in our industry and have developed a staggering number of ‘first to market’ solutions to ensure that our customers expectations are met. Approximately 20% of our clientele are now B2C clients spanning a range of industries including apparel, general merchandise, hardware and housewares. Product profiles range from small satchel deliveries to two man deliveries. We fully expect 20% of retail will be on line by 2020 and have invested heavily in this prediction.

3. “ SCS architect high performance; low cost, supply chain solutions” Supply Chain Solutions 74 Westney 6,500 Pallets Approx 20 Customers 20 FTE ops + 3 FTE CS Head Office Other Sites: Cargo Central Christchurch 3 Timberly 4,000 Pallets 10 Customers 18 FTE ops + 3 FTE CS 11 Timberly 14,500 Pallets Approx 80 Customers 60 FTE ops + 8 FTE CS 4PL Department

4. “ SCS architect high performance; low cost, supply chain solutions” Physical Platform <<< Sales Order Processing Returns Management Customer Service/Back office <<< PurchaseOrder Processing <<< Facilities Management >>> SUPPLY DEMAND >>> Freight Forwarding <<< >>> Freight Forwarding Demand Planning<<<

5. “ SCS architect high performance; low cost, supply chain solutions” IT Platform SCS SCS or Client SCS or Client or 3rd Party Physical Platform ERP Tracking SUPPLY DEMAND P/O Debtors Management Debtors WMS S/O B2B/C Call Center FMS Sales Force Automation Tracking Returns Management CTS

6. “ SCS architect high performance; low cost, supply chain solutions” The truth about B2C • The battle to acquire consumer clicks is won in the marketing department • The war to retain them is won in the supply chain • Procurement (strategy) • Purchasing (tactical) • Fulfillment (Strategic and tactical) • IT (strategic and tactical) • No point winning the battle to loose the war.

7. “ SCS architect high performance; low cost, supply chain solutions” B2C challenges Whilst a successful 3PL can deliver outstanding outcomes for your business, most relationships fail in numerous areas. The biggest problem with 3PL B2C/B 3PL selection is the buyer. All of our clients are referred, most of them come through the “washing machine” of being sold by a multinational that can boast impressive size supported by a very good sales person and the buyer has used a traditional freight purchasing strategy instead of a strategic procurement method required for logistics outsourcing. 19.05.14 Richard Taylor – owner TradeTested a week doesn’t go by where I’m pleasantly surprised at how smoothly things are going and how little I have to do. Your operation is really impressive, and you’ve certainly delivered on your promises.

8. “ SCS architect high performance; low cost, supply chain solutions” B2C challenges • The need for fulfillment flexibility, B2C businesses regularly see ratio differences between top and low weeks of 20. (Concernsfacility, MHE and labour) • Poor digital strategy • IT platform (ERP/Accounting-inventory  WEB WMS  FMS  POS) • Inventory concurrence • Site design and structure. (Search algorithms, availability, layout) • Cost, poor scoping and understanding of technologies to deliver a working solution. • Evolutionary path of bricks and mortar retailer • store - inventory issues, poor customer experience • Hybrid – confusion, inventory accuracy across multiple supply points • DC - Capex burn and rigidity (pick to light, carousel, fixed o/head etc..) • Don’t understand CTS (cost to serve) • Stock turn, retailers understand value of floor space if it is not moving they quit it, novice e-tailers hold on to inventory with a death grip because they lack the sensitivity to know what it is costing them • Insufficient margin • Shipability, miss-understood due to B2B background • Freight and fulfillment costs (and recovery) model • Returns, more expensive than outbound both in freight and processing, must make it easy (parcelWings)

9. “ SCS architect high performance; low cost, supply chain solutions” B2C opportunities • Service excellence • Fulfillment TATs • Shipment confirmations and status updates • Perfect deliveries (right item(s), address, paperwork) • Easy GRA process • Delivery Options (urgent, standard, evening, weekend) • Omni channel • Click and Pick with store locaters (30% increase in client spend v.s. store only) • Drop ship • Flexibility • Scalability (facility and workforce) • Dynamic kitting • Night shifts • A good 3PL can provide you all of this capability and then some. • The market is embarrassingly short of good B2B 3PL providers, B2C providers are even more scarce.

10. “ SCS architect high performance; low cost, supply chain solutions” Belly Beyond and SCS our journey • KPI structure – this is really the foundation of the deal – Smiley face story  • B2C knowledge – SCS have it and this is really important  • IT platforms are confusing – SCS has good IT capability and can work with anything and provide assistance • Seamless now but getting integrated was not easy to start with -makes management of the business entirely mobile – we can run it from anywhere, which we did when we just spent a week in Fiji. • Big benefits include • Promotional activity, used to burn out but SCS cope (with good planning)  - Cyber volumes • Costs are transactionally based, flows with sales -known cost vs turnover  • Frees up your time to focus on the core business • scalability

11. “ SCS architect high performance; low cost, supply chain solutions” Unique and Proprietary SCS B2C solutions • parcelWings, cloud based logistics software • Stand alone or ‘stitch’ into existing ecommerce platform (Smith and Caughy’s, Billabong) • parcelWings(obf) Outbound Freight • Freight shopping, bulk vs. courier (in development) • parcelWings(rms) Returns Management System • parcelWings (p2p) Point to Point (in development) • STRTCrD Staged Time Release Cross Dock • Currently B2B (Billabong, Cummins Diesel but will eventually extend to int. Drop ship) • HVPA – High Velocity Put Array • Giftwrapping (nature baby) • Ugly inventory (trade tested) • 90 minute fulfillment challenge (Dasko)

12. “ SCS architect high performance; low cost, supply chain solutions” Thank You For Your Time Today If you have the time, please visit our website www.supplycs.com