The State of Logistics Outsourcing 2008 Third-Party Logistics Copyright 2008 C. John Langley Jr., Ph.D. and Capgemini U.S. LLC. All rights reserved. Results and Findings of the 13 th Annual Study

The 2008 13 th Annual 3PL Study Focuses Attention on Topics of Current Importance CUSTOMER STUDY E-mail survey – 1,644 global respondents Focus interviews with key industry executives Facilitated workshop session at Capgemini Accelerated Solutions Environment – Berlin, Germany Copyright 2008 C. John Langley Jr., Ph.D. and Capgemini U.S. LLC. All rights reserved.

CUSTOMER STUDY

E-mail survey – 1,644 global respondents

Focus interviews with key industry executives

Facilitated workshop session at Capgemini Accelerated Solutions Environment – Berlin, Germany

The 2008 13 th Annual 3PL Study Focuses Attention on Topics of Current Importance CUSTOMER STUDY E-mail survey – 1,644 global respondents Focus interviews with key industry executives Facilitated workshop session at Capgemini Accelerated Solutions Environment – Berlin, Germany Investigate Topics of Contemporary Interest Integrated services Green supply chain 2008 Special Topics Supply chain security Copyright 2008 C. John Langley Jr., Ph.D. and Capgemini U.S. LLC. All rights reserved.

CUSTOMER STUDY

E-mail survey – 1,644 global respondents

Focus interviews with key industry executives

Facilitated workshop session at Capgemini Accelerated Solutions Environment – Berlin, Germany

Investigate Topics of Contemporary Interest

Integrated services

Green supply chain 2008 Special Topics

Supply chain security

Current State of the 3PL Market Most Customers are Satisfied, But Improvement Opportunities Continue to Exist Copyright 2008 C. John Langley Jr., Ph.D. and Capgemini U.S. LLC. All rights reserved.

Customers Report a Number of Continuing Problems with 3PL Providers Copyright 2008 C. John Langley Jr., Ph.D. and Capgemini U.S. LLC. All rights reserved. TOP SEVEN Continuing Problems Cited by 3PL Users All Regions Service level commitments not realized 51% Lack of continuous, ongoing improvements and achievements in offerings 42 Information technology capabilities not sufficient 39 Cost reductions not realized 36 Lack of project management skills 35 Ineffective management of key performance indicators (KPIs) 34 Unsatisfactory transition during implementation stage 30

Service level commitments not realized

Ineffective management of key performance indicators (KPIs)

Unsatisfactory transition during implementation stage

The IT Expectation/Performance Gap Continues… Copyright 2008 C. John Langley Jr., Ph.D. and Capgemini U.S. LLC. All rights reserved. Expectation/ Performance Gap

Integrated Logistics Managing Systems and Services for Best Results Copyright 2008 C. John Langley Jr., Ph.D. and Capgemini U.S. LLC. All rights reserved.

3PL Users Indicate Benefits and Drawbacks From the Use of “Integrated” Logistics Services Ease of managing outsourced services Focus on core business Improved efficiency and effectiveness Greater flexibility Reductions in number of logistics providers Enhanced shipment visibility Quicker response Custom solutions, and more complex solutions Inventory reduction Pro-active IT approach Service quality concerns More expensive to use external provider Service and systems integration are among our core competencies Proprietary IT capabilities are more flexible and user-friendly Issues with dependence on external party Copyright 2008 C. John Langley Jr., Ph.D. and Capgemini U.S. LLC. All rights reserved. Drawbacks Benefits

Ease of managing outsourced services

Focus on core business

Improved efficiency and effectiveness

Greater flexibility

Reductions in number of logistics providers

Enhanced shipment visibility

Quicker response

Custom solutions, and more complex solutions

Inventory reduction

Pro-active IT approach

Service quality concerns

More expensive to use external provider

Service and systems integration are among our core competencies

Proprietary IT capabilities are more flexible and user-friendly

Issues with dependence on external party

Green Supply Chain It’s Not Whether to Act, It’s How Copyright 2008 C. John Langley Jr., Ph.D. and Capgemini U.S. LLC. All rights reserved.

3PLs are Uniquely Positioned to Help Customers Plan and Execute Green Supply Chain Initiatives Copyright 2008 C. John Langley Jr., Ph.D. and Capgemini U.S. LLC. All rights reserved. Educate customer regarding green supply chain and sustainability Leverage meaningful case studies Provide simple diagnostic tools / maturity model Step 1 Education Step 2 Planning Step 3 Execution Measure customer’s carbon footprint Identify change levers to reduce GHG emissions Support business case development Develop implementation plan Implement green supply chain Consolidate shipments and optimize routing Leverage green vehicles and distribution centers Facilitate reverse logistics for recyclables Consultants 3PLs Green Focused 3PLs

Supply Chain Security Concerns Rise as Regulations, Risks Mount Copyright 2008 C. John Langley Jr., Ph.D. and Capgemini U.S. LLC. All rights reserved.

The Majority of 3PL Users Are Satisfied with the Security Provided by their 3PL Copyright 2008 C. John Langley Jr., Ph.D. and Capgemini U.S. LLC. All rights reserved. Level of Security All Regions Very secure 16% Secure 60% Somewhat secure 22% Not secure 2%

Very secure

But They Still Have Security Concerns Copyright 2008 C. John Langley Jr., Ph.D. and Capgemini U.S. LLC. All rights reserved. Most Serious Concerns Over Supply Chain Security Issues All Regions Theft of material goods (74%) Natural disaster disrupting supply chain (33%) Tampering with material goods (32%) Theft of intellectual capital (26%) Other materials smuggled within your shipments (19%) Terrorist attack disrupting supply chain activities (17%)

Theft of material goods

Terrorist attack disrupting supply chain activities

The State of Logistics Outsourcing 2008 Third-Party Logistics Copyright 2008 C. John Langley Jr., Ph.D. and Capgemini U.S. LLC. All rights reserved. Results and Findings of the 13 th Annual Study Visit http://3plstudy.com