1LOGISTICSCOSTIMPROVEMENTPOTENTIALRE-ENGINEERINGTECHNIQUESSRMLogistics,Inc(StephenRMcCleary,Pres)©20122COSTofFREIGHTThecost($)offreightisgenerallybetween4%to8%ofacompaniesGrossSalesFreight($)is5.5%*ofGrossDomesticProduct(GDP)intheUnitedStatesWiththelargestmodebeingtruckload{2010-$520Bn**}Either:Parcel(Ground)Less-than-Truckload(LTL)TruckloadCommercialCarriersPrivateFleetsDedicated-ContractCarrierServicesInter-modalTOFC–TraileronFlatcarCOFC–ContaineronFlatcar*Source:APICSModule3,ManagingCustomer&SupplierRelations,pg74**Source:DCVelocity,March2011,pg51SRMLogistics,Inc(StephenRMcCleary,Pres)©20123ANNUALSALEStoTRANSPORTATIONSPENDtoMANAGINGFREIGHTRemoved$36MMfrom$270MMinfreightcoststhrough:ReengineeringStrongerTariffsBetterContractNegotiationsFocusedRoutingGuidesSALESTRAFFICSPENDPOTENTIALSAVINGS(4%to8%ofSales)(13%ofTrafficSpend)$50MM$2MMto$4MM$260Kto$520K$75MM$3MMto$6MM$390Kto$780K$100MM$4MMto$8MM$520Kto$1.1MM$250MM$10MMto$20MM$1.3MMto$2.6MM$500MM$20MMto$40MM$2.6MMto$5.2MMSRMLogistics,Inc(StephenRMcCleary,Pres)©20124PERCENTAGEofFREIGHTintheLOGISTICSBUDGETSRMLogistics,Inc(StephenRMcCleary,Pres)©2012PACKAGINGSHIPPINGMATERIAL;6%MANAGEMENTSALARIES;7%DC/WAREHOUSEOPERATIONS;25%INTER-FACILITYTRANSPORTATION;22%OUTBOUNDTRANSPORTATION;40%5CONTROLofFREIGHTCOSTTHROUGHCOMPETITIVEContractsTieredDiscountsTariffsRatesheetsTARGETEDACCESSORIALS($)RE-ENGNEERINGofMETHODSCOLLABORATIVETRANSPORTATIONMANAGEMENT(CTM)SRMLogistics,Inc(StephenRMcCleary,Pres)©20126FUELSURCHARGEAddedintotheline-haul(offsetthefluctuationinfuel)ChangesWeeklyfromDOEpublishedDieselPrices(cst/gal)TwoWaystoCalculateCstpermiles–Advantageifshipmentsarelessthan(<)500milesPercentage(%)–Advantageifshipmentsaremorethan(>)750milesAllCarriersarecalculatingthisintheirratesThereisnoadvantagetoanAll-InRateSRMLogistics,Inc(StephenRMcCleary,Pres)©20127COSTofDIESELFUEL(US-DOE)JAN'05JUN'05JAN'06JUN'06JAN'07JUN'07JAN'08JUN'08JAN'09JUN'09JAN'10JUN'10JAN'11MAR'11...