WAREHOUSING AND MATERIAL MANAGEMENT FROM CAT LOGISTICS SERVICES INC.

The essence of Materials Management is in achieving industry-leading customer service by providing the right products to the right place and at the right time while optimizing inventory investment. Cat Logistics' experienced staff applies advanced analytics & processes, modeling techniques and technologies, along with extensive supply chain performance monitoring tools, to work with clients to achieve their cost and service objectives. Cat Logistics manages the inventory replenishment of more than 500,000 stock keeping units for Caterpillar using proven inventory management business processes, advanced analytics, and world-class Materials Management technology. Its world-class fill rate to customers in its vast global network of independent Dealers is without peer in the automotive and industrial market sectors, and remains as Caterpillar's most significant competitive strength. Demand Planning Cat Logistics can forecast the demand for products to stock in the distribution network using its advanced forecasting algorithms, statistical technologies and collaborative market planning tools. Distribution Requirements Planning Cat Logistics can use its DRP algorithms to determine the required quantity, delivery timing, and deployment of product from all customer supply sources to every facility in the distribution network. DRP schedules can be generated for daily, weekly, monthly or quarterly supply requirements, depending upon the unique needs of the customer and its supplier network. Purchasing & Expediting Cat Logistics can manage and communicate purchasing schedules to suppliers, prioritize and fulfill backorders, and notify customers of delivery information. Inventory Optimization Cat Logistics has unique inventory management processes which can help minimize inventory investment while achieving customer service goals by determining appropriate reorder points and reorder quantities for each product / location (SKU). Inventory Accuracy & Control Cat Logistics has special technology and business processes which can be used to reduce inventory shrinkage through accurate inventory recordkeeping, by using statistical test counts, by auditing stock records, and by reconciling inventory discrepancies. Service Loss Analysis / Supply Chain Performance Analysis Cat Logistics can measure the effectiveness of the customer's supply chain in "real time" by determining root causes of customer backorders and recommending areas for specific improvement, including key elements of the supply chain such

as specific suppliers, certain transportation modes or carriers, specific warehouse operations or inventory management policies and practices.

MANUFACTURING LOGISTICS

Leveraging the extensive manufacturing expertise of its parent company, Caterpillar Inc., Cat Logistics can quickly assess the efficiency of the customer's supply chain and successfully plan and implement value-added processes to streamline assets, reduce cost, and improve responsiveness. Caterpillar operates more than 100 manufacturing plants around the world. As a result, Cat Logistics understands the dynamic, time-sensitive, lean manufacturing environment required of a contract logistics provider. Cat Logistics can bring this knowledge and expertise to the customer and can help achieve the kinds of cost reduction and "just-in-time" manufacturing excellence that it has achieved for its parent, Caterpillar. Sub-Assembly & Kitting Cat Logistics can build sub-assemblies and kits to meet the demands of main production operations to reduce inefficient material handling, optimize use of production floor space, and optimize utilization of skilled trades. This requires work order planning, sub-assembly instructions, production routings, tooling specifications and timely availability of component inventory. Sequencing Cat Logistics can stage loads for delivery to the production line in the order of the product build sequence. Sequencing activity can apply to kits, sub-assemblies, components, and supplier material. Line-Side Delivery Cat Logistics can schedule the placement of kits, sub-assemblies, components, and supplier material to different points of use within the production facility. Postpone-To-Build Cat Logistics can help minimize space and inventory by delaying assembly of in-process or finished goods until specific customer demand is communicated via electronic build notification.

TRANSPORTATION LOGISTICS SERVICES FROM CATERPILLAR LOGISTICS SERVICES INC.

Transportation involves the physical movement of goods through the supply chain by ground, rail, air, and water. Transportation logistics management is a key enabler to improved customer service and generates a significant portion of supply chain costs. Because of the size and global scope of its parent company, Caterpillar, Cat Logistics is one of the largest users of global transportation services in all different types of delivery modes and maintains valuable relationships with industry-leading carriers of all types. As a result, it has gained the experience and the buying leverage to help its customers achieve lower annual transportation costs while achieving demanding customer service delivery requirements. Transportation Logistics Planning Cat Logistics can manage the overall planning and execution for daily and weekly product moves, determine the most appropriate modes of transportation and select cost-effective carriers to achieve the clients strategic and/or tactical business goals. Carrier Selection / Management Cat Logistics can manage carrier certification and the establishment of core carrier programs. Carrier management is the ongoing process of managing information regarding carriers rates and service capabilities through carrier performance and reporting. Inbound & Outbound Management Cat Logistics can manage the day-to-day coordination of product moves throughout the supply chain, including communication with carriers, exception management and product recovery. Track & Trace Cat Logistics can provide each customer the ability to see the status of a specific physical movement of a product or of a specific outbound customer order via its connectivity to the carrier's web site or other available technology. Freight Bill Audit, & Payment Cat Logistics manages the reconciliation of carrier charges to actual freight movements, identifying overcharges, managing freight damage claims and paying the carriers using a cost effective rate structure. Freight Forwarding Cat Logistics can provide assistance from carrier selection through document management.

DISTRIBUTION CENTER MANAGEMENT

Cat Logistics provides comprehensive distribution and order fulfillment solutions to efficiently manage material flows and storage requirements, and perform additional value-added services to satisfy virtually any client need. Cat Logistics is one of the world's largest contract logistics companies with a rich experience in global operations and "best practice" performance metrics in service parts logistics. Over the last seventeen years, it has developed a proven track record with customers in reducing current distribution center operating costs, providing an improved competitive advantage in the distribution channel and creating additional shareholder value through outsourcing. Warehousing Cat Logistics can perform a number of specific warehousing and distribution activities for the client at a distribution facility ideally located between vendor supply and customer demand points. Some of these activities include receiving and inspecting vendor items, packaging and labeling for sale to customers, storing items for future customer orders, picking, packing and making customer orders ready for shipment via preferred carriers. Packaging Cat Logistics can package customer product for desired brand identity and protect against damage during shipment, by placing it into an appropriate container, and marking and labeling the container with the unique customer brand identity and shipping destination data. Cross-docking Cat Logistics helps clients reduce overall inventory investment and expensive storage space requirements through crossdocking operations, which involve redirecting certain selected incoming shipments so they may be sorted, packed, and shipped to their final destination with minimal handling in the distribution center. Product Marking/Labeling Cat Logistics can apply special marking and/or apply labels to customer products for accurate picking and replenishing. Special labels can also be applied to all shipping containers, including corrugated boxes, pallets, drums and other items, as required, for effective order tracking and tracing by the customer. Kitting Cat Logistics can build kits for stock ordering or can custom-build kits for special customer needs to simplify customer ordering and improve order-filling efficiency. Quality Assurance

Cat Logistics has developed some of the best quality standards in the logistics business based upon its comprehensive quality inspection programs developed in conjunction with its clients and their demanding customer service requirements.

REVERSE LOGISTICS

A supply chain is not complete without the efficient management of reverse logistics. Cat Logistics manages the reverse flow of products and materials for the purpose of returns, repair, re-stocks, remanufacture, and/or recycling to increase return on assets. Cat Logistics manages the regular return of unneeded or excess inventory for not only Caterpillar, but for many of our larger automotive and industrial customers. This capability enhances the overall efficiency of the customer's supply chain and helps improve the loyalty, profitability and strength of the customer's dealer network. Asset Recovery Cat Logistics can manage the reverse flow of durable items, including containers, pallets, racks, and other assets. Returns & Exchange Management Cat Logistics can manage the receipt and disposition of customer returns, including rotables and cores, consisting of receiving, inspecting, inventory tracking and control and shipment activities. Repairs Processing Cat Logistics can oversee and manage the identification of defective products and make the determination of their reparability to restore a product to a satisfactory and saleable condition. Remanufacturing Cat Logistics can perform physical inspection, failure diagnosis, product refurbishment, re-engineering and testing of products to meet original equipment specifications for quality, fit, and performance. Remanufacturing Cat Logistics can manage the removal and documentation of unneeded product from the supply chain into available channels based upon salvage value, environmental considerations, reparability and market value.

ORDER MANAGEMENT

Communications that help inform customers on product availability and order status is key to building strong business relationships and providing superior customer satisfaction. Order Management includes the capture, tracking and billing of customers orders for products. Cat Logistics manages one of the world's finest product support organizations in the world for Caterpillar. The cornerstone of this successful business model has been built around its world-class Customer Order Management system. This system allows the complete execution of supply chain visibility and order fulfillment synchronized throughout 25 different global distribution centers in a continuous 24x7 environment. Customer Services Cat Logistics can operate a service center to respond to customer inquiries, communicate needed customer information, and act as a liaison and expeditor with Materials Management, Transportation and Operations. Order Entry Cat Logistics can manage the physical or automated capture, maintenance and tracking of customer sales orders and quotes. Order Allocation/Processing Cat Logistics can allocate stock to sales orders, considering sales order type and priority based on defined allocation rules. Technical Support Cat Logistics can respond to customer inquiries regarding product identity, specifications and fitness for use. Claims Management Cat Logistics can resolve order discrepancies made against facilities including the issuing of credit, the re-shipment of product and inventory adjustments. Invoicing Cat Logistics can use its logistics information systems to generate timely and accurate information from which to bill customers.