Leveraging RFID-Enhanced Networks for Ocean Cargo Visibility and

Leveraging RFID-Enhanced Networks for Ocean Cargo Visibility and Security: Vic Verma Chairman, President and CEO Savi Technology AIDC 100 "Truth in Technologies 2005: Supply Chain RFID"

Challenges to Supply Chain Efficiency • Supply Chains Have Become Increasingly Complex • • Increasing Outsourced Off Shore Manufacturing 20+ Entities Participate In The End-to-end Movement Of An Ocean Container Shippers Vary Manufacturers & Service Providers For Best Price & Service Carriers Vary Schedules And Routes For Maximum Efficiency • Security Issues Threaten Supply Chain Disruption • Potential For Weapon Of Mass Destruction Smuggled In Ocean Containers • Subsequent Impact To Global Commerce Would Be Significant • Anti-terrorism Regulations Increase Complexity And Costs • U. S. Initiatives • 24 Hour Manifest Rule, Seal Checks • International Initiatives • ISPS codes for ship and facility security • World Customs Organization

Recent Drivers Accelerating Change • US CBP expected to pass verification rule rollout to industry early next year – Driving collaboration among carriers, shippers, terminal operators and tech companies to finalize e-seal standards • Wal-Mart and Do. D compliance continuing to next wave of suppliers – Driving companies to look for ways to gain value in international logistics operations – Source tagging growing as mechanism to comply • Bonner recent comments on Greenlane – December 31 st goal to define benefits of use of “smart containers” • Standardization among allied militaries for global container tracking • IBM/Maersk joint initiative

Ocean Cargo Supply Chain Executive Priorities Reducing Inventory and Assuring Container Security are the most important issues supply chain executives are managing (n = 24) Assuring Container Security 4. 0 Reducing Inventory 3. 9 Reducing Lead Time Var. 3. 7 Reducing Stock Outs 3. 7 Preventing Lost Containers 3. 5 Managing POFR 3. 3 Reducing Labor/Fees 3. 1 Locating Lost Containers 3. 0 Assigning Liability 2. 8 Increasing Mfg Uptime Reducing Shrink Reducing Insurance Costs Complying with RFID Mandates 1 Not Important Source: A. T. Kearney interviews 2. 7 2. 4 2. 2 2. 1 3 Moderately Important 5 Most Important

Savi Networks Commercial Launch • HPH and Savi Launched Savi Networks in April – service for container tracking and security • In August, 0 false tamper field trial of 3 rd generation RFID sensor tag on Mitsui containers • Officially launched Savi. Trak service last week – Consumer goods manufacturer operational program – Full source tagging and nested visibility solution

Business Model • Savi Networks is a utility service – Installs and operates a shared network infrastructure – Operates the service to collect data, monitor the network and provide information to customers • Savi Networks provides integrated hardware, software, services, and tags necessary for users to connect – Manufacturing and consolidation facilities that originate cargo – Distribution centers receiving cargo – Enabling nested visibility and source tagging • Savi Networks provides data to carriers, shippers and/or other customers – Hosted view of the information – Integration to backend systems – Per transaction or subscription basis

Features • Solution Enables: – Continuous supply chain performance improvement – Exception management and Supply chain analytics – Tamper alerts and audit trails for loss prevention and risk management – Data availability and accuracy improvements – Passive tag reads for manifest creation and “nested visibility” – Enables retail RFID mandate compliance as source – Automated ASN creation and other documentation – Automated monitoring and alerting during import transport segments – Electronic securing by authenticated users and chain of custody controls – Chain of custody control at key hand offs in the supply chain • Anticipated future capability: – Satisfy government requirements for “Greenlane” treatment of imports – E-Seal verification once standard is completed

Device-Level Solution Connectivity to users on the ground, verifying people, automating processes, validating security, capturing origin and destination physical location and status

Reader Solution Chain of custody control through confirmation of physical movement and container status at process points like the port crane operations

Nested Visibility: Supports Source Tagging Integrated, global, multi-modal Hardware Software GPS

Savi Software Supports Multiple AIDC Technologies Item Transport unit Packaging Unit Load Container Movement vehicle Barcode Passive RFID Gen 2 ISO 18000 -6 Active RFID ISO 18000 -7 GPS • Zebra • Symbol • Intermec • Phillips • Intermec • Matrics • Alien • TI • SAMSys • Thing Magic Smart. Chain Software • Qualcomm • @Road • PAR • Wherify

Networked Software Networked software application provides users specific data security, alert and reporting capability for exception management, audit and analytics information, and operating system integration (ERP, TOS, TMS)

Managed Services Savi Networks is Implementing an ISO Standard RFID Network Including a Hosted Application to Provide Global Visibility To and Manage The Security of Ocean Cargo Containers Savi Networks Hosted Software

Managed Services Shippers Implement Compatible RFID Infrastructure At Supply Chain End Points, Connecting To Savi Networks Hosted Software Extending The Network Across The Global Supply Chain Savi Networks Hosted Software

6 Managed Services Web Based Services Alert Services Data Services Savi Networks Hosted Software Savi Networks Will Provide Visibility and Security Transaction Priced Services To Shippers Through Web Portal Alert Services Direct Enterprise Data Integration

Value to Shippers Supply chain executives estimated the total average benefit per container from Savi Networks Solution is approximately $1, 150(1) Increase Mfg. Uptime 16% Other 6% Key Findings Reduce Inventory 31% Reduce Lead Time Variance 17% Reduce Outof-Stocks 30% • Approximately 95% of the total benefit derived from the offering savings are driven by four factors — Reduced inventory carrying costs — Reduced out-of-stocks — Reduced lead time variance — Increased manufacturing uptime • Reducing labor and fees (3%), increasing security (2%), preventing lost containers (1%), and reducing insurance costs (0%) combined for 6% of the total benefit Note: (1) Reducing insurance costs showed zero benefits or the benefits could not be provided, according to the interviewees Source: A. T. Kearney Interviews; A. T. Kearney analysis

Leveraging RFID-Enhanced Networks for Ocean Cargo Visibility and Security: Vic Verma Chairman, President and CEO Savi Technology AIDC 100 "Truth in Technologies 2005: Supply Chain RFID"