Genco Supply Chain Solutions

Supply chain management (SCM) is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers (Harland, 1996). Supply Chain Management spans all movement and storage of raw materials, work-inprocess inventory, and finished goods from point-of-origin to point-ofconsumption (supply chain) Activities/functions Supply chain management is a cross-functional approach to manage the movement of raw materials into an organization, certain aspects of the internal processing of materials into finished goods, and then the movement of finished goods out of the organization toward the end-consumer. As organizations strive to focus on core competencies and becoming more flexible, they have reduced their ownership of raw materials sources and distribution channels. These functions are increasingly being outsourced to other entities that can perform the activities better or more cost effectively. The effect is to increase the number of organizations involved in satisfying customer demand, while reducing management control of daily logistics operations. Less control and more supply chain partners led to the creation of supply chain management concepts. The purpose of supply chain management is to improve trust and collaboration among supply chain partners, thus improving inventory visibility and improving inventory velocity. Several models have been proposed for understanding the activities required to manage material movements across organizational and functional boundaries. SCOR is a supply chain management model promoted by the Supply Chain Management Council. Another model is the SCM Model proposed by the Global Supply Chain Forum (GSCF). Supply chain activities can be grouped into strategic, tactical, and operational levels of activities. Supply Chain Management Problems Supply chain management must address the following problems: •

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Distribution Network Configuration: Number, location and network missions of suppliers, production facilities, distribution centers, warehouses, cross-docks and customers. Distribution Strategy: Including questions of operating control (centralized, decentralized or shared); delivery scheme (e.g., direct shipment, pool point shipping, Cross docking, DSD (direct store delivery), closed loop shipping); mode of transportation (e.g., motor carrier, including truckload, LTL, parcel; railroad; intermodal, including TOFC and COFC; ocean freight; airfreight); replenishment strategy (e.g., pull, push or hybrid); and transportation control (e.g., owner-operated, private

carrier, common carrier, contract carrier, or 3PL). Trade-Offs in Logistical Activities The above activities must be coordinated well together in order to achieve the least total logistics cost. Trade-offs exist that increase the total cost if only one of the activities is optimized. For example, full truckload (FTL) rates are more economical on a cost per pallet basis than less than truckload (LTL) shipments. If, however, a full truckload of a product is ordered to reduce transportation costs there will be an increase in inventory holding costs which may increase total logistics costs. It is therefore imperative to take a systems approach when planning logistical activities. These trade-offs are key to developing the most efficient and effective Logistics and SCM strategy. •

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Information: Integration of and other processes through the supply chain to share valuable information, including demand signals, forecasts, inventory, transportation, and potential collaboration etc. Inventory Management: Quantity and location of inventory including raw materials, work-in-progress (WIP) and finished goods. Cash-Flow: Arranging the payment terms and the methodologies for exchanging funds across entities within the supply chain.

Supply chain execution is managing and coordinating the movement of materials, information and funds across the supply chain. The flow is bidirectional. Strategic • •

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Strategic network optimization, including the number, location, and size of warehouses, distribution centers, and facilities Strategic partnership with suppliers, distributors, and customers, creating communication channels for critical information and operational improvements such as cross docking, direct shipping, and third-party logistics Product lifecycle management, so that new and existing products can be optimally integrated into the supply chain and capacity management Information Technology infrastructure, to support supply chain operations Where-to-make and what-to-make-or-buy decisions Aligning overall organizational strategy with supply strategy

Tactical • • •

Sourcing contracts and other purchasing decisions. Production decisions, including contracting, scheduling, and planning process definition. Inventory decisions, including quantity, location, and quality of inventory.

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Transportation strategy, including frequency, routes, and contracting. Benchmarking of all operations against competitors and implementation of best practices throughout the enterprise. Milestone payments Focus on customer demand.

Operational • • • • • • • •

Daily production and distribution planning, including all nodes in the supply chain. Production scheduling for each manufacturing facility in the supply chain (minute by minute). Demand planning and forecasting, coordinating the demand forecast of all customers and sharing the forecast with all suppliers. Sourcing planning, including current inventory and forecast demand, in collaboration with all suppliers. Inbound operations, including transportation from suppliers and receiving inventory. Production operations, including the consumption of materials and flow of finished goods. Outbound operations, including all fulfillment activities and transportation to customers. Order promising, accounting for all constraints in the supply chain, including all suppliers, manufacturing facilities, distribution centers, and other customers

GENCO Supply Chain Solutions ======History The GENCO of today had its humble beginnings in 1898 as H. Shear Trucking Company. Leading his horse and wagon through the streets, Hyman Shear delivered commodities in Pittsburgh and surrounding communities. With the advent of motorized vehicles, Hyman mechanized the business with the purchase of his first gas-powered truck in 1917. Within a short period of time, the company was operating a small fleet of trucks and servicing an expanded area. Historical Pittsburgh Following years of success, Hyman's son Sam ushered in the company's second-generation of leadership in the early 1940s. Under a new name, General Commodities Warehouse and Distribution Company, Sam expanded the delivery fleet and added warehousing and distribution services.

Like his father before him, Herb Shear joined his father Sam in 1971, to become the family's third generation involved in the logistics business. Together, they expanded the company's service offerings to include public warehousing, distribution and product manipulation services. Continuous growth throughout the seventies and eighties expanded the company's technology base and service offerings. In the late eighties, Herb transformed product returns management by developing a centralized returns process known today as Reverse Logistics. Following development of its proprietary returns processing software and product liquidation capabilities in the early nineties, the company began providing Reverse Logistics to help customers manage and maximize the value of their returned products. In 1995, the company consolidated its divisions and service offerings under one name, GENCO Distribution Systems. With a new focus, came new concepts and innovative developments. The company continued its strategic expansion, making several key acquisitions, including contract logistics and warehouse management software development companies, to end the twentieth century well positioned as a leading full service provider of supply chain solutions. Over the past several years, GENCO has continued its growth by adding an expanded range of service offerings, including transportation logistics, parcel negotiation and audits, damage research, pharmaceutical services and government solutions. In addition, the company formed a strategic LLC with BDP International to provide end-to-end global supply chain solutions. In 2007, the company changed its name to GENCO Supply Chain Solutions to better reflect its complete range of service offerings. As GENCO Supply Chain Solutions celebrates its 110-year anniversary in 2008, it is recognized as North America's second largest and a Global Top 50 thirdparty logistics and remains the clear industry leader in Reverse Logistics. While the company continues its growth, many of the things that have made it successful will remain the same, including a superior management team, the supply chain industry's best professionals and best customer experience and depth of technology innovation to deliver value-added solutions, which meet the 21st century needs of its customers. ====GENCO Supply Chain Solutions at a Glance Solutions at a Glance * Magnifying Glass 111-year, privately held, non-asset based company

* North America's second largest and a Global Top 50 third-party logistics company * Over 150 customers, including many Fortune 500 manufacturers and retailers and U.S. government agencies * 130 operations throughout U.S. and Canada * Over 37 million square feet of managed warehouse space * Over $722 million in annual sales * Over 7,000 teammates * Through 2008, $9.5 million savings with Six Sigma process improvements * Recognized leader in Reverse Logistics * Over $1 billion in freight managed annually * Visibility to $2.5 billion in parcel freight * Leading B2B wholesaler of surplus inventories, liquidating more than $5.2 million worth of merchandise daily ===GENCO's Mission, Vision and Values 1. To provide value to our customer and teammates 2. To be profitable Our Strategic Vision We are committed to provide the best non-asset based supply chain solution experience for our customers and to be the productivity, data management and innovation leader for our industry. Our Values We will continually strive for Better Practices in all of our business processes. We will make and Keep Our Commitments to our customers, teammates, business partners and shareholders. We will behave in a Legal, Fair and Ethical manner. We will show Respect for ourselves, other teammates and customers by being prepared, open and honest, and by resolving conflict. =======GENCO Awards and Recognition GENCO Supply Chain Solutions’ reputation as North America’s second largest and a Global Top 50 third party logistics company and the recognized leader in Reverse Logistics are well documented.

GENCO Supply Chain Solutions has been recognized for its accomplishments and success as a leading third party logistics company known for creating initial and ongoing value, and providing the industry’s best customer experience. Top 36 North American 3PLs Logistics Quarterly November 2008 Top 20 North American 3PL Warehouse Operators Modern Material Handling November 2008 Top 50 Logistics Providers Logistics Management August 2008 100 Great Supply Chain Partners Global Logistics & Supply Chain Strategies July 2008 Top 100 3PLs Inbound Logistics July 2008 Sears’ Partners in Progress Award Top 1% of Sears’ Vendors 1994-2008 Salzberg Medallion Award Martin J. Whitman School of Management at Syracuse University Gus Pagonis April 2008 Readers’ Choice Awards Consumer Goods Technology January 2008 =====Charitable Giving At GENCO, caring about our communities is at the heart of our philanthropic philosophy. We know we can make the greatest impact on our community by supporting causes that are important. We are proud to help support charitable and community-focused organizations through a combination of charitable donations and sponsorships that drive positive change where it is needed most. PittsburghGENCO contributions and sponsorships include: * * * *

Greater Pittsburgh Community Food Bank Make-a-Wish Foundation The United Way Foundation POWER

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March of Dimes West Pennsylvania Conservancy Three Rivers One Future Ronald McDonald House The Mario Lemieux Foundation Susan G. Komen Race for the Cure Pittsburgh Jewish Foundation and others

====== Consumer Product Goods Industry Profile Consumer packaged goods (CPG) manufacturers are faced with a variety of market pressures - demanding consumers, dominant retailers and globalization. While the CPG manufacturing industry is large and successful, margins are shrinking and competition is intense. With hundreds of product categories and globalization, CPG manufacturers must constantly innovate to compete. Supermarket aisle To remain competitive, CPG manufacturers must address supply chain obstacles, including operational inefficiencies, dealing with vendor managed inventories, lack of inventory visibility and getting new products to market faster and more efficiently. GENCO Supply Chain Solutions provides supply chain management solutions for many leading CPG manufacturers. The company provides an "all-in-one" solution that creates a competitive advantage through increased efficiencies, optimized productivity and continuous improvement opportunities by integrating proven processes, innovative technologies and Six Sigma applications. GENCO Supply Chain Solutions all-in-one solution allows customers to realize a return on investment in the form of improved product flow, reduced operating costs, improved inventory management, increased visibility and flexibility to adapt to changing market needs. ======= Electronics Industry Profile

Many consumer electronics companies struggle with inconsistent execution between distribution and return centers which leads to wide variations in operational performance and affects profit potential. Manufacturers, suppliers and retailers express concern over poor quality control on shipments and handling. Lengthy processing times tie up inventory, limit buyers' purchasing potential and contribute to reconciliation issues which delay receipt of credits. With little Couple looking at big screen televisions collaboration and data exchange, there is limited visibility given to returns. GENCO Supply Chain Solutions reverse logistics process can decrease returns processing cost-per-unit by 50 percent. The company's supply chain analyses and implementations significantly reduce transportation costs by increasing the number of full truckload shipments. GENCO Supply Chain Solutions can reduce the timeframe for returned goods final disposition by 75 percent while increasing inventory turn rate from 12 to 24 percent. The company's proprietary return system removes internal resource constraints. Reporting and process standards are shared between suppliers and retailers to alleviate reconciliation issues. Retailers, suppliers and manufactures benefit from a significant improvement in "open-to-buy" availability. GENCO Supply Chain Solutions' ongoing collaborative Six Sigma process focuses on reasons for returns and efficiencies across the supply chain from point of manufacturer through final disposition. A growing opportunity for improving competitiveness and profitability can be found in areas related to reintroducing returned products into sales or manufacturing channels. GENCO Supply Chain Solutions' centralized reverse logistics and distribution approach makes it easy to repurpose goods, in whole, through online and traditional brick and mortar sales channels or as harvested parts into the manufacturing stream. ===== Food and Beverage Industry Profile Food & beverage companies are faced with market challenges driven by the slow industry growth, margin pressures and a marketplace crowded with new product introductions, which makes it difficult to differentiate and build brand value. Many food & beverage companies realize that an efficient supply chain can provide a competitive advantage. Person picking up an orange juice carton GENCO Supply Solutions understands the challenges food & beverage manufacturers face with their overall supply chains. Their networks must support a diverse customer base, various product forms, unique rotations and freshness constraints while satisfying environmental and shareholder interests.

GENCO Supply Solutions helps customers resolve these business challenges and realize the best return on their supply chain investment. In addition to warehousing and distribution, GENCO Supply Solutions understands the added dimension of customer guarantee days as it relates to product freshness. The element of time sensitivity goes beyond handling dated products. It includes understanding individual customer requirements. GENCO Supply Solutions effectively manages this aspect of distribution, demands an operations and the systematic commitment to delivering products that meet customers' product freshness requirements. Operating a food & beverage supply chain can places a huge demand on both capital and environmental resources. GENCO Supply Solutions' commitment to ongoing supply chain improvements drive continual innovation that saves customers money and enhances sustainability. GENCO Supply Solutions boasts one of the supply chain industry's largest Six Sigma certified management teams. The company invests heavily in process improvement throughout its facilities to control costs and reduce waste. GENCO Supply Solutions' comprehensive knowledge of food & beverage supply chains has made it a leader in the development and administration of unsaleables policies. Embracing a commitment to shared responsibility, GENCO Supply Solutions develops programs that drive waste from the supply chain while appropriately holding trading partners accountable. The goal is an overall reduction in waste with an overriding improvement in customer service and ultimately consumer satisfaction. ===== Government Industry Profile Achieving critical supply chain and operational missions for U.S government agencies, whether military or civilian, requires a proven "best-in-class" solution supported by a superior performance. Challenged with expanding and increasingly complex supply chains and reduced operating budgets, privatesector support has become an integral part of the U.S. government's success. Military Base GENCO Government Solutions, a division GENCO Supply Chain Solutions, specializes in warehousing, distribution and base operations in support of U.S. government agencies and the warfighter worldwide. The company's success stems from its diverse and complementary combination of military, government and private-sector experience. As a non-asset based company, GENCO Government Solutions employs creative contracting methods, commercial best practices and innovative technologies as long-term costeffective solutions. ====

Medical Device Industry Profile As the medical device industry continues to expand, companies are searching for ways to become more competitive. Medical device manufacturers are faced with intense competition, increasing regulatory pressures, shorter product life cycles, rapid new product introductions, globalization and higher quality standards. As a result, there is an increased focus on creating efficiencies in the supply chain similar to other industries. Dental equipment GENCO Supply Chain Solutions' experience, innovative technologies and proven best practices improve service levels while reducing inventory and labor costs. In the process, customers gain end-to-end visibility to align their corporate business strategies and processes to their global supply chains. GENCO Supply Chain Solutions' expertise with numerous supply chain technologies helps customers automate high volume, labor intensive and error prone processes. The company remains current with RFID advancements and E-pedigree standards. GENCO Supply Chain Solutions' proprietary warehouse management system provides visibility and compliant reporting in the form of: * Fully traceable device history to track throughout the supply chain * Information capture and storage, including lot and date code tracking and expiry dates all supported by full quarantine and recall capabilities * Customer-specific electronic reports. GENCO Supply Chain Solutions has extensive experience managing conventional, secured and temperature-controlled warehouses, incorporating superior health and safety measures. All of the company's systems are validated according to FDA regulations and adhere to GMP guidelines.

===== Pharmaceutical Industry Profile Pharmaceutical companies have entered a difficult period where shareholders, the market and regulators have all created significant pressures for change within the industry. From thinning pipelines and skyrocketing operating costs to calls for lower prices and a greater regulatory burden, pharmaceutical companies are confronted with unprecedented challenges that are expected to radically transform the industry. To overcome these challenges, pharmaceutical companies require a bold vision and leadership willing to embrace fundamentally new approaches to their businesses, including pharmaceutical returns and recalls. Pharmaceutical products in blister packs

As the industry leader and innovator, GENCO Pharmaceutical Services, formerly Capital Returns, has transformed pharmaceutical returns into a datarich, systematic process that drives critical information and value back to manufacturers, pharmacies and wholesalers. GENCO Pharmaceutical Services sets the standard for delivery and service excellence using industry-leading technology and reporting tools to provide pharmaceutical companies with the most precise and timely pharmaceutical returns and recall management solutions. Overseeing every step of reverse distribution, GENCO Pharmaceutical Services delivers accurate returns data and highly responsive customer service. Providing strategic data management throughout the returns life cycle, GENCO Pharmaceutical Services delivers valuable information and insight that makes today's pharmaceutical companies better businesses. Today, many of the largest pharmacy chain operators, pharmaceutical manufacturers, PBMs, drug wholesalers and independent pharmacies turn to GENCO Pharmaceutical Services for timely and cost-effective solutions that bring transparency and business value to every stage of the return cycle. ====== Retail Industry Profile Today's retail industry is focused on being better, faster and leaner. Retailers are challenged with a faster-paced society and faster-paced technology changes. At the same time, overall inventory pressures are mounting, too. Larger retailers, with their efficiencies of scale and global scope, are driving prices down and reducing margins. Shoppers looking at retail clothing GENCO Supply Chain Solutions provides retail supply chain management solutions for both forward and reverse supply chains. The company has created a seamless product flow that tracks and manages each customer's products from point of order, regardless of source, through disposition of returned items. With each new retail distribution and return center operation, GENCO Supply Chain Solutions integrates process improvements by continuously enhancing its systems, technology and operations. In the process, GENCO Supply Chain Solutions has uncovered billions of dollars in hidden profits for some of the world's biggest retailers. GENCO Supply Chain Solutions experience helps retailers manage their supply chain processes so they can: * Fulfill the right product at the right time

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Employ inventory controls to insure product availability Reduce transportation costs Eliminate in-store labor hours Increase available space in stores and distribution centers Leverage better terms with vendors and suppliers Achieve end-to-end supply chain visibility and analysis.

===== Second Largest Third Party Logistics, 3PL, Provider in North America GENCO Supply Chain Solutions > North America's 2nd Largest 3PL GENCO Supply Chains Solution is a Global Top 50 and North America's second largest third party logistics company. GENCO is a privately owned 110 year old company. 3PL Services GENCO is world renown as a leader and innovator of reverse logistics solutions. In fact, GENCO offers a full range of third party logistics solutions that eliminate waste and maximize profits within the supply chain. Our contract logistics solutions emphasize highly efficient warehouse management and distribution centers. Transportation logistics enables the delivery of truckload, LTL and parcel delivery throughout North America. GENCO's reverse logistics solutions offer more than return center operation into service such as product liquidation and damage analysis. GENCO Supply Chain Solutions provide initial and on-going value throughout the supply chain by maximizing efficiencies and eliminating waste. GENCO's Supply Chain Technology GENCO's RFID and our award Technology that improves the supply chain winning optically enabled RTLS allow tracking of inventory from the moment inventory enters a warehouse. GENCO uses its stature to partner with other technology companies to bring the most innovative supply chain technologies to our customers. We partner with Manhattan Associates to provide Tier 1 logistics and warehousing solutions at highly competitive rates. Our partnership with Sky-Trax produced a first-runner-up award for Supply Chain Innovation at CSCMP for our optically enabled RTLS system. Our Customers GENCO provides services to a wide range of customers across many verticals. In fact, we currently have over 150 customers, including many Fortune 500 manufacturers and retailers, and U.S. government agencies. GENCO has entire

divisions that work exclusively with government solutions and pharmaceutical services. We have extensive experience working in industries such as * * * * * * *

Consumer Product Goods Electronics Food & Beverage Government Medical Devices Pharmaceutical Retail

==== 3PL Solutions Lead to a Green Supply Chain Creating a green supply chain means both adding more green to the bottom line as well as doing business in an Earth friendly manner. The third party logistics services available through GENCO Supply Chain Solutions will help you meet both your financial and environmental goals. Transportation Management One of the best ways to reduce your carbon footprint is through efficient transportation management. Choosing an effective shipment method isn’t always obvious. GENCO’s Transportation Logistics division can help you determine when full truckload, LTL or parcel delivery services make the most sense for your organization. Supply Chain Network Optimization Supply chain network optimization can be used to reduce the need for transportation services. Which makes better sense: * Transporting smaller quantities of product more frequently * Making one large delivery less often. GENCO’s supply chain network optimization services will identify the strategy you need for green success. Eliminate Unsaleables There is no greater waste than transporting product that is unsaleable. Damaged products need to be returned. Spillage from leaking products can lead to environmental issues, not to mention resources needed for cleanup. Damage analysis audits will identify and offer recommendations that will significantly reduce unsaleables. GENCO’s Damage Research division finds ways to drive cost and waste out of the supply chain. The results are a more eco-friendly and cost effective supply chain. Reduce, Reuse, Recycle

One of the easiest ways to green the supply chain is through reverse logistics. A percentage of your product is going to be returned. Whether the product is damaged or just unwanted, good use can be made of it. Damaged products can be repaired or refurbished, then placed back into the market. GENCO Marketplace offers product liquidation services that return unwanted, repaired and refurbished merchandise back into the sales cycle. Business decisions are most likely going to made based on the bottom line. Using GENCO’s 3PL services unites the desire to act more environmentally friendly with the need to improve a company’s financial status.