RESULTS MATTER.SM

ODETTE CONFERENCE, Berlin, May 16 th 2017

2

Can “Last Mile Logistics” challenge

the traditional distribution model for

automotive service parts ?

How much change to the Service

Parts Supply Chain should we

expect in future ?

©2017 XPO Logistics, Inc.

3

Shift from input and reporting platform to an interactive User output tool

©2017 XPO Logistics, Inc.

AGENDA

- Looking a few years back

- Today models & variances

- Changes & revolution ahead !

XPO Logistics: a first class international operator

Global

forwarding

$14.6 billion

turnover

Near to 15,000,000 m² warehouse space

#2 largest contract

logistics provider

worldwide

89,000 employees

1,431 sites

in 34 countries

#1 in e-commerce

logistics in Europe

©2017 XPO Logistics, Inc.

Few years back: National Distribution Centers

NDC

Manufacturing

Lead time

(2 to 8 weeks)

Warehousing

Lead time

(1 to 3 days)

Dealers

Pros

• Simple to operate

• No change to NSC P&L

• Do not require “advanced” planning

systems

Cons

• High inventory & operating costs

• Not optimised for slow movers

• High parts obsolescence

In place in many places today: Multi-Echelon Network

Multi Facilities

Manufacturing

Lead time

(2 to 8 weeks)

Warehousing

Lead time

(2 to 4 days)

Multi-Echelon

Dealers

Pros

• Full facing concept & global entry points

• Global management & visibility

• Reduced parts obsolescence &

operating costs

Cons

• Requires “advanced” planning

systems

• More complex to operate

Some variances

Usually not fully multi-entry points but selected “sources” warehouses (up to 3 per continent)

Rarely deployed with 3 levels of distribution:

– Local Distribution Centers concept with 2 hours order-to-delivery lead time

– PUDOs

– Direct delivery to vans

or mix of the above

Sometime in place with DMI / RMI

Fully supportive of e-commerce !

Variances of the multi-echelon model

©2017 XPO Logistics, Inc.

More changes & disruption ahead !

OEM distributors setting up their own LDC network:

Supported by OEM

Independently from OEM

“Dealers are back in town”

©2017 XPO Logistics, Inc.

Overall targeted benefits:

Reduce overall inventory level and parts obsolescence

Increase service levels & reduce back orders

Reduce lead times to service bay and enable up-sell to final clients

The graveyard of companies which lost “vision”

Kodak: jump onto the digital wave too late

Polaroid instant camera: poor quality killed the golden goose of consumables

Nokia: did not saw the smartphone era coming; now into wireless network components ‘only’

Laserdisc: no eco system led to prohibitive price & isolation

Betamax, V2000, VHS: no agreement on standard (again no eco system agreement) = worst technology won !

Survivor: IBM (from hardware to service), Marvel (from comics to movies), Apple !

©2017 XPO Logistics, Inc.

Change is compulsory to adapt to rising competition

Large players now joining the battle !

Strong retail footprint & e-tail know-how in place able to challenge the current models

The independent parts distributors & rising e-commerce competition

©2017 XPO Logistics, Inc.

Even more changes & challenges coming our way

3 revolutionary disruptions to the Service Parts Logistics ahead of us

©2017 XPO Logistics, Inc.

12

©2016 XPO Logistics, Inc. CONFIDENTIAL AND PROPRIETARY MATERIAL | Internal Use Only | Do Not Copy or Distribute

Shift from input and reporting platform to an interactive User output tool

Conclusion

Changes to “Last Mile Logistics” are

unavoidable & can be expected short term

Hiding or ignoring these is not an option

Understanding, cross sectors learning &

partnering are the only way forward

©2017 XPO Logistics, Inc.