Why Freight Estimating and Quoting are Critical to Customer Service and Profitability at XSE Group

1. Why Freight Estimating and Quoting are Critical to Customer Service and Profitability at XSE Group Hosted by: Craig Baratta, Director of Operations & Information Technology Diego Fernandez, Senior Manager, Premier Group

2. Leading wholesaler of imaging products, with a selection of OEM and compatible printer, fax, copier and data media products. Also offer print management solutions that integrate the sales, service and supplies of printing In business for over 20 years. Revenue growth of 40% over the last 4 years Three distribution center model – CT, TN, CA Operate under three “brands” – ImageStar (wholesale), Aztec (leasing and service), and Tonerworld.com (direct to consumer) Two of three warehouses opened within 18months Overview of XSE Group

3. JD Edwards usage • Started running JD Edwards in 2000 • Currently have 86 users on the system • Run Financials, Distribution, integration with custom WebSphere app for web based orders • Currently at release level Xe SP24 • Final stages of 9.1 upgrade underway

4. Infrastructure 2004 Pennsylvania Middletown

5. Infrastructure 2005 Buffalo Pennsylvania Middletown

6. Infrastructure 2009 Buffalo Pennsylvania San Clemente Middletown New York City Tarrytown Miami

7. Infrastructure 2010 Buffalo Worcester Springfield Pennsylvania Providence San Clemente Middletown New York City Tarrytown Miami

8. Infrastructure 2013 Buffalo Chicago Worcester Springfield Fresno Pennsylvania Providence San Clemente Middletown New York City Memphis Tarrytown Miami

9. A couple of “beauty shots” of part of our warehouse … Upper level, with conveyor to lower level … Lower level, packing and filling area … Warehouse is about 35,000 Square feet

10. 1995-2012: Next day delivery nationwide at UPS Ground rates One warehouse in Middletown, CT Aggressive rates and fuel surcharge cap with DHL New UPS rates, while discounted, see significant increase over DHL Overall freight subsidy projected at $3MM if no action taken Begin a shift to 2day model for all customers 2012-Present: Two additional warehouses Increase 1-2day coverage with ground service to 80+% of zip codes Next/Second day subsidy decreasing from 78% of total shipments to 25% Wholesale Business Model

11. January 2012

12. Business Challenges - 2012 • XSE was subsidizing $3MMin freight each year • Goal was to reduce subsidy by $1MM • Increase billable freight from 40% to 65% • Reduce freight cost as a % of total sales from 6% to 3% • At the time 78% of all orders Shipped Next day and 22% were ground

13. Research • Worked with UPS and Fedex to determine placement to increase 2 day ground reach • Analyzed our competition for freight programs • Found most had standard 2 day ground programs • All charged a $2.50 or higher handling fee separate from Freight • All charged small order fees for orders under Specific $ amount • Competition was determining freight rates based on UPS published rates and often charged full load or above • All were charging more than UPS published saver rates for NEXT DAY Service

14. Business Challenges - How do we get there? • Open 2 more warehouses • Temporarily subsidize shipments during transition phase • Default all of our customers to ground shipping as our standard • Develop standard minimum freight deals for reps to offer based on MOT • Create multiple freight options in JDE for each warehouse and each MOT so that we could offer customized freight by MOT and location • Pick up regional freight carriers that would add strategic benefit for 1 day ground transportation • Create ground programs for all customers that were previously given a next day freight program that would be better cost savings than their current program

15. Manage Multiple Carriers and Modes of Transportation Maintain rates by weight, by warehouse for each carrier/mot Must be able to compute and upload in bulk Mechanism to assess handling fees and insurance Ability to provide price breaks and free freight at certain dollar breaks as well as small order fees Business Challenges - JDE

16. Business Challenges – 2013 – Where do we stand? • XSE was subsidizing 3mil in freight each year • Goal was to reduce subsidy by 1 mil • Increase billable freight from 40% to 65% - We are currently hovering around 60% • Reduce freight cost as a % of total sales from 6% to 3% - we are currently at 3.14% • At the time 78% of all orders Shipped Next day and 22% were ground- Now 75% of packages ship ground, 15% ship next day and 10% ship 2nd day air.

18. Default freight programs by Carrier/MOT/Company Each Business Unit needs different options for delivery with their own company defaults All companies offer variants by Bill-To and Ship-To eCommerce applications must be able to use identical calculations Business Challenges - JDE

20. August 2012

21. June 2013

22. Inventory Branch Allocation by Destination Zip Inventory Branch(SDMCU) represents physical warehouse location Must be selected based on time in transit and UPS zone to allocate each order to the closest warehouse to the destination Destinations overridden at point of sale, not from address book records Business Challenges - JDE

25. How to reach us… www.xsegroup.com baratta@xsegroup.com 888-272-8340

26. April 7-11, 2014 The Venetian and Sands Expo Center Las Vegas, Nevada QuestDirect.org/COLLABORATE Attend COLLABORATE 14 to hear high-level, strategic education for the JD Edwards audience. Register through Quest to receive exclusive JD Edwards updates, materials and networking events. Registration OPEN! Early Bird rates end February 12, 2014.