March 2009
John Brockwell
Global Supply Chain Practice Lead
Trade Management Consulting
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Topics
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JPMorganChase Bank N.A. Corporate Structure
Treasury and
Securities
Services
Investment
Bank
Asset and
Wealth
Management
Commercial
Banking
Card Services
 Treasury Services
 Global Trade
Services
 Worldwide
Securities
Services
 Credit and Rate
Markets
 Investment
Banking (Mergers and Acquisitions)
 Institutional
Equities
 Proprietary
Positioning
 JPMorgan Private
Bank
 Private Client
Services
 BrownCo (online trading)
 JPMorgan
Fleming Asset
Management
 Chase Middle
Market
 Asset-Based
Lending

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Commercial Real
Estate
Equipment
Leasing
 Credit Cards
 Merchant
Processing
Retail
Financial
Services
 Consumer
Banking
 Auto and
Education
Finance
 Home Finance
 Insurance
 Small Business
Banking

Flexible Global Trade Management Offerings
TRADE MANAGEMENT
CONSULTING
• Customs, export, and supply chain management
• SCM Process design and optimization
• Trade compliance assessments, compliance improvement plans, implementations and audits
• Sourcing and
Fulfillment landed cost analysis
GLOBAL TRADE
MANAGED SERVICES
• Outsourced import and export trade operations support
• Product classification
• Trade compliance resolution
• Special trade program management
• Brokerage and broker management
STATE-OF-THE-ART
TECHNOLOGY
• Trade documents
• Duty calculation and Customs clearance
• Regulatory screening and automated license decision
• Government reporting and agency/bureau interfaces
• Consistently updated with the most recent trade regulations
TRADE FINANCE
• Letters of Credit and
Open Account initiation
• Electronic notification of
Purchase Order requirements to suppliers
• Exception resolution
• Government
Documentary compliance review
• Settlement
• Supply chain financing
REAL-TIME FINANCIAL & PHYSICAL SUPPLY CHAIN SERVICES FOR THE WORLD

We’re integrating systems and platforms to leverage the financial and trade information from export to import and on to final delivery
Exporter/Seller
Classify ECCN #’s
Jurisdiction Determination
Screen Orders
EAR/ITAR
Determine Licensing
Submit SED
Submit Export Dec
Track/Trace Shipment
Education & Training
Import Data review - 10+2
Trade Logistics Mgt
Supply Chain Security and
Safety- CTPAT/AEO
Forwarder
Track Shipments
Forwarder Processes
Select Carriers
Book Carriers
Consolidate Freight
Track Shipments
International
Carrier
Resolve Issues
Carrier Processes
Transport Goods
Track Shipments
On-time arrivals
Bulk Breaking
Broker
Manage Brokers
Broker Processes
Pre-Entry
Submit Entry
Clear Customs
Importer/Buyer
Import Processes
Classify HS #’s
Import Data Mgmt
Submit Pre-Entry
Manage Doc Creation
Minimize Duties
Declare Goods Value
Perform Liquidation
Education & Training
Export Declaration
Import Declaration
Government
Supporting
Technology
Post Entry Info
Supply Chain Security and
Inbound Landed Cost
Safety – CTPAT/AEO
Trade Management Professionals
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Global trade management costs are small as a percentage of the value of the goods traded but the activity is critical
Trade Management
Costs
•People
•Processes
•Technology
Typically for large companies < .1% of goods value traded
Trade Management Affects
•Revenue, Cost of Goods Sold, Inventory,
Development Expense, Sales and General
Administration (SG&A), Days Purchases
Outstanding, Days Sales Outstanding
• Operational staffing
• Supply Chain Flow - Defects in the Trade
Management process can and do stop the supply chain
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Supply Chains have become more global, more extended, and riskier
Supplier
Components
Manufacturing
Distribution
Consumers
Customer
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Future trends demand flexible “smart” global supply chains that support operations
Supply chain security programs
 Failure to plan and develop secure supply chains will result in significant disruptions when supply chains are threatened
Environmental and Safety regulatory concerns
 Failure to incorporate the regulations in supply chain processes can expose companies to disruptions, seizures, significant fines and inventory write-downs
New intense competition for demanding global customers
 Highly efficient “Greenfield” competitors are entering the global markets
 Customers in all global markets are demanding high product availability and reliability, creating intense competition and high risk of “diminished value”
Security, Environment and Customer Demands create significant risk to inventory value, we have a choice, to let it happen or manage it with flexible supply chains
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More hand-offs in the supply chain decreases reliability
Domestic factory to the store, 3 days at 95% reliability
1 day 2 days 18 days
1 day 3 days
International factory to the store, with 5 hand-offs and each leg 95% reliable for a total of 25 days. 0.95x0.95x0.95x0.95x0.95 = 77.4% reliability
Irregularities in goods flow like cargo cut-offs or customs delays can result in full days added to the supply chain, causing expedited freight and increased inventory
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The purpose of the Value Chain is to deliver product at maximum profit to the market
Selling Season
Expected Price
Service Level Requirement
For On Time Delivery
Diminished Price
Manufacturing
Outbound Logistics and
Inventory Investment Risk
Diminished Profit due to Higher Product,
Storage Cost,
Inventory
Obsolescence and
Write-downs
Inbound Logistics
Raw
Materials &
Components Product &
Distribution
Forecasting Costs
Time In Season
Selling Season Start
75% reduction in price
Out of Season
Selling Season End
Does not include lost revenue and profit from product service and follow-on sales
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If you think “Diminished Value” is an abstract term …
…………………………………….think again!
Inventory write-off, lost sales, lost service contracts, lost tie in sales, disappointed customers, expensive restock
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Sourcing and Fulfillment decisions are often based on assuming an accurate Forecast and a Perfect Order
The Perfect Order
•Order Fill Rate 100%
•On-Time Delivery 100%
•Discount or mark-downs 10%
•100% Quality (no rejects)
•Accurate Paperwork 100%
© 2006 JPMorgan Chase and Co. All rights reserved. JPMorgan Chase Bank, N.A. Member FDIC.
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“91% of companies reported that unexpected supply chain costs were eroding their anticipated low-cost country savings”
-- New Strategies for Global Trade Management
Aberdeen Research
Top Reasons:
 Transportation (due to variability)
 Raw Materials
 Supplier Charges
 Taxes and Tariffs
 Inventory
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
3% better = 1% additional Profit Margin
 5% better = 2.5% increase in Return on Assets
 10% better = $0.50 better Earnings Per Share
— AMR Research
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 Majority of logistics departments currently monitor carriers’ websites for tracking
 Roughly one out of four companies utilizes an internally-developed tracking solution or maintains inventory visibility through their ERP solution
 Most tracking is focused on in-transit events
 Trend for increased monitoring of order acknowledgements and/or advanced shipping notices
 54% of these firms are automatically monitoring order quantities, shipment dates and order commitments
 Of companies that track 71% check shipment status at least once per day
-- A Study on Inventory Visibility
Logistics Management Magazine and Sterling Commerce, December 2008
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Why is this good business for a service provider to be in?
 The inventory visibility space is being attacked from many different angles
 ERP providers
 Pure inventory visibility software as a service (SaaS) companies
 4PL’s/3PL’s
 Global Trade Management companies
 Even Banks !!!
 Why?
 Leverage existing data flowing through systems
 Extend reach – become more “sticky” with the customer
 Economies of scale
 I/T infrastructure
 Software application logic
 Database formats
 Connections with carriers
 Provide better service to the client
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 Increased integration with supplier and customer collaboration efforts
 Demand forecasting
 Supplier inventories
 Key milestones in supplier’s supply chain for raw materials and components
 Intra-company inventories
 Vendor managed inventory
 Trend towards re-creating a vertically integrated “enterprise” through information vs. brick-and-mortar
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