A&A Penske LTEQ Center site visit 11-2002

Penske Logistics Integrates Systems and People for

Top-Notch Transportation Management Solutions

Penske Logistics Technology, Engineering and Quality Center

Cleveland, Ohio USA

November 13, 2002

Evan Armstrong

Key Personnel:

Joseph Gallick, Senior Vice President of Sales

Chuck Papa, Director of Information Technology

Jack Straka, Director of Systems Development

Amy Ilyes, General Manger of Logistics Engineering

Kevin Lamanna, Project Manager Engineering Sales

Michele Mitch, Logistics Product Marketing Manager

Building upon its roots in truck leasing and dedicated contract carriage, Penske Logistics has grown to be a top 3PL and Lead Logistics Provider. Penske boasts net revenues in excess of $1 billion, more than 11,000 employees worldwide, and has solid earnings. Growth has come through a combination of technological improvements and increased value-added transportation services. The impact of these improvements has been reflected in Penske’s growth with existing customers. In 2001, approximately 70% of its new business came from providing additional services to existing customers.

Penske’s strategy focuses on optimizing transportation networks to reduce customer costs, improve service levels, and increase supply chain visibility. The backbone infrastructure includes integrated proprietary and purchased supply chain systems that result in a unique and powerful I.T. solution. Its staff of 280 at the technology center in Cleveland includes 118 systems development people, 55 logistics engineers and 40 systems implementation/integration personnel.

Penske has long been a beta test site for i2’s transportation management software. They have successfully integrated i2’s transportation manager and optimizer with their proprietary logistics management system (LMS) to efficiently optimize supply networks under the Penske operating model. This model usually starts with Penske managing a dedicated fleet for a customer and uses the systems to optimize the transportation by consolidating smaller shipments for inclusion on dedicated truck routes where possible, or for tender to contract carriers if the cost savings is greater. By including dedicated contract carriage into the carrier selection process it provides customers with greater fleet utilization and cost savings and gives Penske a unique systems offering.

Further systems capabilities come from integration of street-level routing routines, customer ERP systems, EDI, warehouse management systems, Qualcomm satellite tracking for dedicated units, and handheld PDA use by drivers for real-time proofs of delivery. All order status information is made available to customers via the internet through Penske’s web based Supply Chain Window inquiry tool.

This technology backbone and underlying data warehouse drives extensive reporting and order management functionality and has been instrumental to Penske’s growth with highly service sensitive customers in automotive, durable goods manufacturing, and computers and electronics. Its customer list includes DaimlerChrysler, Ford, GE Aircraft Engine, Panasonic, and Whirlpool.

As Penske moves forward as a true transportation network manager, we anticipate seeing continued international growth and greater customer reliance on Penske to manage total supply chains as a lead logistics provider.

For detailed information on Penske’s Ford Nirvana operation, see Dick’s write-up at http://www.3plogistics.com/penske_site_visit.htm.

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