Indiana Logistics Summit

October 19, 2005

Supply Chain Strategy & Real Estate

• Overview: Becton Dickinson - BD

• Strategic Decision Making

• Network Rationalization

• Site Criteria

• Building Design

BD – Company Overview

• Medical Technology Company serving Healthcare Institutions, Life Science Researchers, Clinical Laboratories, Industry and General Public

• $5.3 Billion Revenue (~50% North America)• 3 Divisions:

– Medical Device: Ex. Needles; Syringes; Catheters; Surgical Blades– Bioscience: Research Tools which Study Genes, Proteins & Cells– Diagnostics: Microorganism Mgm’t; Blood Collection Products

• 25,000 Employees Worldwide• 59 Manufacturing Plants Globally• U.S.A.

– 4 DC’s - 1.4mm Sq.Ft; Expanding in 2006 to 1.75mm Sq.Ft– Constructing new DC: Plainfield, IN - 653,000 sf; exp. to 970,000 sf

• NYSE: BDX

Strategic Decision Making Supply Chain – Real Estate

• Distribution Orientation…

• Planning or Reacting?– Trigger event – Service, Cost, Space,

Sudden Change in Business Requirements, Acquisition/Divestiture

– 3 – 5 year planning for growth, inventory rationalization

• Business Case over IRR hurdle• Internal Selling

Network Design

• Network Design is a Balance– Service requirements - (cycle time, order fill, “last mile”)

– Total Cost to Serve - (Distribution, Transportation & Inventory Carry Cost – Safety Stock)

– Risk

• Optimized Network = Optimizing Constraints– Optimal # of DC’s with sufficient capacity in Optimal

geographic locations with Optimal Transportation & Inventory Costs which will meet/exceed Customer Expectations

Location Selection – Key Drivers

• Location - driven in general by optimization of transportation costs– Centers of Gravity: Manufacturing & Customers

• Key Factors to selecting one City over another:– Existing Operations – Incumbent factor– Existing educated labor base within community– Transportation Equipment Availability– State, County & Local tax & training incentives– Availability of Investment Grade Land– Sophistication of Local Government concerning

planning & efficient, ‘rules based’ decision making. – Supportive, Responsible & Seasoned

Building Design

• Key Factors, Changes– Building Height – 40’ clear - MHE– Velocity vs. Storage Density– T5 motion lighting– Climate Control – reinforced roof– Security built into site layout– ESFR sprinklers to NFPA standard– Building to FM standard