Investor Presentaiton

Principles in Supply Chain Analysis & Design ☐ ☐ Building Competitive Supply Chain Capabilities Building competitive supply chain capabilities requires understanding the unique advantages of each location being considered Site location studies go deep into country risk, customs and duties, logistics costs, capabilities, and capacity For companies looking to establish trade in the Caribbean and South America, Puerto Rico enjoys significant supply chain advantages in the Caribbean ■ ☐ Country Risk: Superior rule of law, US defenses, and use of the US dollar for financial transactions virtually eliminates country risk Trade Efficiency: No customs or duties for inbound cargo from the US mainland; ample FTZ areas allow imports without immediate entry cost Geographic Advantage: Centrality to the Caribbean market means short trade routes to many other island economies Geographic Advantage: Puerto Rico is also well placed to service South American demand for North American shippers Transportation Links: Frequent sailings and adequate port capacity ensure security of supply Workforce: Specialized skills, especially in pharma and chemical production mean that Puerto Rico can support production and distribution For Puerto Rico, the challenge is finding companies that have these unique needs ☐ Competing in the broader market where these factors are less important will not be a winning strategy Instead, Puerto Rico must focus on companies that can clearly benefit from the Island's unique capabilities Competitive Requirements (Choose: 1 Superior / 1 Advantaged/2 Parity) Companies build their supply chains to create differentiated offerings and drive competitive advantage. This example shows a firm that sets different supply chain goals for each of its sales channels. SEABURY MARITIME Performance Category Channel → International Wholesale Reseller Solutions/End Users Delivery Reliability Responsiveness/Speed Flexibility Cost S P P S P A S P P P P ↑ A A Working Capital Д P P Stocking Policy Implications Concentrate on managing unreliable lead-time items; hold more safety stock Concentrate on managing long lead-time items; hold less safety stock Concentrate on managing long lead- time items; hold more safety stock Concentrate on managing unreliable lead-time items; hold more safety stock 15

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