Publication Overview Supply Chain Management

Publication Overview

EBITA

CHFm -3.5 7.2 21.9 28.6 50.1 50 40 30 20 10 0

Net income

CHFm -3.9 2.2 13.2 22.1 31.2 30 25 20 15 10 5 0

Orders received Earnings per share (after share split August 1997)

CHFm 272.3 435.5 420.1 557.8 727.9 CHF -1.4 0.8 4.8 8.0 11.3 700 12 600 10 500 8 400 6 Edited by Swisslog Management AG, Buchs/Aarau 300 4 Supply Chain 200 2 Visual design Erdmann Design AG, Brugg 100 0 Concept and Text Haussmann, Weber-Thedy Corporate & Financial Communications, Zurich Management Net sales Employees at year end Photography Geri Krischker, Baden Lithography/Printing Schwabe & Co. AG, Basel/Muttenz 1999 Annual Report CHFm 255.6 388.4 474.9 551.0 722.5 1121 1323 1709 2063 3507 700 3500 600 3000 The Swisslog 1999 Annual Report comprises 500 2500 400 2000 two parts: the report on activities and the 300 1500 200 1000 financial overview. The annual report is 100 500 1999 Annual Report 1999 published in German and English. The German 95 96 97 98 99 95 96 97 98 99 version is binding.

Swisslog Holding AG, Webereiweg 3, CH-5033 Buchs/Aarau, Phone +41 62 837 95 37, Fax +41 62 837 95 10, www.swisslog.com Swisslog Mission 1999 – Highlights Africa Americas Australia Asia

South Africa Uruguay Canada Australia China The Supply Chain Excellence Partner January August Trans-Tele (PTY) LTD Corob S.A. Color Engineering Translogic Limited Corob Ltd. Corob Ltd. Swisslog signs software support contracts with Cathay Pacific Swisslog takes over the worldwide light conveyor system Citrus Street Industrial Park C.P. 11600, Cardal 3092 #7-1200 Aerowood Drive Branch office Room 403, 4/F Printing House 6 Swisslog is an international company offering Supply Chain Excellence to its Catering (CPC) and with the Hangzhou Cigarette Factory. activities of Thyssen Krupp Industries GmbH. Honeydew Unit No 4, RDU-Montevideo Mississauga, Ontario AUS-Melbourne Dupple St. Central Hong Kong clients through comprehensive IT-controlled information and material flow February September P.O. Box 1334 Phone +598 2 487 0732 L4W 2S7 Canada Phone +61 3 9331 7897 Shau Kai Wan, Hong Kong solutions. Swisslog’s activities cover the entire spectrum of Supply Chain Exe- Swisslog receives two major orders from BMW/Hams Hall, Swisslog hands over a new distribution system to Allied SA-North Riding 2162 Fax +598 2 487 0736 Phone +1 905 629 2400 Fax +61 3 9331 7930 Phone +852 2 557 8108 cution for today’s economy. The aim is to improve its clients’ productivity Germany, for automated guided vehicle (AGV) systems and Bakeries in the UK. Phone +27 11 7 94 41 36 Fax +1 905 629 2799 Fax +852 2 556 7160 and services and at the same time minimize their logistics costs and tied-up logistics stores. October Fax +27 11 7 94 42 56 capital. March Swisslog in collaboration with Professor Richard Thornton USA Digitron Logistics Pty. Ltd. Swisslog supplies two hospitals in Singapore with a total of develops MagneTrak, a worldwide innovation in the field Corob North America Inc. 30, Cowper Street, Level 1 India Based on their expertise in knowledge management, software and system inte- 33 automated guided vehicle (AGV) systems, 13 rail vehicle of supply chain systems. 13315-G Carowinds Boulevard AUS-Parramatta NSW 2150 Corob India Pvt. Ltd. gration, the Swisslog Industry Practice Groups (IPGs) plan and realize industry- systems and 120 pneumatic tube stations. November Charlotte, NC 28273 USA Phone +61 2 9895 1000 Warden House, 1st Floor specific Supply Chain Solutions for their clients. Proactive support through April Swisslog installs a pneumatic tube system and an Phone +1 704 588 8408 Fax +61 2 9895 1095 Sir P.M. Road, consulting and service optimizes the performance of each individual logistics Swisslog implements a successful e-commerce startup for electric track vehicle system at the Mayo Clinic, Rochester, Fax +1 704 588 8471 Fort Mumbai 400 001 system throughout its operational lifetime. a European large-scale fresh food distributor. Minnesota. Phone +91 22 287 2295 May December Fax +91 22 287 3475 Continuous development of Supply Chain Software, Supply Chain Solutions and Swisslog signs a comprehensive support contract with Swisslog‘s upgrades for the millennium changeover see all Munck Automation Technology, Supply Chain Systems as well as strategic alliances have enabled Swisslog to Woolworths Queensland Properties (QP), Australia, for the Swisslog customers safely into the year 2000. Inc. Malaysia provide Internet fulfillment solutions for all types of online businesses. Swisslog complete technical operation of distribution centres 161 Enterprise Drive Digitron Logistic Systems is well positioned to explore the new market opportunities and demands arising QP 1 & 2 set up by Swisslog, the only ones of their type in Newport News, VI 23603 USA Sdn. Bhd. from emerging e-business. the world. Phone +1 757 887 80 80 54-3, 2nd Floor, Jalan USJ 9/5P June Fax +1 757 887 55 88 MAL-47620 UEP Subang Jaya, Headquartered in Buchs/Aarau, Switzerland, Swisslog currently employs 3,507 Swisslog develops comprehensive Internet fulfillment solu- Selangor people in 22 countries. The parent company, Swisslog Holding AG, is listed tions for booming online businesses. Phone +60 3 724 4 790 on the Swiss Exchange SWX. Swisslog initiates the Management Potential Program (MPP). Swisslog America Inc. Fax +60 3 724 5 790 July 9 East Loockerman Street Swisslog supplies an extensive transport system linking City of Dover, Transnorm System Sdn. Bhd. numerous medical supply centers for the Mayo Clinic in Delaware 19901 USA Lot Plo 28 Kawasan Perindustrian Rochester, Minnesota. Phone +1 303 371 7770 Kluang, 4 1/2 Miles Jalan Mersing Fax +1 303 373 7870 MAL-86000 Kluang/Johore Phone +60 7787 9990 Fax +60 7787 9966 Translogic Corp. 10825 East 47th Avenue Singapore Denver, CO 80239 USA Digitron Logistic Systems Pte. Phone +1 303 371 77 70 Ltd. Fax +1 303 373 78 70 215G Upper Thomson Road Singapore 574349 Phone +65 453 0192 Transnorm System Inc. Fax +65 453 6018 1906 South Great Southwest Parkway Grand Prairie, TX 75051 USA Telelift Automation Pte. Ltd. Phone +1 972 606 0303 15 Little Road # 05-01 Fax +1 972 606 0766 Singapore 526988 Phone +65 280 06 00 Fax +65 286 81 00 2 Letter to Shareholders 26 Best Healthcare Practices

6 Swisslog Offering 30 Corob – Colorful Supply Chain Revolution 8 Internet Fulfillment Solutions – Powered by Swisslog 34 MagneTrak

14 Supply Chain Consulting 38 24-7 – There when needed

18 Swisslog Creates Intellectual 44 Investor Relations Capital 48 Organization 22 Allied Bakeries – Bread for Britain 50 Addresses Fazer – A Plenitude of Bread Contents and Pastries Dear Shareholder

The year 1999 was marked with continued growth and success for Swisslog. Enhancing its position as a leading provider of supply chain solutions, Swisslog showed excellent performance in all business segments and in its target markets of North America and Europe. As in previous years, Swisslog recorded significant growth rates in both sales and earnings. Orders received rose by 30.5% over the previous year to CHF 727.9 million and net sales increased by 31.1% to CHF 722.5 million. Earnings before interest, taxes and goodwill amortization (EBITA) reached CHF 50.1 million, up 75.2% over 1998. Net income grew 41.2% to CHF 31.2 million. The Swisslog Software division was transformed into an important profit contributor with the highest growth of all business segments. Through its existing core competence complemented by selected alliances and acquisitions, Swisslog is strategically well positioned to provide fully integrated Internet fulfillment solutions. 2…3

Fast Growth and Improved Profitability

Swisslog grew steadily in 1999, continuing the trend of previous years. It has thus strongly secured its position as a leading international group specializing in supply chain solutions. Net sales totaled CHF 722.5 million, up 31.1% over the 1998 figure of CHF 551.0 million.

Profit generated from operations outpaced the already important increase in net sales. Earnings before interest, taxes and goodwill amortization (EBITA) reached CHF 50.1 million, up 75.2% on the 1998 result. Overall Swisslog achieved a 41.2% increase in net income to CHF 31.2 million and an Earnings Per Share (EPS) before goodwill of CHF 13.7 up 55.7% from CHF 8.8 in 1998.

Overall Swisslog experienced internal growth of 4.8%. Results by segment show that major internal growth was generated by Supply Chain Software and Supply Chain Solutions. Supply Chain Software posted significant gains, transforming this segment from a loss-maker to the most profitable. The Supply Chain Systems & Products segment experienced growth of 58.2% in net sales mainly based on acquisitions.

Global Leadership Internet Fulfillment Software

In 1999, Swisslog continued to develop its global image as an With Europe’s online retail market in 1999 equaling euro international supply chain solutions provider with a unique and 3.5 billion, industry experts currently estimate the development unified corporate design. Aiming to secure future success of this market to euro 9 billion in 2000 and euro 45 billion in through acquisitions and alliances, Swisslog bought the Light 2002. Such growth should be harnessed, but simply getting Conveyor Systems of Thyssen Krupp Industries GmbH in August online is not enough. While providing Internet access is impor- 1999. The acquisition of Thyssen Krupp’s 800 employees and tant, fulfilling customers’ expectations has become an absolute diverse client base in healthcare, banking, libraries, administra- prerequisite for any player looking to secure a leading role in tion and the electronics industry gave a significant boost to online business, be it business-to-consumer (b2c) or business- Swisslog’s sales and customer support. Swisslog is now the to-business (b2b), with the majority of growth expected in the leader in the fast-growing global healthcare automation market. latter segment.

Last year also saw the initiation of a deliberate effort to serve fast-growing industries, such as the electronics/telecommunica- tions industry, where the importance of optimized global supply chain end-to-end solutions is rapidly increasing. During the first quarter of 2000, Swisslog formed an alliance with JOT Auto- mation Plc of Finland, the world market leader in production and assembly solutions for the electronics industry. This cooperation enables Swisslog to provide optimal supply chain solutions through efficient logistics management supported by advanced production automation. An Internet penetration rate in Europe of 12% last year is ex- functionality and rapid deployment solutions thereby reinforc- pected to reach 55% by 2003. With every second European soon ing an important link in the e-commerce cyberchain stretching to be online, the rapid expansion of the new economy and from the mouse to the house. the need to provide flawless fulfillment and customer service has inspired Swisslog to become a provider of comprehensive Swisslog has now developed or acquired the competence nec- Internet fulfillment solutions. With a high rate of dissatisfied essary for every phase of I-fulfillment. Its ability to provide customers (up to 50% according to some estimates), the winners excellent front-end service, order entry via a webstore, order in the battle for online market share will be those businesses processing, warehouse management and delivery management that successfully and consistently deliver a satisfying end- can now all be carried out under the guidance of one consis- to-end purchase experience. Throughout 1999, Swisslog aimed tent solution provider, Swisslog. to do just that by developing a comprehensive strategy of how to optimize and complement its established expertise in supply The traditional buy-sell transaction is eliminated and a new chain solutions to create new Internet fulfillment solutions element of customer tracing and tracking is introduced. A cus- (ifs). tomer may follow an order during the entire order fulfillment process with the click of a mouse. Swisslog plans further By building on its core competence, Swisslog has been able to acquisitions and alliances during this year in order to comple- combine IT knowledge and efficient material flow capabilities, ment the progress made during 1999 towards developing critical factors to success in the digital economy. In its quest to comprehensive e-business software solutions. build a complete Internet fulfillment solution to meet the growing demands of e-commerce, last year Swisslog started an intensive global search for qualified partners. One such partner, Lifetime Partnership INTERNOLIX AG of Germany, a leading supplier of shop systems, will provide valuable support to the webstore front-end of With today’s trend towards consolidation and concentration Swisslog’s I-fulfillment package. Swisslog has confirmed its com- on core competence, Swisslog has been actively developing its mitment to its new partner by investing in INTERNOLIX. Customer Support services. By providing excellent support, Swisslog alleviates its customers’ service and maintenance This innovative approach has continued in 2000, thereby po- responsibilities and allows them to direct their expertise and sitioning Swisslog as an early leader in the race to fill a gap in efforts to specialized areas where they have a competitive the e-business market. The recent acquisition of 100% of the advantage and can achieve cost savings through economies of equity in California-based Sonica Software Corporation, a lead- scale. As a result of this new focus, Swisslog Customer Support ing innovator of warehousing and distribution software, is an underwent major innovations in 1999. important step to achieving this goal. Sonica Software empha- sizes true product orientation as opposed to the ”package”. During 1999, Swisslog established the Global Information This product strategy has allowed them to provide industry-lead- Network and Expert Help Desk available 24 hours a day, 7 days ing solutions to customers in an effort for them to continually a week (24-7) to guarantee optimal response time by phone, improve their supply chain strategies. Internet or locally. Swisslog’s global network of Customer Support specialists, almost 800 in 22 countries, enables Swisslog As the first Warehouse Management Software (WMS) vendor to maintain a local presence and closeness to its customers, to support NT, Unix and Linux, Sonica has demonstrated its thereby keeping its promise to remain a lifetime partner provid- vision to embrace the future more rapidly than its competitors. ing individual solutions to its customers throughout the entire The acquisition brings together Sonica’s industry-leading life of the supply chain system. software which offers unparalleled configurability and scalability with Swisslog’s established supply chain software and world Realizing that the trend to outsource many tasks in the area class sales to offer a unique I-fulfillment solution. As a team, of supply chain solutions management or even to delegate they are able to deliver fully integrated e-commerce fulfillment responsibility for customers’ entire logistics departments is a 4…5

fast-growing global business, Swisslog is ideally positioned with performance particularly in the Swisslog Supply Chain Software its global presence and broad software and engineering com- segment. The Group plans strong internal growth for 2000. petence to take a leading role in offering the management The medium-term profitability target is set at an EBITA of complete supply chains. As a result, a dedicated management of 10% of sales. team was established at the beginning of 2000 to exploit this potential. The first international outsourcing contracts were signed in 1999, and the first long-term contract in the US Dividend Proposal was signed at the beginning of 2000. The Board of Directors will propose to the Annual General Meeting a dividend of CHF 2.50 per registered share. Human Resources Swisslog achieved sound improvements in 1999. By putting In this area, Swisslog also made great strides during 1999. With customers first and through their dedication and flexibility, a staff of over 3,500 as at 31 December 1999, personnel has Swisslog’s highly knowledgeable employees provided the basis increased 70% year-on-year thereby enabling the Group to carry for the Group’s success. We would like to extend our sincere out its expansion plans and to capture the growing market for thanks to them for rising to the challenges posed by today’s I-fulfillment. fast-paced and demanding international environment. We also wish to express our gratitude to you, the shareholder for your To deal with this increase and manage the personnel in an continued interest and confidence in Swisslog during 1999. optimal manner, substantial investments were made. An internal management program, Management Potential Program (MPP), For the Board of Directors was initiated to instruct upcoming managers on the latest management methods and to work on defined Swisslog projects which are then directly inserted into the Group’s decision-making process.

Remaining true to Swisslog’s Customer Support approach of providing complete service throughout the lifetime of a customer’s logistics system, an effort is made on the HR level to attract more young open-minded recruits who will adapt easily to the fast-paced changes taking place in supply chain solutions and be able to foresee and satisfy each customer’s needs.

Outlook for the future Truls D. Berg Juhani Anttila Chairman Delegate of the Board Swisslog expects further earnings-driven growth in 2000. The Supply Chain Systems & Products segment has launched several new innovative products adding to sales and profitability, particularly in the US, due to enhanced R&D activities which doubled during 1999. Moreover, the Group is focusing on I-fulfillment solutions and the fast-growing electronics and healthcare provider industries. The creation of a complete Inter- net fulfillment software solution which was launched in March 2000 will be a major driver for improved growth and Buchs/Aarau, Switzerland April 2000 e-Commerce

Electronics

Distribution

Healthcare Swisslog Offering

Automotive

Pharma

Comprehensive Supply Chain Solutions: Beverage Supply Chain Consulting System Design and Realization Supply Chain Software Internet Fulfillment Food Transport Systems Storage Systems Handling Systems

Colorant Dispensing Customer Support Modernization

Paper & Printing 6…7

Supply Chain Consulting – Financial analysis of logistics processes – benchmarking – Logistics network studies – Logistics consulting Transport Systems – Choosing the right degree of – Automated Guided Vehicles (AGVs) automation – Pallet conveyors – Concept and feasibility studies – Unit load conveyors – System Design – Electric monorails Customer Support – Computer simulation – Power & Free – Preventive maintenance – 24-hour hotline – Corrective support on site System Design and Realization Storage Systems – Remote software support – Data analysis – Automated high-bay warehouses – Full technical operations – Concept and detailed planning – Automated bin and tote stores – Training of staff – Engineering and specifications – Refrigerated and freezer stores – Spare parts management – Computer simulation – Automated buffer stores – Continuous consultancy – System integration – Automatic stacker cranes – Project management Modernization Handling Systems – Analysis of existing systems Supply Chain Software – Robotics – Consultancy and realization – ERP consultancy – Automated order picking – Software upgrades – SAP consultancy – Manual order picking – Minimal disruption of operations – Warehouse management software – Single- and multi-stage picking – Visualization and monitoring – Sorting Systems software – Goods-to-man solutions – Material flow control software – Man-to-goods solutions – Device control systems – Forklift supervisory systems

Internet Fulfillment – Fulfillment consultancy – Internet shopping system – Order management – Warehouse management – Delivery management – Order tracking

8…9

Internet Fulfillment Solutions – Powered by Swisslog

The Internet revolution calls for new distribution concepts. “From the mouse to the house” only works if customers get their products physically delivered at the right time in the right place. To put it simply: online businesses, whether operated by a dot.com startup or a well-established multinational firm, will not succeed commercially and report earnings until they are able to physically deliver on time at competitive costs. Internet Fulfillment Solutions – Powered by Swisslog

Digital Demand Chain - Physical Supply Chain

In today’s economy business transactions take To meet the increasing demand of e-business, place anytime, anyplace. Order execution and Swisslog decided in spring 1999 to build, offer delivery must be paperless, fast, precise and and service complete I-fulfillment solutions transparent. This requires seamless information from a single source. The unique combination flow and intelligently automated logistics of Swisslog’s proven supply chain software, systems. During a year when Swisslog continued knowledge and efficient material handling to increase both sales and earnings, its sights expertise is the critical factor to success. were also focused on the future options in Creating this combination and drawing on other online business and how to adapt to the quick- forward-thinking companies with complemen- paced changes brought on by the technological tary knowledge and experience worldwide to advancement at the heart of today’s Internet form global alliances was an important boom. objective for Swisslog during 1999. The results of this advanced planning have already begun to appear and even more benefits from Swisslog’s Internet initiatives will be visible during 2000. 10…11

Order Entry Order Warehouse Delivery Management Management Management

Tracking ent llm lfi Fu

automatic

Warehouse A Consumer

manual b2c

b2b manual

Business Warehouse B

automatic

g kin rac ry T Delive

TM Delivery Execution ifs – powered by swisslog Swisslog’s I-Fulfillment Solutions Swisslog’s Internet Order Tracking

Whatever the business, business-to-business Any time during the order fulfillment process, (b2b) or business-to-consumer (b2c), the Swisslog clients are able to offer their Internet supply chain starts with the webstore. e-business customers transparent order This important link in Swisslog’s cyberchain is tracking. The recipient has constant access to reinforced by its strategic partner INTERNOLIX. the current status of an order with the simple Whether it is private shopping at home, online click of a mouse - via the Internet. ordering of spare parts or inter-company replenishment, the webstore makes Swisslog customers’ products accessible online. The Swisslog’s I-Fulfillment Solutions Software webstore is directly integrated into Swisslog’s I-fulfillment software which also features an After much visionary thinking, preparatory open, configurable interface to any Enterprise planning and intensive combined development Resource Planning (ERP) system. efforts by the various competence centers during the course of 1999, today Swisslog Once the order is in the system, based on the Software is ready to launch its new I-fulfillment availability of the ordered product, Swisslog’s solutions (ifs) software, thereby further virtual order management software transfers positioning the Group as the leading provider of the order to the closest distribution center information and material handling solutions for thereby minimizing delivery costs. the burgeoning global e-business and I-fulfillment markets. Today Swisslog is in a At the chosen distribution center the order is position to offer complete solutions to startup picked and packed. Swisslog’s IT-controlled dot.coms as well as to long-established material flow systems reduce order processing companies irrespective of the business they are times as well as rates of error. Next the in. The Group’s solutions can be implemented in Swisslog delivery management software a manual distribution environment and then determines the optimum transport channel grow with them and their partners to support based on the time remaining to achieve the the most sophisticated and automated lowest distribution cost for on-time delivery. distribution operations. Final order delivery to the customer is then executed by leading transportation companies. 12…13

TM ifs – powered by swisslog

While competitors are offering only parts of the Swisslog-ifs is built on the solid architecture package, for example either software or of the existing WMS and provides all of the material handling systems, Swisslog proposes key functional components for this market the only available global solution whereby segment from order reception, inventory and customers get the software, integration and location management, to picking/packing/ support necessary to implement and maintain shipping including integrated order tracking. I-fulfillment solutions from the initial entering In addition to the functional components, of the order to its arrival at the delivery Swisslog has designed a standard Application destination. Programming Interface (API) for communi- cating with web-based order entry systems Ahead of the competition, Swisslog foresaw that includes “available-to-promise” the missing element in online business, capabilities, real-time inventory and order I-fulfillment, and combined its expertise in sup- status updates as well as parcel carrier ply chain software, systems and solutions with confirmation, all very important features for complementary global providers of supply delivering high quality, reliable results in the chain services to construct an extended cyber- e-commerce world. chain to provide today’s b2bs and b2cs with dependable cost-effective Internet solutions. Swisslog-ifs is extremely scalable and can grow Swisslog fulfills the promises the Internet easily as its customers’ e-businesses grow. makes. In many situations, Swisslog-ifs will be the inventory engine supporting the business. In the end, the Internet economy is all about customer satisfaction and service, and Swisslog-ifs is designed to support superior customer service and relationships.

14…15

Supply Chain Consulting

Boosting Sales with Swisslog Supply Chain Solutions

The Internet revolution is opening up Supply Chain Consulting has developed totally new ways of selling, marketing and I-fulfillment models providing appropriate delivering goods. This means that all market solutions for products and business models players, end consumers and companies of the most disparate kind. An I-fulfillment alike, can order any article just by clicking solution for Swisslog customers is valuable if the mouse of a PC. From that point until it reduces costs, increases the quality of the time the goods are actually delivered, service and as a result boosts sales. the supply chain must fulfill very different For Swisslog Supply Chain Consulting, this requirements depending on the type of means coming up with answers to the cen- product, order or customer. Working in tral issues of customized order processing. cooperation with its customers Swisslog Objectives… Food shopping from home: Global player’s supply chain the I-fulfillment supply chain Multinational companies with production faci- As it stands now, retailers leave the entire lities worldwide and central distribution have delivery process to their customers. End con- totally different expectations from their supply sumers have to pick out the articles on their chain when it comes to ensuring optimum shopping list at the shop, put them onto the delivery to their customers. Most of these com- conveyor belt to be checked out, and then load panies produce high-end durable consumer Short lead times them back into the trolley. Once they have goods such as PCs, television sets, video record- paid for their purchases they have to load them ers and other electronic equipment. Production into the car, drive home and put them away in of the goods is initiated by the customer with the proper storage places. This costs time the click of a mouse and is subdivided into and money and can be a source of stress. Con- individual elements that are manufactured at sequently there is a burgeoning demand for different production plants. The individual service providers to perform these functions. elements are then assembled into the required end product and finished at central distribution Low inventories Swisslog has responded to this demand by centers from which they are delivered to the developing a model that makes provisions for end customer by parcel service. the short time span between receipt of the order and delivery (lead time) and for the At the very instant that the customer places narrow delivery window. With this model, cus- an order, local customer support is activated in tomers send their shopping list to the supplier order to be available at the precise time of in question from their home PC, mobile tele- delivery to install the product. The same cus- phone or from work. From there each individual tomer support provides the customer with after Efficient processes order goes into an online business module sales and maintenance service during the entire where the articles are collected and delivered life of the product. directly to the customer. One of the main challenges to this system is the problem of the extremely narrow delivery window. Customers Third party distributor’s supply chain do not have time to wait several hours for their shopping. On the other hand, just-in-time deliv- According to this model, customers electron- ery to the front door would make this service ically send their order directly to their supplier’s High service levels too cost-intensive. A cost-effective solution is server. The supplier makes up the order via the to provide personal goods lockers, known as particular product suppliers using either its own drop points, with temperature regulation for products or those of a third party. From the perishable items. The shopping baskets are left product suppliers, the delivery goes directly to at the customers’ drop-off points until they the Fulfillment Distribution Center of the have time to collect them. supplier handling the order for direct dispatch to the customer. 16…17

Supply Chain Consulting

However varied the requirements for different Internet Fulfillment Solutions kinds of supply chains, Swisslog Supply Chain Consultants will find the best solution for each • I-fulfillment consulting type. Swisslog develops and implements supply • I-fulfillment system planning chain systems that increase performance while • Web-based input system for online orders reducing costs and thus increase customer • Web-based solutions for e-commerce satisfaction. Swisslog offers modular service order processing concepts to meet any customer’s wishes, from • Web-based transport visualization systems Data analysis individual services and consulting to acting • Automatic storage systems as the prime contractor for international distri- • Automatic transport systems bution networks. Such solutions are available • Manual / automatic sorting systems for both the business-to-business (b2b) and • Manual / automatic order picking systems business-to-consumer (b2c) sectors.

Supply Chain Consulting Simulation model • Financial analysis of logistics processes – benchmarking • Planning of logistics networks • Logistics consulting • Definition of the optimum degree of automation • Concept and feasibility studies • System design Building cross section • Computer simulation

Comprehensive Supply Chain Solutions

• I-fulfillment technology • System design and realization • Transport systems Ergonomic analysis • Storage systems • Handling systems • Integrated customer support • Modernization and upgrades

18…19

Swisslog Creates Intellectual Capital

During 1999, the number of people employed Consequently, in 1999 the Swisslog Group worldwide by the Swisslog Group rose by started a large number of continued training 1,444 to 3,507. This is equivalent to a programs for employees. Under this policy growth rate of 70% and is attributable to Swisslog offers employees a variety of strategic acquisitions as well as to large- opportunities for further individual develop- scale hiring. This means that Swisslog has ment and for involvement in the imple- now reached the critical mass at which mentation of Swisslog‘s strategic goals. selective personnel development becomes necessary and possible. Swisslog managers and lecturers from the Uni- versity of St. Gallen (HSG) support and super- vise the participants according to a dual training philosophy involving project activities and training courses. Four teams are currently working at the project level, each specializing in a particular topic: e-commerce/web sales, customer retention, supply chain management and corporate culture. They are also responsible for management functions within their project above and beyond the specific requirements of their normal field of expertise. Technical aspects aside, the focus of these programs is on promoting mutual respect and The teams efficiently carry out customer, developing shared values for employees from research and development projects, focusing on all areas and different cultures. This will create the project’s mission. Those taking part in this the necessary conditions for the synergies that exercise widen their expertise in particular will make Swisslog one of the world’s leading areas and in different management functions. suppliers of supply chain and I-fulfillment At the same time they improve their social and solutions. communication skills through working in diverse teams.

MPP – Management Potential Program HSG lecturers and Swisslog mentors hold regular workshops devoted to the key issues of Working in partnership with the University of corporate management. These workshop mod- St. Gallen (HSG), last year Swisslog devised a ules are also open to interested parties outside program for tailored training logistics. In June the immediate group of participants and thus 1999 about 50 employees took part in a pilot yield benefits far beyond the actual circle of project for the Management Potential Program Swisslog participants. The MPP is based on a (MPP) that officially began in November 1999. transparent and dynamic training concept. Employees from all different areas of Swisslog Possible project subjects from additional areas are taking part in this project. are already being prepared.

Swisslog Creates Intellectual Capital 20…21

The combination of theoretical training and The four strategic topics practical implementation in real-life situations results in an above-average success rate which e-Commerce/ is already noticeable in individual employees. Web Sales The practical cooperation between Swisslog mentors and university lecturers and the open, success-driven sharing of information between all participants creates synergies on a large scale. The object is to support and advise the participants and to constantly challenge them, Customer Retention thereby optimizing the program results.

The individual project groups regularly present their findings to the Swisslog Management Committee. Mentors and project participants together incorporate the results into Swisslog‘s management processes. Supply Chain Management

Corporate Culture

Finding solutions – taking responsibility

Transparency and mutual support are the key factors to successful cooperation among the teams. Today Swisslog can already boast an international corporate culture. The cross- divisional Industry Practice Groups (IPGs) that have been operating successfully for years combine technical applications with the industry-specific know-how that has made Swisslog a leading company for supply chain solutions.

22…23

Fresh and varied - that’s how consumers The key to this service is Allied Bakeries’ like their bread. When it comes to freshness, centrally regulated supply chain system, the employees of Allied Bakeries produce and designed, developed and installed over the distribute bread and other baked goods last two years by Swisslog for the produc- around the clock six days a week throughout tion plants in Cardiff. It enables sustained Great Britain. For variety, Allied Bakeries growth in service levels and at the same offers its customers some 300 different time reduces costs. types of bakery products. And thanks to the revolutionary Swisslog order picking and distribution system, all of the products are available oven fresh and in the quantities required to Allied Bakeries’ customers in the UK.

Allied Bakeries – Bread for Britain

24…25 Fazer – A Plenitude of Bread and Pastries

The same system used by Allied Bakeries in the accustomed to, Fazer opted for Swisslog’s fully UK also enables Fazer Bakeries in Finland to automatic MultiPick system. Developed by achieve optimal order picking and distribution. Swisslog, this system was carefully tailored to In 1999, Swisslog thoroughly modernized the meet Fazer’s special requirements. Computer control system used in Fazer’s sorting and simulations tested the results and ensured an distributing operations. optimal, risk-free startup.

The first shift in the company’s baking program starts on Sunday morning. From then on, some Fazer Bakeries Ltd. 60 delivery trucks begin distributing Fazer products to the firm’s customers. Due to its • Member of the Karl Fazer Group three-shift operating schedule, many customers • Major market: metropolitan Helsinki receive orders up to three times daily. The • Approximately 500 employees product mix changes depending on which day in the firm’s bakery operations of the week or what time of the day. The ship- • Including some 350 bakers ping department sorts and dispatches roughly • Bread, baked goods, traditional pastries 20,000 crates of baked products daily. The last • About 30% of Finland’s bread market deliveries are made at noon Saturday. Although • Nearly 17,000 tons of bread annually most of the firm’s products are sold in metro- • About 21,000 tons of baked goods yearly politan Helsinki, several traditional products, • Approximately 20,000-30,000 crates of such as Fazer’s popular and unsurpassed berry baked goods delivered daily pies, are marketed throughout Finland. • Deliveries throughout Finland • More than 200 different items MultiPick, unrivalled anywhere in the world, in product assortment uses a host to record the type and quantity of the products required and the sequence of deliveries. On the basis of this information, Advantages for Fazer Bakeries Ltd. MultiPick collects the crates of bread, cakes and pastries temporarily stacked on the floor in • Guaranteed quality and freshness reverse order. Using this last-in-first-out • Continuous distribution guaranteed to the system, the consignments can be loaded onto customer up to three times a day the delivery trucks in the correct order. This • Rich variety of products offered daily type of order picking saves time - crates need • Distribution in metropolitan not be stored first on racks. It is efficient - the and peripheral areas number of operating steps is reduced. And it is • Accurate order picking and sorting hygienic - after the last delivery, floors can be • Last-minute order changes possible easily cleaned. There are no unnecessary storage • Saves time and space racks or equipment to collect dirt. • Efficient and hygienic • Fazer well-positioned to grow Fazer’s success is based primarily on the fresh- with Finnish baked goods market ness of its products. With the steady decline in Finnish home-baked bread and pastries, the need for prepared bakery products is on the rise which means enormous growth potential for the baked goods market in Finland. In order to meet the greater demand for bread and pastries having the freshness and quality Finns are

26…27

Best Healthcare Practices

Today’s healthcare organizations face increasing costs and demands for greater efficiency in patient care. The application of automated material handling solutions using pneumatic tube systems, track vehicle systems and automated guided vehicles has enhanced the delivery of patient care and relieved professional staff from manual transport duties.

Swisslog’s Healthcare Industry Practice Group studies the material transport needs of each individual facility. Specialists plan, simulate and design each system solution for optimum performance while highly skilled project management, installation and service personnel ensure timely completion and reliable system operation. To improve productivity and response time Mayo Clinic Benefits when moving vital materials, Swisslog’s from Automated Solutions pneumatic tube systems are designed to transport light-load unit materials at high speeds. More than a decade ago, the Mayo Clinic in For larger and batch deliveries of up to 15 kg Minnesota chose to complement its pneumatic many hospitals rely on track vehicle systems. tube system with an extensive Swisslog These systems also provide full service capabili- electric track vehicle (ETV) network. Installed in ties to all departments. Swisslog’s automated several building sites, the ETV system is a com- guided vehicles (AGVs) transport trolleys with puter-controlled network of track with rails meal trays, clean and soiled laundry, central that transports containers vertically and hori- supplies and surgical supplies. zontally, each capable of carrying 11 kilograms at a speed of 38 meters per minute.

The Mayo Clinic system transports laboratory specimens, medical records, X-rays and mail. When first installed, the system made close to 2,400 trips a day in one building alone, equivalent to the work of 17 full-time messengers. Today, another 2,500 meters of track will be installed in a new medical building. When complete, the multi-campus system will have nearly 15,240 meters of track conducting more than 20,000 transactions per day. The system is estimated to displace 200,000 hours of manual material transport time each year.

Best Healthcare Practices 28…29

Stanford University Hospital Kandang Kerbau Hospital and Changi General Hospital, Singapore In 1989, the Stanford University Hospital and Clinics underwent major renovation during Through Swisslog experts’ continuous consult- which the old pneumatic tube system was aban- ing, the Singapore Government was convinced doned and gradually replaced with a new Swiss- to implement AGV systems in two new hospital log 6-inch pneumatic tube system throughout buildings. After system simulations and refer- the 1990s. Swisslog’s project expertise enabled ence visits to Europe to study feasibility, the the complex installation of subterranean pipe Singapore Government decided to apply systems between buildings while meeting very stringent that had never before been installed in similar California earthquake construction standards. applications in that region. A worldwide comp- At the same time, Swisslog installed a 6-inch etition took place, and Swisslog was chosen as pneumatic tube system at the neighboring Lucile the preferred partner. Packard Children’s Hospital. Additionally, a pneumatic tube system for light In 1999, the two hospitals merged their systems materials and spontaneous sends was needed. while upgrading to Matrix, the latest generation The Kandang Kerbau Hospital was planning a of pneumatic tube system. Today, both hospitals small track vehicle system to handle medical use the system extensively for the transport of records and send supplies between the main vital materials between departments. and outpatient pharmacies. Swisslog was chosen to provide these systems as well, due to its technical expertise and its ability to supply Sophien and Hufeland Clinics, all the necessary systems under one project Weimar, Germany management. Today Kandang Kerbau and Changi General with a total of 33 AGVs, a Six months before completion, the manage- 13-station track system and over 120 pneumat- ment of this new 600-bed hospital opted for a ic tube stations take care of more than 1200 Transcar AGV solution to add to the Swisslog patients every day. pneumatic tube system already installed. To allow most small items to be sent by the carriers, a tube diameter of 160 mm was chosen with 50 stations being linked by a 2000-meter tube network. To implement the AGV, planning the flow of transport trolleys needed to be done which required a well-grounded analysis of the projected data in a hospital not yet in operation.

The client and Swisslog combined experienced project management and a motivated on-site team to turn this project into a success. Today ten Transcar vehicles start a breakfast distribution at 6 a.m., returning only for short rests at the charging positions until they can finally fully recharge their batteries at 9 p.m.

30…31

Corob – Colorful Supply Chain Revolution

With e-commerce, the acquisition of a car or a computer on the web with custom features, performance and colors is now possible. Terms like ”just-in-time” production, “tailor-made” products and “post-production customization” have become part of every- day language. In Corob’s business, the Paint Industry, this revolution is called the Tinting System and is the only logical answer to the very simple question: how can the variety of colors be substantially increased? For more than 16 years, Corob has continuously For the Tinting System some developed and provided color solutions for a new components have been included: variety of needs from points of sale at the small hardware store or major paint retailer to the • Semi-finished products (colorants and base manufacturer of customized goods, thus setting paints) to be mixed at the point of sale new standards in terms of dispensing accu- • Color cards, displays and other marketing racy, repeatability and speed. Corob’s complete tools to select the desired color range of products and services includes • Data bases with formulas to obtain the all the necessary elements to meet the needs of selected color by mixing colorants and bases an increasingly dynamic and flexible business • Distributors to dispense colorants in the base environment: automatic dispensers, shakers, paints mixers, software packages and spectrophoto- • Mixers to blend colorants and bases meters.

The advantages of a Tinting System for the From Factory to Store – Past, Present and paint manufacturer are huge and not only in Future terms of color service:

The concept behind the Corob Tinting System • Rationalization of the production area looks very easy: moving color paint production • Decrease in cost of the final product from the factory to the store. Before the • Reduction in stock (raw material and finished introduction of the Tinting System, the paint product) industry supply chain included raw material suppliers, machinery suppliers for the produc- In the US, the Tinting System has been a com- tion process and can suppliers. plete success, today providing more than 85% of colored paint at the point of sale and standing as a model to be exported all over the world.

Using a Corob system provides you with the opportunity to select a color from a video and apply it to a photo of your house or read a color and formulate it via a computer, then dispense and mix it. All this is done with Corob’s dependable accuracy, repeatability and speed. 32…33

Corob – Colorful Supply Chain Revolution

From Store to Factory – Present and Future With the Tinting During Filling concept, Corob complements the range of systems it can offer The same concept used for retail purposes can by providing the desired color paint customized also be effectively applied in a depot or a to each individual order thereby guaranteeing factory. Even when the Tinting System is ex- optimum cost and quality. tensively used, there are still some orders for colored paint that cannot pass through a store From Factory to Home – Future (mainly contractors’ orders). Still the last frontier of the Tinting System In this area, Corob has recently developed a concept has not yet been reached. Corob has complete line of solutions called Tinting During all the tools necessary to prepare orders for Filling (TDF). Relying on a modular approach colored paint online. Fully automated lines for and extensive use of automation, TDF is the processing and delivering just-in-time orders appropriate solution for all requirements in of colored paint with high productivity and terms of productivity and flexibility, granting without required minimum quantities are huge advantages such as: Internet-compatible. They offer a paint manufacturer with Corob’s TDF automated lines • Unlimited color range electronic systems which process orders the • Minimum order of one can same moment they are sent. • Reduction of product waste • Dramatic reduction of labor costs In the near future, orders will be sent directly • Just-in-time production and delivery from a home, factory or workshop through the web to the factory thereby integrating Swisslog’s I-fulfillment systems and adding a new hue to the supply chain revolution.

34…35

MagneTrak

At a trade show in Detroit, Michigan in Together they decided that the electro- 1998, a Swisslog representative met the magnetic technology being developed by Director of Business Development for MagneMotion could provide the core MagneMotion, a young high-tech company constituent of an automated transport tech- co-founded in 1996 by Professor Richard nology which would revolutionize current Thornton, a former Massachusetts Institute warehouse and process link applications. The of Technology professor who had been technology was efficient and offered many doing research in the area of linear motor alternatives to traditional transport systems. propulsion for over three decades. While having been well-received, Magne- Motion had encountered difficulty in getting potential customers to take the final step to commit to industrializing the system and bring it to market. Swisslog was willing to take that step. An Cleanliness and low maintenance costs com- agreement was made to develop a prototype bined with the previously mentioned features using MagneMotion’s linear motor propulsion also make MagneTrak extremely attractive technology and Swisslog’s reputable supply to the semiconductor and electronics industries. chain solutions.

The result is MagneTrak, the automation logis- The First Project tics response to increasing customer demand for state-of-the-art solutions. MagneMotion While creating the MagneTrak prototype, Swiss- develops the software, electronics and mechan- log was approached by a world-renowned Swiss ical components to propel, power and steer the supplier of luxury mechanical goods to help transport vehicles, and Swisslog provides the design a very demanding warehouse and trans- software necessary for the overall warehouse port system to meet its increasing needs. The management system. The two programs form a value and fragility of the product being handled completely integrated communications system: was a major concern for the Swiss manufactur- handling an order from receipt by the ware- er. Upon seeing the advantages of MagneTrak, house system to delivery at a specific location. the Swiss manufacturer readily accepted the idea. Fully aware that the new handling system MagneTrak stands out among its competitors was still in its preliminary phase, but highly due to the unique options it provides. Relying convinced of its superior performance compared entirely on linear synchronous motor propulsion, to traditional systems, the client expressed a magnetic guidance and magnetic switching, willingness to order in advance and wait for the MagneTrak has eliminated almost all moving finished product. In this way, the developer of parts and gears including the bus bar used for an innovative new technology, MagneMotion, power and data transfer thereby drastically found a partner with whom to bring the prod- improving reliability and reducing maintenance uct to market, Swisslog, and this team was requirements. Its speed and precision far exceed then able to sell the result of this partnership, that provided by traditional handling systems, MagneTrak, to a demanding and receptive and its positioning sensor capabilities allow customer. orders to be located and modified with the click of a mouse. The Nuts & Bolts (or absence thereof) of MagneTrak High Potential for e-Business and High Tech Applications MagneTrak was developed based on years of academic research carried out by Professor All of these advantages make MagneTrak Richard Thornton. This work was then applied particularly appropriate for the demands of the to develop a handling system. The sophisticated quickly expanding e-business industry. Its and complex system is able to handle a high ability to manage high numbers of individual number of diverse payloads in a quick and payloads of up to 100 kg quickly and efficiently precise manner. with real-time control and constant re-routing possibilities make MagneTrak an obvious choice for e-commerce businesses looking to deliver products in the expedient and precise manner demanded by today’s cyber consumers. 36…37

All acceleration, braking and steering is performed by electromagnetics thereby avoiding any dependence on friction or traction as well as the need for moving parts in the track or vehicle (aside from castering wheels).

The vehicle operates on a flat surface and can switch from one track to another using magnetic forces, without the need to move any part of the track or vehicle. This allows for the safe and rapid switching of vehicles when operating at high speed with short headway.

Coordination of multiple vehicles in a complex Innovation – From Professor to Provider system is achieved by dividing the track into blocks with a controller for each one. A central Richard Thornton, a former professor of Electri- control which has overall command and opti- cal Engineering at the prestigious university mizes traffic flow throughout the whole system MIT for over forty years, conducted research in serves a vital function. However, the system the areas of moving magnetic fields and elec- can operate safely even if the central control is tronics and authored more than sixty papers. completely disabled. Upon his retirement from MIT, Professor Thornton made a transition from academia to Each vehicle has a unique identification in the the private sector by applying three decades control system. This control architecture also of research to developing an automated permits immediate detection of any failure in transport technology for a market demanding the system, the shutting down of that segment, innovative alternatives to conventional material and the ability to work around it thereby avoid- handling systems. ing any shutdown or interruption in the transport of material. To do this, he co-founded MagneMotion in 1996. Their applications for automated material The joint development of two very capable handling for warehouses and distribution cen- industry players, MagneTrak, is the answer to ters and their ability to scale the systems to greater demands for security and efficiency by large and small payloads with a wide range of both traditional and e-business customers. transport needs made MagneMotion an obvious MagneTrak positions itself above other material choice for Swisslog, a leading provider of supply handling systems by increasing speed, accuracy chain solutions. and cleanliness while minimizing maintenance costs and system disruptions.

MagneTrak

38…39

24-7 – There when needed

Supply chain services do not often comprise For Swisslog customers, the most important the core competence of many companies. The advantage is that the full operating costs more software is becoming an integral part for the facility’s operation can be clearly of every supply chain solution, the stronger calculated in advance. The customer benefits the trend to outsource these tasks. In order from cost savings through economies of to free up necessary resources to concentrate scale, concentration of all resources on the on their main business areas, an increasing core business, continuous transfer of the number of Swisslog customers are making latest technology and the easing of internal the strategic decision to direct all available management’s tasks. By outsourcing supply manpower and resources to their areas of chain management, companies may then core competence. Swisslog is well positioned utilize their internal resources in the most to meet this increasing demand for out- optimal manner, cut costs in non-strategic sourcing and to completely take over the areas and take advantage of the knowledge technical operation of customers’ logistics and expertise of outside specialists. facilities. With the Customer Support (CS) market grow- Swisslog’s Customer Support philosophy of ing, Swisslog continuously invests time and putting a qualified, reliable team at the cus- resources to further develop its capacities in tomer’s disposal 24-7 is carried out by a CS this area. Its global network of Customer staff equipped with sound technical knowledge, Support specialists, almost 800 in 22 countries, communication skills and social skills. By enables Swisslog to maintain a local presence recruiting young forward-thinking employees, and closeness to its customers, thereby keeping Swisslog is then able to provide a team that is its promise to be a lifetime partner providing capable of monitoring and optimizing a logistics individual consulting and support services to system continuously throughout its entire each customer. service life.

Having abandoned the classical customer support model of reactive repair service and New Framework for Supply Chain Control advice in favor of the proactive customer care approach long ago, Swisslog endeavors to anti- Schüco, a leading German window frame com- cipate problems before they occur. The Swisslog ponent manufacturer, was experiencing customer support team provides its customers numerous problems with its logistics control with consulting and assistance around-the- system, supplied by a Swisslog competitor, and clock, starting in the planning phase and lasting dissatisfied by complicated and time-consuming throughout the lifetime of the supply chain emergency and failure restoration procedures systems. resulting from the highly specific structure of its control system. As a result, the company This method of proactive customer care is decided to look for a competent service accomplished through fault prevention and provider. maintenance of supply chain systems assured by comprehensive service 24-7. Swisslog’s Customer Support was called upon to supply the latest control systems with a An Expert Help Desk manned by a team of soft- standardized structure and program architec- ware specialists and local service technicians ture, running on a common and reliable ensures that nearly all system disturbances hardware platform. Swisslog’s scope of supply and fault reports are solved either by phone, was to include interfaces between the new Internet or locally. systems and Schüco’s host system as well as state of the art support equipment for trouble- shooting and intervention. 40…41

Operation and maintenance

The new hardware and software and the entire Implementation control system needed to be installed in the brief 5-day period between Christmas and the New Year to avoid any interruption in Schüco’s production schedules. To accomplish this task, Modernization Swisslog Customer Support built a test system to simulate the interfaces and to check the functionality of the entire system.

Operation and maintenance When the time came, Swisslog took over. The old equipment was dismantled, the new components installed, commissioning was completed and testing was performed. By January 1st the Implementation system was fully operational and Schüco was able to resume production on January 2nd as planned.

The Schüco example demonstrates Swisslog’s Design competitive advantage. Swisslog is able to use its knowledge and expertise not only to install superior supply chain solutions but also to resolve system complications in the most efficient and effective manner possible. Whether the expert called in to modify a third party installation or the original provider of a customer’s system, Swisslog is the comprehensive The Swisslog Millennium solutions provider who guarantees continued support. Since the Year 2000 issue was both a business and an operations problem, by early 1998 Swisslog started probably the largest global project in the Group’s history. All countries in which Swisslog operates were involved. The Swisslog Management Committee assigned Legal Experts, Regional Managing Directors and Y2K coordinators from the local Customer Sup- port organizations to help solve the problem. To be ready and confident to meet the demands in the event of any major disruptions. Some of the event, Swisslog introduced a successful critics have questioned whether the high cost program to increase awareness of the Year of this massive effort was necessary. “Was the 2000 issues. Regular reporting and monitoring money well spent? Of course it was.” by the Customer Support network ensured Swisslog got off to a good start. At the begin- The results are long lasting. Today Swisslog’s ning, it was necessary to carry out a detailed customer database is extensive and accurate, inventory of all systems in a structured and and the customers’ systems are in excellent professional manner. In cooperation with the shape. Swisslog’s internal hard- and software local Y2K coordinators from each country, systems are also in great condition. All compa- Customer Support contacted every client to nies that have managed their Y2K planning offer Swisslog’s Y2K services. well are in an excellent position to implement all forms of online business systems. Contracts and components from external suppliers that were crucial to Swisslog’s customers and their operational systems were checked so Outsourcing – the way that every conceivable microprocessor-embed- to full facility servicing ded system received a satisfactory Y2K declara- tion. If necessary the customer’s system under- Swisslog’s 1999 signing of maintenance con- went a detailed analysis and inventory of all tracts for two major logistics installations systems, equipment, hardware, software and by Queensland Property Investments (QPI) in applications. The Y2K analysis reports included Australia is a prominent result of Swisslog’s all statements from 3rd party suppliers, along investment in Customer Support services for with any recommendations for modifications this expanding market and demonstrates and upgrades. After installing recommended client demand to outsource tasks that are not modifications or patches to make the system part of their core competence. Y2K compliant, an on-site test was performed.

During the latter part of 1999, Swisslog completed detailed internal audits on every entity of the Group to guarantee standards were being maintained and contingency plans were in place to ensure the effective running of the company 42…43

Woolworths’ two QPI sites were designed and installed by Swisslog. Both new distribution centers were built for major supermarket chains in Minchinbury (QP1) near Sydney and in Broadmeadows (QP2) near Melbourne. Under the Customer Support agreement, the QP1 site is manned on a 24-hour seven-day per week During a second phase in 1998, Swisslog sup- basis covering operations for 16 hours daily and plied a comprehensive upgrade for the Oracle carrying out preventive maintenance for eight system that had been in place at Peacock for hours at night. QP2 is manned on a 24-hour many years, similarly making it fit for the mil- basis for a six-day work week with similar lennium. As a final measure in 1999 Swisslog operating conditions. updated the system display, a minor, scheduled modification that was deliberately planned for Swisslog provides full maintenance for the 1999. facilities with all maintenance engineers being Swisslog employees thereby allowing the cus- With its long-term planning and efficient tomer to apply its human resources to areas implementation of all the necessary upgrades, where it has proven skill and expertise. Swisslog helped its customer Peacock make the change to the new millennium safely without any loss of performance to any of its systems. Peacock – a well orchestrated transition The key to success, however, is not only the to the third millennium smooth transition to the year 2000, but also the overall improvement in the cost-effectiveness Peacock, a company in the Otto Versand Group, of the system that will allow Peacock to supply supplies computer hardware and software to its customers even more efficiently in the the wholesale and retail markets. Peacock’s future. distribution center in Paderborn, Germany, was originally built by a consortium led by Swisslog. In 1996 Peacock awarded Swisslog a contract to provide new, millennium-compliant logistics software. Under this agreement Swisslog installed a software system at Peacock that met the required reliability standards in every respect, a good four years before the actual changeover to the year 2000. Dividend Derivatives The Board of Directors will propose to the As of 31 December 1999 there were no war- Annual General Meeting on 17 May 2000 that a rants in circulation issued by Swisslog or third dividend of CHF 2.50 per registered share be parties on the company’s registered shares. paid out.

Registration limit Investment policy Upon introduction of the Federal Act on Stock Swisslog aims to expand its presence worldwide Exchanges and Securities Trading (“Stock Ex- in the markets for Supply Chain Software, change Act”) on 1 January 1998, the percentage Supply Chain Solutions, and Supply Chain limit (transfer restriction) imposed on the entry Systems & Products. Customer proximity, a of registered shares in the company’s share comprehensive range of services and a broad register as stipulated in Art. 6 para. 2 of the geographic base are crucial to success. Articles of Association was automatically rescinded. Swisslog’s affirmed goal is to finance its internal growth through Swisslog generated funds. The Articles of Association of Swisslog Holding To secure further growth through acquisitions, AG no longer contain a percentage ceiling on the Board of Directors will propose to the the registration of shares. The Articles of Asso- Annual General Meeting on 17 May 2000 that a ciation have merely retained a nominee ruling conditional capital increase be carried out (Art. 6 para. 4) which stipulates that no more through the issue of a convertible bond with than 5 percent of the registered share capital pre-emptive rights for Swisslog shareholders. may be entered in the share register under the name of persons holding shares on a fid- uciary basis for third parties not known to the Capital structure company. As of 31 December 1999, 2,752,000 registered shares at CHF 10 par value were outstanding The object of this ruling is to prevent anyone and entered in the Commercial Register. This is from anonymously securing control over the same number entered as of 31 December Swisslog Holding AG. 1998.

Swisslog held neither authorized nor conditional Shareholders’ duty to disclose holdings capital as of 31 December 1999. (The Board The shareholders of Swisslog Holding AG are of Directors will propose to the General Meeting subject to the disclosure requirements of the on 17 May 2000 that conditional capital be Stock Exchange Act. Under Art. 20 of the Stock created. See investment policy.) Exchange Act, any shareholder who either directly, indirectly or by joint arrangement with third parties acquires or sells shares of Swisslog Holding AG and thereby attains, exceeds or

1 falls below a threshold of 5, 10, 20, 33 ⁄3, 50

2 or 66 ⁄3 percent of the voting rights (whether enforceable or not) shall be required to notify Swisslog Holding AG and the Disclosure Office of the Swiss Exchange. Address: Swiss Exchange Disclosure Office P.O. Box Investor Relations CH-8021 Zurich Phone +41 1 229 29 16 Fax: +41 1 229 29 35 44…45

Under Art. 21 of the Stock Exchange Act, the Shareholder structure company, for its part, is obliged to publish any Approximately 2,000 registered shareholders are such information that it receives. entered in the share register. Principal shareholders were as per 31 December 1999: Shareholders who, as of 1 January 1998, had a holding of at least 5 percent of the voting rights • Chase Nominees Ltd, London of Swisslog Holding AG are granted a period • Henderson Investors Ltd, London of 3 years within which to make their disclosure, • B.V.B.A. Group 2000 Participatie, Antwerp provided they do not increase this holding to the next highest threshold during this time. Listing The registered shares of Swisslog Holding AG Decision not to include opting-out are traded on the main board of the Swiss and opting-up clauses Exchange SWX. Swisslog Holding AG has consciously decided against writing into its Articles of Association The number of shares traded daily in 1999 either an opting-out or an opting-up clause averaged 7,825 with a mean volume of which would waive or restrict the obligation im- CHF 1.6 million. posed on shareholders to make an offer as stipulated under Art. 32 of the Stock Exchange Act effective 1 January 1998. Under Art. 32 of Securities ID numbers, ticker symbols the Stock Exchange Act, a shareholder who Securities ID number: 675 227 either directly, indirectly or by joint arrangement ISIN: CH0006752270 with third parties acquires shares of Swisslog Telekurs, Dow Jones: SLOG Holding AG and thereby exceeds the threshold of Reuters: SUSZn

1 33 ⁄3 percent of the voting rights (whether enforceable or not) is required to submit a purchase or exchange offer to all shareholders of Key dates for the investor’s diary Swisslog Holding AG. Moreover, the minimum Press conference and price stipulations defined in the Stock Exchange analysts’ meeting: 14 April 2000 Act will also apply to any such offer. Annual General Meeting: 17 May 2000 Half-year report: 22 August 2000 Own shares As of 31 December 1999, the Swisslog Group held a total of 14,350 registered shares of Contact Swisslog Holding AG with a book value of CHF Juhani Anttila 1.8 million. These registered shares are carried Delegate of the Board of Directors in the books of Swisslog Management AG at an Swisslog Holding AG average price of CHF 126. Webereiweg 3 CH-5033 Buchs/Aarau Switzerland Remuneration for the Board of Directors The remuneration paid to the Board of Directors Phone (direct) +41 62 837 95 12 in 1999 took the form of an allocation of Fax +41 62 837 95 56 5,250 registered shares of Swisslog Holding AG. e-mail [email protected] Swisslog at a glance – an overview for investors

Key data per registered share (equivalent of registered shares at CHF 10 par value) 1999 1998 1997 1996 1995 Earnings before interest, tax depreciation and amortization (EBITDA) CHF 22.7 13.4 10.4 4.6 0.3 Earnings before interest, tax and amortization of goodwill (EBITA) CHF 18.2 10.4 8.0 2.6 –1.3 Earnings before interest and taxes (EBIT) CHF 15.8 9.6 7.7 2.6 –1.3 Net income/registered share (EPS IAS 33) CHF 11.3 8.0 4.8 0.8 –1.4 Consolidated shareholder’s equity per registered share (net asset value) CHF 76.6 65.5 60.1 62.5 74.1

The registered shares were split 1: 5 in 1997.

Dividends 1999 1998 1997 1996 1995 Consolidated net income CHFm 31.2 22.1 13.2 2.2 –3.9 Dividend/capital repayment CHFm 6.9 6.9 5.5 18.7 8.8 Dividend payout ratio % 22 31 42 – – Dividend/registered share1) CHF 2.502) 2.50 2.00 Capital repayment/registered share1) CHF 6.80 3.20

1) Equivalent of registered shares at CHF 10 par value. 2) Dividend for the year under review in accordance with the proposal of the Board of Directors to the Annual General Meeting of 17 May 2000. 46…47 Swisslog: the market view

Share price development of registered shares, monthly averages

750 700 650 600 550 500 450 400 350 300 250 200 150 100 50 IIIIV I II III IV I II III IV I II III IV I II III IV I II III IV I 1994 1995 1996 1997 1998 1999 2000

For comparison purposes, prices for the period 1994 to 1996 in the above chart were adjusted to reflect the 1: 5 share split.

1999 1998 1997 1996 1995 Price of registered shares 1) High CHF 475 186 125 83 72 LowCHF11495866154 Gross return on registered shares High % 0.5 1.3 1.6 NA NA Low % 2.2 2.6 2.3 NA NA

Market capitalization (31.12) CHFm 1,280 358 294 203 176 Market capitalization as % of shareholders’ equity % 607 198 177 118 86

Price earnings ratio (P/E ratio) (as of 31.12) Factor 41.0 16.2 22.3 92.3 NA

1) Equivalent of registered shares at CHF 10 par value.

48…49 Organization

Board of Directors of Swisslog Holding AG Auditors and Swisslog Management AG PricewaterhouseCoopers AG, Basel Truls D. Berg Chairman through 2002 Konrad Peter Vice-Chairman through 2002 Group Auditors Juhani Anttila Delegate through 2002 PricewaterhouseCoopers AG, Basel René Garo Member through 2001 Hans Hulsbergen Member through 2002 Management Committee Guido Patroncini Member through 2002 Juhani Anttila President and CEO

Operations Charles Teissonnière Logistics Systems Region 1 Ulf Jansson Logistics Systems Region 2 Urs Birrer Software Uwe Eckert Overhead Conveyors Kari Ollila Robotics Uwe Schöning Warehouse and Materials Handling Technology Werner Gstöttmayr Light Materials Handling Automation Charles Kegley Light-Load Unit Conveying Systems

Corporate Office Pekka Pylkäs Chief Financial Officer Göran Fredriksson Operations Management Wolfgang Maier Customer Support Martin Strobel Corporate Services Björn Berg Corporate Marketing Swisslog Holding AG Webereiweg 3 CH-5033 Buchs/Aarau Phone +41 62 837 95 37 Fax +41 62 837 95 10

Swisslog Management AG Webereiweg 3 CH-5033 Buchs/Aarau Phone +41 62 837 95 37 Fax +41 62 837 95 10 Europe

Belgium Finland Great Britain Digitron Benelux N.V. Telelift GmbH Cimcorp Oy Corob Service Ltd. Kernenergiestraat 47-49 Siemensstrasse 1 Sammontie 5 706 Stirling Road, Trading Estate B-2610 Wilrijk D-82178 Puchheim FIN-28400 Ulvila GB-Slough, SL1 4SY, Berkshire Phone +32 3 830 38 00 Phone +49 8980 00 10 Phone +358 2 6775 111 Phone +44 1753 756 553 Fax +32 3 828 89 26 Fax +49 8980 00 11 11 Fax +358 2 6775 200 Fax +44 1753 570 407

Germany Cimcorp GmbH Transnorm System GmbH Corob Oy Digitron Ltd. Monreposstrasse 53 Förster Strasse 2 Sammontie 5 Units 2/3, Regents Court D-71634 Ludwigsburg D-31177 Harsum FIN-28400 Ulvila Far Moor Lane Phone +49 7141 38 360 Phone +49 5127 402 0 Phone +358 2 6777 700 GB-Redditch B98 OSD, Worcs. Fax +49 7141 38 36 10 Fax +49 5127 440 0 Fax +358 2 6777 701 Phone +44 1527 517 333 Fax +44 1527 517 344

France Digitron-OWL GmbH Transnorm System GmbH Digitron Benelux N.V. Digitron Ltd. Monreposstrasse 53 Ziegelhüttenweg 4 14, Rue des Cinq Perches 706 Stirling Road, D-71634 Ludwigsburg D-65232 Taunusstein-Neuhof F-77645 Chellex-Cedex Trading Estate Phone +49 7141 22 600 Phone +49 6128 97 600 Phone +33 1 60 95 06 06 GB-Slough, SL1 4SY, Berkshire Fax +49 7141 22 6055 Fax +49 6128 97 6044 Fax +33 1 60 95 06 15 Phone +44 1753 528 545 Fax +44 1753 570 407

Digitron-OWL Service GmbH Walther Rohrposttechnik Digitron Translift S.A. Digitron Translift Ltd. Martin-Schmeisser-Weg 6 GmbH 151, Avenue Aristide-Briand Hallcroft Road D-44227 Dortmund Hansacker 5 + 7 BP 2275 GB-Retford DN22 7PT, Notts. Phone +49 231 758 9500 D-26655 Westerstede F-68068 Mulhouse-Cedex Phone +44 1777 707 511 Fax +49 231 758 9512 Phone +49 4488 8 38 90 Phone +33 3 89 32 65 65 Fax +44 1777 860 778 Fax +49 4488 68 66 Fax +33 3 89 59 75 51

Digitron-OWL-Service GmbH Denmark Swisslog Holding (France) Transnorm System Ltd. Ziegelhüttenweg 4 Digitron AB 90, avenue des Champs-Elysées Ashchurch Industrial Estate D-65232 Taunusstein-Neuhof Friis Hansens Vej 2 F-75008 Paris GB-Tewkesbury GL20 8TD Phone +49 6128 97 600 DK-7100 Vejle Gloucestershire Fax +49 6128 97 6044 Phone +45 75 85 81 33 Phone +44 1684 291 100 Fax +45 75 85 95 60 Fax +44 1684 291 550 Teledoc S.A. 137, avenue Louis Roche Louis Schierholz GmbH F-92635 Gennevilliers-Cedex Telelift (UK) Ltd. Arsterdamm 110 Phone +33 1 40 85 72 10 Unit 2, The Old Flour Mill D-28277 Bremen Fax +33 1 40 85 72 19 Queen Street Phone +49 421 8406 0 GB-Emsworth P010 7BT Fax +49 421 8406 202 Hampshire Phone +44 1243 377 131 Fax +44 1243 377 133 Europe

Italy Norway Switzerland Corob S.p.a. Digitron-Munck AS Corob International AG Swisslog Software AG Via Agricoltura 103 Nedre Rommen 5 Bahnhofstrasse 96 Bahnhofstrasse 96 I-41038 San Felice s.P./MO N-0988 Oslo CH-5001 Aarau CH-5001 Aarau Phone +39 0535 66 30 Phone +47 22 78 95 00 Phone +41 62 837 95 37 Phone +41 62 834 15 00 Fax +39 0535 66 36 00 Fax +47 22 78 95 10 Fax +41 62 837 95 10 Fax +41 62 834 17 95

Czech Republic Digitron Italia S.r.l. Digitron-Munck AS Digitron-OWL AG Schierholz Dopravni Via Columella 40 P.O. Box 2433 Solheimsviken Erlenstrasse 32 Technika s.r.o. I-20128 Milano N-5829 Bergen CH-2555 Brügg/Biel Repna 20 Phone +39 02 2707 111 Phone +47 55 59 53 00 Phone +41 32 374 22 00 CZ-321 00 Pilsen-Litice Fax +39 02 2707 1150 Fax +47 55 59 53 01 Fax +41 32 374 24 99 Phone +420 19 78 28 272 Fax +420 19 78 28 272

Sweden Digitron Translift S.r.l. Corob Scandinavia AB Digitron-OWL AG Via Rondò Bernardo, 28 Datavägen 6 Webereiweg 3 I-10092 Beinasco/TO S-436 32 Askim CH-5033 Buchs/Aarau Phone +39 011 358 08 18 Phone +46 31 748 1850 Phone +41 62 837 41 41 Fax +39 011 358 15 47 Fax +46 31 287 172 Fax +41 62 837 44 99

Netherlands Corob Color Robots B.V. Digitron AB Digitron-OWL Service AG Energieweg 10 Brodalsvägen 13 Erlenstrasse 32 NL-3641 RT Mijdrecht S-433 38 Partille CH-2555 Brügg/Biel Phone +31 297 285 121 Phone +46 31 336 60 00 Phone +41 32 374 22 00 Fax +31 297 286 221 Fax +46 31 336 60 08 Fax +41 32 374 24 99

Digitron Benelux B.V. Schierholz Svenska AB Digitron-OWL Service AG P.O. Box 576 Brodalsvägen 13 Webereiweg 3 NL-4100 AN Culemborg S-433 38 Partille CH-5033 Buchs/Aarau Phone +31 345 53 11 88 Phone +46 31 336 61 70 Phone +41 62 837 41 41 Fax +31 345 53 07 36 Fax +46 31 336 60 12 Fax +41 62 837 41 35

Transnorm System B.V. Transnorm System AB Swisslog Translift AG Energieweg 10 Carl Trügers väg 13 Rainacherstrasse 47 NL-3641 RT Mijdrecht S-590 12 Boxholm CH-6010 Kriens/LU Phone +31 297 285 121 Phone +46 142 557 00 Phone +41 41 329 88 00 Fax +31 297 286 221 Fax +46 142 555 55 Fax +41 41 329 88 99