Layers of Risk Define Layers of Security

1. Layers of Risk Define Layers of Security Katie Freisen Sr. Manager, Transportation Security Johnson & Johnson Global Transportation April 3, 2012

2. Agenda • Johnson & Johnson North American Security Evolution • Risk Assessment Model • Attributes • Actions • Key Focus Areas • DDI/DNET • TSA

3. GTO Security Evolution 2008 - 2012 YOU ARE HERE!

4. Goal of Risk Assessment – to protect the loads that are at risk, with the right layer of security • The Risk Assessment tool was created to model risk based on pre-determined risk criteria, in a scalable fashion: • Product (Scheduled Narcotics, PSE, Ingestible, Infuseable, Implantable, Unsterilized FG) • Distance (ie: >500 miles = layover for single driver) • Value of the load • Frequency (>1 per month?) • Known Security Risk at origin & destination • Prior incidents on specific lane • All TL lanes in North America are completed • Implemented escorts for key Destruct Loads • Ocean, LTL, Air, Parcel assessments in progress

5. DNET DNET = 12:01 AM of the RDD – Carrier Quoted Transit Time Example • Order • Has an RDD of 3/30 • Has transit time of 6 hours “Depart No Earlier Than….Freight at Rest is Freight at Risk” 3/27 3/28 3/29 3/30 12:01 AM 12:01 AM 12:01 AM Actual Appointment Order Drops DNET= 6 PM PROCEED DIRECTLY TO THE DC…...DROP LOADS 24/7 AT ALL J&J DISTRIBUTION CENTERS

6. DDI • Johnson & Johnson Cargo Handling Policy and Procedures (highlights) • All loads parked unattended overnight must be secured in a locked, fenced-in, and well lighted lot. Under no circumstances is an open lot, public street or highway, or truck stop, acceptable for overnight, unattended parking. Avoid parking in an area dimly lit and hidden from view. • Recommend that drivers do not stop for the first 200 miles upon leaving the terminal unless an emergency or has Hours of Service implications. • Drivers are responsible to lock their tractors when stopping and not have the motor running in their absence. • If in an emergency, a Johnson & Johnson load is to be dropped, it must be padlocked and the trailer backed up against a building or another trailer in such a manner that entry into the trailer is prohibited (restricted). KINGPIN or SUZY locks to be used on the “5th Wheel” trailer coupling if trailers are to be dropped. • At the beginning of each day and stop, the seals and locks on all trailers will be checked for tampering and recorded as to date and time of check with the driver’s initials next to each entry on the Bill of Lading.

7. Freight Security Pyramid HIGH S E C U R I T Y LOW Highest Risk Lanes Security Escorts Compliance Escorts Fleet Cutting-edge Security Equipment High Risk Lanes High Risk (components) Embedded GPS: Active Monitoring by Logistics Security Provider (lanes & Rest Stops vetted by GS) Embedded GPS: Exception Monitoring by Logistics Security Provider Embedded GPS: Theft recovery only by Logistics Security Provider External GPS & monitoring provided by premium security carriers (including advanced locks and braking systems) Applies to All business groups Team Drivers Implement “Depart No Earlier Than” Process at DCs Carrier, driver SOPs tied to contracts Security Certified Carriers Closing gaps from carrier on-site assessments All lanes, all stops vetted by WWS

8. US Theft History – Industry • Consumer cargo theft rose from just over 2% in • 2006 to 6% in 2010.  • At 5% for 2011, the total number of thefts for the • year was relatively flat, going from 54 thefts in • 2010 to 52 thefts in 2011. • Pharmaceutical cargo theft has remained at a steady • % of total cargo theft between 4% and 6% year over year.  • 2011 saw the first dip in the total number of cargo • theft incidents, declining from 49 in 2010 to 35 in 2011.  • Factors for drop: • Hardening of the supply chain • Emergence of faster response times • Education of drivers hauling cargo * Source Freight Watch International

9. Thank You! Industry Sharing & Questions