Publication

Edited by

Visual design

Concept and Text

Photography

Lithography/Printing

Swisslog Management AG, Buchs/Aarau

Erdmann Design AG, Brugg

Haussmann, Weber-Thedy

Corporate & Financial Communications, Zurich

Geri Krischker, Baden

Schwabe & Co. AG, Basel /Muttenz

The Swisslog 1999 Annual Report comprises

two parts: the report on activities and the

financial overview. The annual report is

published in German and English. The German

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

Net sales

Overview

Orders received

CHFm700600500400300200100

272.3 435.5 420.1 557.8 727.9

CHFm 700600500400300200100

255.6 388.4 474.9 551.0 722.5

95 96 97 98 99

EBITA

CHFm 50403020100

-3.5 7.2 21.9 28.6 50.1

Net income

CHFm 302520151050

CHF 121086420

-3.9 2.2 13.2 22.1 31.2

Employees at year end

3500 30002500200015001000500

1121 1323 1709 2063 3507

95 96 97 98 99

Earnings per share (after share split August 1997)

-1.4 0.8 4.8 8.0 11.3

Swis

slog

1999

Ann

ual R

epor

t

Supply ChainManagement1999 Annual Report

The Supply Chain Excellence Partner

Swisslog is an international company offering Supply Chain Excellence to its

clients through comprehensive IT-controlled information and material flow

solutions. Swisslog’s activities cover the entire spectrum of Supply Chain Exe-

cution for today’s economy. The aim is to improve its clients’ productivity

and services and at the same time minimize their logistics costs and tied-up

capital.

Based on their expertise in knowledge management, software and system inte-

gration, the Swisslog Industry Practice Groups (IPGs) plan and realize industry-

specific Supply Chain Solutions for their clients. Proactive support through

consulting and service optimizes the performance of each individual logistics

system throughout its operational lifetime.

Continuous development of Supply Chain Software, Supply Chain Solutions and

Supply Chain Systems as well as strategic alliances have enabled Swisslog to

provide Internet fulfillment solutions for all types of online businesses. Swisslog

is well positioned to explore the new market opportunities and demands arising

from emerging e-business.

Headquartered in Buchs/Aarau, Switzerland, Swisslog currently employs 3,507

people in 22 countries. The parent company, Swisslog Holding AG, is listed

on the Swiss Exchange SWX.

1999 – Highlights

JanuarySwisslog signs software support contracts with Cathay Pacific

Catering (CPC) and with the Hangzhou Cigarette Factory.

FebruarySwisslog receives two major orders from BMW/Hams Hall,

Germany, for automated guided vehicle (AGV) systems and

logistics stores.

MarchSwisslog supplies two hospitals in Singapore with a total of

33 automated guided vehicle (AGV) systems, 13 rail vehicle

systems and 120 pneumatic tube stations.

AprilSwisslog implements a successful e-commerce startup for

a European large-scale fresh food distributor.

MaySwisslog signs a comprehensive support contract with

Woolworths Queensland Properties (QP), Australia, for the

complete technical operation of distribution centres

QP 1 & 2 set up by Swisslog, the only ones of their type in

the world.

JuneSwisslog develops comprehensive Internet fulfillment solu-

tions for booming online businesses.

Swisslog initiates the Management Potential Program (MPP).

JulySwisslog supplies an extensive transport system linking

numerous medical supply centers for the Mayo Clinic in

Rochester, Minnesota.

AugustSwisslog takes over the worldwide light conveyor system

activities of Thyssen Krupp Industries GmbH.

SeptemberSwisslog hands over a new distribution system to Allied

Bakeries in the UK.

OctoberSwisslog in collaboration with Professor Richard Thornton

develops MagneTrak, a worldwide innovation in the field

of supply chain systems.

NovemberSwisslog installs a pneumatic tube system and an

electric track vehicle system at the Mayo Clinic, Rochester,

Minnesota.

DecemberSwisslog‘s upgrades for the millennium changeover see all

Swisslog customers safely into the year 2000.

Africa

South AfricaTrans-Tele (PTY) LTDCitrus Street Industrial Park

Honeydew Unit No 4,

P.O. Box 1334

SA-North Riding 2162

Phone +27 11 7 94 41 36

Fax +27 11 7 94 42 56

Americas

UruguayCorob S.A. Color Engineering C.P. 11600, Cardal 3092

RDU-Montevideo

Phone +598 2 487 0732

Fax +598 2 487 0736

USACorob North America Inc.13315-G Carowinds Boulevard

Charlotte, NC 28273 USA

Phone +1 704 588 8408

Fax +1 704 588 8471

Munck Automation Technology,Inc.161 Enterprise Drive

Newport News, VI 23603 USA

Phone +1 757 887 80 80

Fax +1 757 887 55 88

Swisslog America Inc.9 East Loockerman Street

City of Dover,

Delaware 19901 USA

Phone +1 303 371 7770

Fax +1 303 373 7870

Translogic Corp.10825 East 47th Avenue

Denver, CO 80239 USA

Phone +1 303 371 77 70

Fax +1 303 373 78 70

Transnorm System Inc.1906 South Great Southwest

Parkway

Grand Prairie, TX 75051 USA

Phone +1 972 606 0303

Fax +1 972 606 0766

CanadaTranslogic Limited#7-1200 Aerowood Drive

Mississauga, Ontario

L4W 2S7 Canada

Phone +1 905 629 2400

Fax +1 905 629 2799

Australia

AustraliaCorob Ltd.Branch office

AUS-Melbourne

Phone +61 3 9331 7897

Fax +61 3 9331 7930

Digitron Logistics Pty. Ltd.30, Cowper Street, Level 1

AUS-Parramatta NSW 2150

Phone +61 2 9895 1000

Fax +61 2 9895 1095

Asia

ChinaCorob Ltd.Room 403, 4/F Printing House 6

Dupple St. Central Hong Kong

Shau Kai Wan, Hong Kong

Phone +852 2 557 8108

Fax +852 2 556 7160

IndiaCorob India Pvt. Ltd.Warden House, 1st Floor

Sir P.M. Road,

Fort Mumbai 400 001

Phone +91 22 287 2295

Fax +91 22 287 3475

MalaysiaDigitron Logistic Systems Sdn. Bhd.54-3, 2nd Floor, Jalan USJ 9 /5P

MAL-47620 UEP Subang Jaya,

Selangor

Phone +60 3 724 4 790

Fax +60 3 724 5 790

Transnorm System Sdn. Bhd.Lot Plo 28 Kawasan Perindustrian

Kluang, 4 1/2 Miles Jalan Mersing

MAL-86000 Kluang/ Johore

Phone +60 7787 9990

Fax +60 7787 9966

SingaporeDigitron Logistic Systems Pte.Ltd.215G Upper Thomson Road

Singapore 574349

Phone +65 453 0192

Fax +65 453 6018

Telelift Automation Pte. Ltd.15 Little Road # 05-01

Singapore 526988

Phone +65 280 06 00

Fax +65 286 81 00

Mission

Contents

2 Letter to Shareholders

6 Swisslog Offering

8 Internet Fulfillment Solutions – Powered by Swisslog

14 Supply Chain Consulting

18 Swisslog Creates Intellectual Capital

22 Allied Bakeries – Bread forBritain Fazer – A Plenitude of Breadand Pastries

26 Best Healthcare Practices

30 Corob – Colorful Supply Chain Revolution

34 MagneTrak

38 24-7 – There when needed

44 Investor Relations

48 Organization

50 Addresses

Dear Shareholder

The year 1999 was marked with continued growth and suc-cess for Swisslog. Enhancing its position as a leadingprovider of supply chain solutions, Swisslog showed excellentperformance in all business segments and in its target mar-kets of North America and Europe. As in previous years, Swisslog recorded significant growth rates in both sales andearnings. Orders received rose by 30.5% over the previousyear to CHF 727.9 million and net sales increased by 31.1%to CHF 722.5 million. Earnings before interest, taxes andgoodwill amortization (EBITA) reached CHF 50.1 million, up75.2% over 1998. Net income grew 41.2% to CHF 31.2 mil-lion. The Swisslog Software division was transformed into an important profit contributor with the highest growth ofall business segments. Through its existing core competencecomplemented by selected alliances and acquisitions,Swisslog is strategically well positioned to provide fully inte-grated Internet fulfillment solutions.

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

In 1999, Swisslog continued to develop its global image as an

international supply chain solutions provider with a unique and

unified corporate design. Aiming to secure future success

through acquisitions and alliances, Swisslog bought the Light

Conveyor Systems of Thyssen Krupp Industries GmbH in August

1999. The acquisition of Thyssen Krupp’s 800 employees and

diverse client base in healthcare, banking, libraries, administra-

tion and the electronics industry gave a significant boost to

Swisslog’s sales and customer support. Swisslog is now the

leader in the fast-growing global healthcare automation market.

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 coopera-

tion enables Swisslog to provide optimal supply chain solutions

through efficient logistics management supported by advanced

production automation.

2…3

Internet Fulfillment Software

With Europe’s online retail market in 1999 equaling euro

3.5 billion, industry experts currently estimate the development

of this market to euro 9 billion in 2000 and euro 45 billion in

2002. Such growth should be harnessed, but simply getting

online is not enough. While providing Internet access is impor-

tant, fulfilling customers’ expectations has become an absolute

prerequisite for any player looking to secure a leading role in

online business, be it business-to-consumer (b2c) or business-

to-business (b2b), with the majority of growth expected in the

latter segment.

An Internet penetration rate in Europe of 12% last year is ex-

pected to reach 55% by 2003. With every second European soon

to be online, the rapid expansion of the new economy and

the need to provide flawless fulfillment and customer service has

inspired Swisslog to become a provider of comprehensive

Internet fulfillment solutions. With a high rate of dissatisfied

customers (up to 50% according to some estimates), the winners

in the battle for online market share will be those businesses

that successfully and consistently deliver a satisfying end-

to-end purchase experience. Throughout 1999, Swisslog aimed

to do just that by developing a comprehensive strategy of how

to optimize and complement its established expertise in supply

chain solutions to create new Internet fulfillment solutions

(ifs).

By building on its core competence, Swisslog has been able to

combine IT knowledge and efficient material flow capabilities,

critical factors to success in the digital economy. In its quest to

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,

INTERNOLIX AG of Germany, a leading supplier of shop systems,

will provide valuable support to the webstore front-end of

Swisslog’s I-fulfillment package. Swisslog has confirmed its com-

mitment to its new partner by investing in INTERNOLIX.

This innovative approach has continued in 2000, thereby po-

sitioning Swisslog as an early leader in the race to fill a gap in

the e-business market. The recent acquisition of 100% of the

equity in California-based Sonica Software Corporation, a lead-

ing innovator of warehousing and distribution software, is an

important step to achieving this goal. Sonica Software empha-

sizes true product orientation as opposed to the ”package”.

This product strategy has allowed them to provide industry-lead-

ing solutions to customers in an effort for them to continually

improve their supply chain strategies.

As the first Warehouse Management Software (WMS) vendor

to support NT, Unix and Linux, Sonica has demonstrated its

vision to embrace the future more rapidly than its competitors.

The acquisition brings together Sonica’s industry-leading

software which offers unparalleled configurability and scalability

with Swisslog’s established supply chain software and world

class sales to offer a unique I-fulfillment solution. As a team,

they are able to deliver fully integrated e-commerce fulfillment

functionality and rapid deployment solutions thereby reinforc-

ing an important link in the e-commerce cyberchain stretching

from the mouse to the house.

Swisslog has now developed or acquired the competence nec-

essary for every phase of I-fulfillment. Its ability to provide

excellent front-end service, order entry via a webstore, order

processing, warehouse management and delivery management

can now all be carried out under the guidance of one consis-

tent solution provider, Swisslog.

The traditional buy-sell transaction is eliminated and a new

element of customer tracing and tracking is introduced. A cus-

tomer may follow an order during the entire order fulfillment

process with the click of a mouse. Swisslog plans further

acquisitions and alliances during this year in order to comple-

ment the progress made during 1999 towards developing

comprehensive e-business software solutions.

Lifetime Partnership

With today’s trend towards consolidation and concentration

on core competence, Swisslog has been actively developing its

Customer Support services. By providing excellent support,

Swisslog alleviates its customers’ service and maintenance

responsibilities and allows them to direct their expertise and

efforts to specialized areas where they have a competitive

advantage and can achieve cost savings through economies of

scale. As a result of this new focus, Swisslog Customer Support

underwent major innovations in 1999.

During 1999, Swisslog established the Global Information

Network and Expert Help Desk available 24 hours a day, 7 days

a week (24-7) to guarantee optimal response time by phone,

Internet or locally. Swisslog’s global network of Customer

Support specialists, almost 800 in 22 countries, enables Swisslog

to maintain a local presence and closeness to its customers,

thereby keeping its promise to remain a lifetime partner provid-

ing individual solutions to its customers throughout the entire

life of the supply chain system.

Realizing that the trend to outsource many tasks in the area

of supply chain solutions management or even to delegate

responsibility for customers’ entire logistics departments is a

4…5

fast-growing global business, Swisslog is ideally positioned with

its global presence and broad software and engineering com-

petence to take a leading role in offering the management

of complete supply chains. As a result, a dedicated management

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

was signed at the beginning of 2000.

Human Resources

In this area, Swisslog also made great strides during 1999. With

a staff of over 3,500 as at 31 December 1999, personnel has

increased 70% year-on-year thereby enabling the Group to carry

out its expansion plans and to capture the growing market for

I-fulfillment.

To deal with this increase and manage the personnel in an

optimal manner, substantial investments were made. An internal

management program, Management Potential Program (MPP),

was initiated to instruct upcoming managers on the latest man-

agement methods and to work on defined Swisslog projects

which are then directly inserted into the Group’s decision-mak-

ing process.

Remaining true to Swisslog’s Customer Support approach of pro-

viding 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

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

performance particularly in the Swisslog Supply Chain Software

segment. The Group plans strong internal growth for 2000.

The medium-term profitability target is set at an EBITA

of 10% of sales.

Dividend Proposal

The Board of Directors will propose to the Annual General

Meeting a dividend of CHF 2.50 per registered share.

Swisslog achieved sound improvements in 1999. By putting

customers first and through their dedication and flexibility,

Swisslog’s highly knowledgeable employees provided the basis

for the Group’s success. We would like to extend our sincere

thanks to them for rising to the challenges posed by today’s

fast-paced and demanding international environment. We also

wish to express our gratitude to you, the shareholder for your

continued interest and confidence in Swisslog during 1999.

For the Board of Directors

Truls D. Berg Juhani Anttila

Chairman Delegate of the Board

Buchs/Aarau, Switzerland April 2000

Swisslog Offering

Comprehensive Supply Chain Solutions:

Supply Chain ConsultingSystem Design and RealizationSupply Chain SoftwareInternet Fulfillment

Transport SystemsStorage SystemsHandling Systems

Customer SupportModernization

e-Commerce

Electronics

Distribution

Healthcare

Automotive

Pharma

Beverage

Food

Colorant Dispensing

Paper & Printing

Supply Chain Consulting– Financial analysis of logistics

processes – benchmarking

– Logistics network studies

– Logistics consulting

– Choosing the right degree of

automation

– Concept and feasibility studies

– System Design

– Computer simulation

System Design and Realization– Data analysis

– Concept and detailed planning

– Engineering and specifications

– Computer simulation

– System integration

– Project management

Supply Chain Software– ERP consultancy

– SAP consultancy

– Warehouse management software

– Visualization and monitoring

software

– Material flow control software

– Device control systems

– Forklift supervisory systems

Internet Fulfillment– Fulfillment consultancy

– Internet shopping system

– Order management

– Warehouse management

– Delivery management

– Order tracking

Transport Systems– Automated Guided Vehicles (AGVs)

– Pallet conveyors

– Unit load conveyors

– Electric monorails

– Power & Free

Storage Systems– Automated high-bay warehouses

– Automated bin and tote stores

– Refrigerated and freezer stores

– Automated buffer stores

– Automatic stacker cranes

Handling Systems– Robotics

– Automated order picking

– Manual order picking

– Single- and multi-stage picking

– Sorting Systems

– Goods-to-man solutions

– Man-to-goods solutions

Customer Support– Preventive maintenance

– 24-hour hotline

– Corrective support on site

– Remote software support

– Full technical operations

– Training of staff

– Spare parts management

– Continuous consultancy

Modernization– Analysis of existing systems

– Consultancy and realization

– Software upgrades

– Minimal disruption of operations

6…7

Internet Fulfillment Solutions – Powered by Swisslog

The Internet revolution calls for newdistribution concepts. “From the mouse tothe house” only works if customers gettheir products physically delivered at theright time in the right place. To put itsimply: online businesses, whether operatedby a dot.com startup or a well-establishedmultinational firm, will not succeedcommercially and report earnings until theyare able to physically deliver on time atcompetitive costs.

8…9

To meet the increasing demand of e-business,

Swisslog decided in spring 1999 to build, offer

and service complete I-fulfillment solutions

from a single source. The unique combination

of Swisslog’s proven supply chain software,

knowledge and efficient material handling

expertise is the critical factor to success.

Creating this combination and drawing on other

forward-thinking companies with complemen-

tary knowledge and experience worldwide to

form global alliances was an important

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.

Digital Demand Chain - Physical Supply Chain

In today’s economy business transactions take

place anytime, anyplace. Order execution and

delivery must be paperless, fast, precise and

transparent. This requires seamless information

flow and intelligently automated logistics

systems. During a year when Swisslog continued

to increase both sales and earnings, its sights

were also focused on the future options in

online business and how to adapt to the quick-

paced changes brought on by the technological

advancement at the heart of today’s Internet

boom.

InternetFulfillment Solutions –Powered by Swisslog

10…11

ifs – powered by swisslog

TM

Consumer

Business

b2c

b2b

automatic

Warehouse A

manual

automatic

manual

Warehouse B

Order Entry

Delivery Execution

Order Management

Delivery Management

Warehouse Management

Fulfillment

Tracking

Delivery Tracking

Swisslog’s I-Fulfillment Solutions

Whatever the business, business-to-business

(b2b) or business-to-consumer (b2c), the

Internet supply chain starts with the webstore.

This important link in Swisslog’s cyberchain is

reinforced by its strategic partner INTERNOLIX.

Whether it is private shopping at home, online

ordering of spare parts or inter-company

replenishment, the webstore makes Swisslog

customers’ products accessible online. The

webstore is directly integrated into Swisslog’s

I-fulfillment software which also features an

open, configurable interface to any Enterprise

Resource Planning (ERP) system.

Once the order is in the system, based on the

availability of the ordered product, Swisslog’s

virtual order management software transfers

the order to the closest distribution center

thereby minimizing delivery costs.

At the chosen distribution center the order is

picked and packed. Swisslog’s IT-controlled

material flow systems reduce order processing

times as well as rates of error. Next the

Swisslog delivery management software

determines the optimum transport channel

based on the time remaining to achieve the

lowest distribution cost for on-time delivery.

Final order delivery to the customer is then

executed by leading transportation companies.

Swisslog’s Internet Order Tracking

Any time during the order fulfillment process,

Swisslog clients are able to offer their

e-business customers transparent order

tracking. The recipient has constant access to

the current status of an order with the simple

click of a mouse - via the Internet.

Swisslog’s I-Fulfillment Solutions Software

After much visionary thinking, preparatory

planning and intensive combined development

efforts by the various competence centers

during the course of 1999, today Swisslog

Software is ready to launch its new I-fulfillment

solutions (ifs) software, thereby further

positioning the Group as the leading provider of

information and material handling solutions for

the burgeoning global e-business and

I-fulfillment markets. Today Swisslog is in a

position to offer complete solutions to startup

dot.coms as well as to long-established

companies irrespective of the business they are

in. The Group’s solutions can be implemented in

a manual distribution environment and then

grow with them and their partners to support

the most sophisticated and automated

distribution operations.

While competitors are offering only parts of the

package, for example either software or

material handling systems, Swisslog proposes

the only available global solution whereby

customers get the software, integration and

support necessary to implement and maintain

I-fulfillment solutions from the initial entering

of the order to its arrival at the delivery

destination.

Ahead of the competition, Swisslog foresaw

the missing element in online business,

I-fulfillment, and combined its expertise in sup-

ply chain software, systems and solutions with

complementary global providers of supply

chain services to construct an extended cyber-

chain to provide today’s b2bs and b2cs with

dependable cost-effective Internet solutions.

Swisslog fulfills the promises the Internet

makes.

12…13

Swisslog-ifs is built on the solid architectureof the existing WMS and provides all of thekey functional components for this marketsegment from order reception, inventory andlocation management, to picking/packing/shipping including integrated order tracking.In addition to the functional components,Swisslog has designed a standard ApplicationProgramming Interface (API) for communi-cating with web-based order entry systemsthat includes “available-to-promise”capabilities, real-time inventory and orderstatus updates as well as parcel carrierconfirmation, all very important features fordelivering high quality, reliable results in thee-commerce world.

Swisslog-ifs is extremely scalable and can grow

easily as its customers’ e-businesses grow.

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.

ifs – powered by swisslog

TM

Boosting Sales with Swisslog Supply Chain Solutions

The Internet revolution is opening up totally new ways of selling, marketing anddelivering goods. This means that all marketplayers, end consumers and companies alike, can order any article just by clickingthe mouse of a PC. From that point until the time the goods are actually delivered,the supply chain must fulfill very differentrequirements depending on the type ofproduct, order or customer. Working incooperation with its customers Swisslog

Supply Chain Consulting

Supply Chain Consulting has developed I-fulfillment models providing appropriatesolutions for products and business models of the most disparate kind. An I-fulfillmentsolution for Swisslog customers is valuable ifit reduces costs, increases the quality ofservice and as a result boosts sales. For Swisslog Supply Chain Consulting, thismeans coming up with answers to the cen-tral issues of customized order processing.

14…15

Food shopping from home: the I-fulfillment supply chain

As it stands now, retailers leave the entire

delivery process to their customers. End con-

sumers have to pick out the articles on their

shopping list at the shop, put them onto the

conveyor belt to be checked out, and then load

them back into the trolley. Once they have

paid for their purchases they have to load them

into the car, drive home and put them away in

the proper storage places. This costs time

and money and can be a source of stress. Con-

sequently there is a burgeoning demand for

service providers to perform these functions.

Swisslog has responded to this demand by

developing a model that makes provisions for

the short time span between receipt of the

order and delivery (lead time) and for the

narrow delivery window. With this model, cus-

tomers send their shopping list to the supplier

in question from their home PC, mobile tele-

phone or from work. From there each individual

order goes into an online business module

where the articles are collected and delivered

directly to the customer. One of the main chal-

lenges to this system is the problem of the

extremely narrow delivery window. Customers

do not have time to wait several hours for their

shopping. On the other hand, just-in-time deliv-

ery to the front door would make this service

too cost-intensive. A cost-effective solution is

to provide personal goods lockers, known as

drop points, with temperature regulation for

perishable items. The shopping baskets are left

at the customers’ drop-off points until they

have time to collect them.

Global player’s supply chain

Multinational companies with production faci-

lities worldwide and central distribution have

totally different expectations from their supply

chain when it comes to ensuring optimum

delivery to their customers. Most of these com-

panies produce high-end durable consumer

goods such as PCs, television sets, video record-

ers and other electronic equipment. Production

of the goods is initiated by the customer with

the click of a mouse and is subdivided into

individual elements that are manufactured at

different production plants. The individual

elements are then assembled into the required

end product and finished at central distribution

centers from which they are delivered to the

end customer by parcel service.

At the very instant that the customer places

an order, local customer support is activated in

order to be available at the precise time of

delivery to install the product. The same cus-

tomer support provides the customer with after

sales and maintenance service during the entire

life of the product.

Third party distributor’s supply chain

According to this model, customers electron-

ically send their order directly to their supplier’s

server. The supplier makes up the order via the

particular product suppliers using either its own

products or those of a third party. From the

product suppliers, the delivery goes directly to

the Fulfillment Distribution Center of the

supplier handling the order for direct dispatch

to the customer.

Objectives…

Short lead times

Low inventories

Efficient processes

High service levels

However varied the requirements for different

kinds of supply chains, Swisslog Supply Chain

Consultants will find the best solution for each

type. Swisslog develops and implements supply

chain systems that increase performance while

reducing costs and thus increase customer

satisfaction. Swisslog offers modular service

concepts to meet any customer’s wishes, from

individual services and consulting to acting

as the prime contractor for international distri-

bution networks. Such solutions are available

for both the business-to-business (b2b) and

business-to-consumer (b2c) sectors.

16…17

Internet Fulfillment Solutions

• I-fulfillment consulting

• I-fulfillment system planning

• Web-based input system for online orders

• Web-based solutions for e-commerce

order processing

• Web-based transport visualization systems

• Automatic storage systems

• Automatic transport systems

• Manual / automatic sorting systems

• Manual / automatic order picking systems

Supply Chain Consulting

• 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

• Computer simulation

Comprehensive Supply Chain Solutions

• I-fulfillment technology

• System design and realization

• Transport systems

• Storage systems

• Handling systems

• Integrated customer support

• Modernization and upgrades

Supply Chain Consulting

Data analysis

Simulation model

Building cross section

Ergonomic analysis

During 1999, the number of people employedworldwide by the Swisslog Group rose by1,444 to 3,507. This is equivalent to agrowth rate of 70% and is attributable tostrategic acquisitions as well as to large-scale hiring. This means that Swisslog hasnow reached the critical mass at whichselective personnel development becomesnecessary and possible.

Swisslog Creates Intellectual Capital

Consequently, in 1999 the Swisslog Groupstarted a large number of continued trainingprograms for employees. Under this policySwisslog offers employees a variety ofopportunities for further individual develop-ment and for involvement in the imple-mentation of Swisslog‘s strategic goals.

18…19

Technical aspects aside, the focus of these

programs is on promoting mutual respect and

developing shared values for employees from

all areas and different cultures. This will create

the necessary conditions for the synergies that

will make Swisslog one of the world’s leading

suppliers of supply chain and I-fulfillment

solutions.

MPP – Management Potential Program

Working in partnership with the University of

St. Gallen (HSG), last year Swisslog devised a

program for tailored training logistics. In June

1999 about 50 employees took part in a pilot

project for the Management Potential Program

(MPP) that officially began in November 1999.

Employees from all different areas of Swisslog

are taking part in this project.

Swisslog managers and lecturers from the Uni-

versity of St. Gallen (HSG) support and super-

vise the participants according to a dual train-

ing 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.

The teams efficiently carry out customer,

research and development projects, focusing on

the project’s mission. Those taking part in this

exercise widen their expertise in particular

areas and in different management functions.

At the same time they improve their social and

communication skills through working in

diverse teams.

HSG lecturers and Swisslog mentors hold reg-

ular workshops devoted to the key issues of

corporate management. These workshop mod-

ules are also open to interested parties outside

the immediate group of participants and thus

yield benefits far beyond the actual circle of

Swisslog participants. The MPP is based on a

transparent and dynamic training concept.

Possible project subjects from additional areas

are already being prepared.

Swisslog Creates Intellectual Capital

The combination of theoretical training and

practical implementation in real-life situations

results in an above-average success rate which

is already noticeable in individual employees.

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,

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.

20…21

The four strategic topics

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.

e-Commerce /Web Sales

Customer Retention

Supply Chain Management

Corporate Culture

Fresh and varied - that’s how consumers like their bread. When it comes to freshness,the employees of Allied Bakeries produce anddistribute bread and other baked goodsaround the clock six days a week throughoutGreat Britain. For variety, Allied Bakeriesoffers its customers some 300 differenttypes of bakery products. And thanks to therevolutionary Swisslog order picking and dis-tribution system, all of the products areavailable oven fresh and in the quantitiesrequired to Allied Bakeries’ customers in theUK.

22…23

Allied Bakeries – Bread for Britain

The key to this service is Allied Bakeries’centrally regulated supply chain system,designed, developed and installed over thelast two years by Swisslog for the produc-tion plants in Cardiff. It enables sustainedgrowth in service levels and at the sametime reduces costs.

The same system used by Allied Bakeries in the

UK also enables Fazer Bakeries in Finland to

achieve optimal order picking and distribution.

In 1999, Swisslog thoroughly modernized the

control system used in Fazer’s sorting and

distributing operations.

The first shift in the company’s baking program

starts on Sunday morning. From then on, some

60 delivery trucks begin distributing Fazer

products to the firm’s customers. Due to its

three-shift operating schedule, many customers

receive orders up to three times daily. The

product mix changes depending on which day

of the week or what time of the day. The ship-

ping department sorts and dispatches roughly

20,000 crates of baked products daily. The last

deliveries are made at noon Saturday. Although

most of the firm’s products are sold in metro-

politan Helsinki, several traditional products,

such as Fazer’s popular and unsurpassed berry

pies, are marketed throughout Finland.

MultiPick, unrivalled anywhere in the world,

uses a host to record the type and quantity of

the products required and the sequence of

deliveries. On the basis of this information,

MultiPick collects the crates of bread, cakes and

pastries temporarily stacked on the floor in

reverse order. Using this last-in-first-out

system, the consignments can be loaded onto

the delivery trucks in the correct order. This

type of order picking saves time - crates need

not be stored first on racks. It is efficient - the

number of operating steps is reduced. And it is

hygienic - after the last delivery, floors can be

easily cleaned. There are no unnecessary storage

racks or equipment to collect dirt.

Fazer’s success is based primarily on the fresh-

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

24…25

accustomed to, Fazer opted for Swisslog’s fully

automatic MultiPick system. Developed by

Swisslog, this system was carefully tailored to

meet Fazer’s special requirements. Computer

simulations tested the results and ensured an

optimal, risk-free startup.

Fazer Bakeries Ltd.

• Member of the Karl Fazer Group

• Major market: metropolitan Helsinki

• Approximately 500 employees

in the firm’s bakery operations

• Including some 350 bakers

• Bread, baked goods, traditional pastries

• About 30% of Finland’s bread market

• Nearly 17,000 tons of bread annually

• About 21,000 tons of baked goods yearly

• Approximately 20,000-30,000 crates of

baked goods delivered daily

• Deliveries throughout Finland

• More than 200 different items

in product assortment

Advantages for Fazer Bakeries Ltd.

• Guaranteed quality and freshness

• Continuous distribution guaranteed to the

customer up to three times a day

• Rich variety of products offered daily

• Distribution in metropolitan

and peripheral areas

• Accurate order picking and sorting

• Last-minute order changes possible

• Saves time and space

• Efficient and hygienic

• Fazer well-positioned to grow

with Finnish baked goods market

Fazer – A Plenitude of Bread and Pastries

Today’s healthcare organizations faceincreasing costs and demands for greater efficiency in patient care. The application of automated material handling solutionsusing pneumatic tube systems, track vehiclesystems and automated guided vehicles has enhanced the delivery of patient care and relieved professional staff from manualtransport duties.

Swisslog’s Healthcare Industry Practice Groupstudies the material transport needs of eachindividual facility. Specialists plan, simulateand design each system solution for optimumperformance while highly skilled projectmanagement, installation and service person-nel ensure timely completion and reliablesystem operation.

26…27

Best Healthcare Practices

To improve productivity and response time

when moving vital materials, Swisslog’s

pneumatic tube systems are designed to trans-

port light-load unit materials at high speeds.

For larger and batch deliveries of up to 15 kg

many hospitals rely on track vehicle systems.

These systems also provide full service capabili-

ties to all departments. Swisslog’s automated

guided vehicles (AGVs) transport trolleys with

meal trays, clean and soiled laundry, central

supplies and surgical supplies.

Mayo Clinic Benefits from Automated Solutions

More than a decade ago, the Mayo Clinic in

Minnesota chose to complement its pneumatic

tube system with an extensive Swisslog

electric track vehicle (ETV) network. Installed in

several building sites, the ETV system is a com-

puter-controlled network of track with rails

that transports containers vertically and hori-

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, equiv-

alent 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

Stanford University Hospital

In 1989, the Stanford University Hospital and

Clinics underwent major renovation during

which the old pneumatic tube system was aban-

doned and gradually replaced with a new Swiss-

log 6-inch pneumatic tube system throughout

the 1990s. Swisslog’s project expertise enabled

the complex installation of subterranean pipe

between buildings while meeting very stringent

California earthquake construction standards.

At the same time, Swisslog installed a 6-inch

pneumatic tube system at the neighboring Lucile

Packard Children’s Hospital.

In 1999, the two hospitals merged their systems

while upgrading to Matrix, the latest generation

of pneumatic tube system. Today, both hospitals

use the system extensively for the transport of

vital materials between departments.

Sophien and Hufeland Clinics, Weimar, Germany

Six months before completion, the manage-

ment of this new 600-bed hospital opted for a

Transcar AGV solution to add to the Swisslog

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 distrib-

ution 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.

28…29

Kandang Kerbau Hospital and Changi General Hospital, Singapore

Through Swisslog experts’ continuous consult-

ing, the Singapore Government was convinced

to implement AGV systems in two new hospital

buildings. After system simulations and refer-

ence visits to Europe to study feasibility, the

Singapore Government decided to apply systems

that had never before been installed in similar

applications in that region. A worldwide comp-

etition took place, and Swisslog was chosen as

the preferred partner.

Additionally, a pneumatic tube system for light

materials and spontaneous sends was needed.

The Kandang Kerbau Hospital was planning a

small track vehicle system to handle medical

records and send supplies between the main

and outpatient pharmacies. Swisslog was

chosen to provide these systems as well, due to

its technical expertise and its ability to supply

all the necessary systems under one project

management. Today Kandang Kerbau and

Changi General with a total of 33 AGVs, a

13-station track system and over 120 pneumat-

ic tube stations take care of more than 1200

patients every day.

With e-commerce, the acquisition of a caror a computer on the web with customfeatures, performance and colors is nowpossible. Terms like ”just-in-time” production,“tailor-made” products and “post-productioncustomization” have become part of every-day language. In Corob’s business, the PaintIndustry, this revolution is called the TintingSystem and is the only logical answer to the very simple question: how can the varietyof colors be substantially increased?

30…31

Corob – Colorful Supply Chain Revolution

For more than 16 years, Corob has continuously

developed and provided color solutions for a

variety of needs from points of sale at the small

hardware store or major paint retailer to the

manufacturer of customized goods, thus setting

new standards in terms of dispensing accu-

racy, repeatability and speed. Corob’s complete

range of products and services includes

all the necessary elements to meet the needs of

an increasingly dynamic and flexible business

environment: automatic dispensers, shakers,

mixers, software packages and spectrophoto-

meters.

From Factory to Store – Past, Present andFuture

The concept behind the Corob Tinting System

looks very easy: moving color paint production

from the factory to the store. Before the

introduction of the Tinting System, the paint

industry supply chain included raw material

suppliers, machinery suppliers for the produc-

tion process and can suppliers.

For the Tinting System some new components have been included:

• Semi-finished products (colorants and base

paints) to be mixed at the point of sale

• Color cards, displays and other marketing

tools to select the desired color

• Data bases with formulas to obtain the

selected color by mixing colorants and bases

• Distributors to dispense colorants in the base

paints

• Mixers to blend colorants and bases

The advantages of a Tinting System for thepaint manufacturer are huge and not only interms of color service:

• Rationalization of the production area

• Decrease in cost of the final product

• Reduction in stock (raw material and finished

product)

In the US, the Tinting System has been a com-

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 dis-

pense and mix it. All this is done with Corob’s

dependable accuracy, repeatability and speed.

From Store to Factory – Present and Future

The same concept used for retail purposes can

also be effectively applied in a depot or a

factory. Even when the Tinting System is ex-

tensively used, there are still some orders for

colored paint that cannot pass through a store

(mainly contractors’ orders).

In this area, Corob has recently developed a

complete line of solutions called Tinting During

Filling (TDF). Relying on a modular approach

and extensive use of automation, TDF is the

appropriate solution for all requirements in

terms of productivity and flexibility, granting

huge advantages such as:

• Unlimited color range

• Minimum order of one can

• Reduction of product waste

• Dramatic reduction of labor costs

• Just-in-time production and delivery

32…33

With the Tinting During Filling concept, Corob

complements the range of systems it can offer

by providing the desired color paint customized

to each individual order thereby guaranteeing

optimum cost and quality.

From Factory to Home – Future

Still the last frontier of the Tinting System

concept has not yet been reached. Corob has

all the tools necessary to prepare orders for

colored paint online. Fully automated lines for

processing and delivering just-in-time orders

of colored paint with high productivity and

without required minimum quantities are

Internet-compatible. They offer a paint manu-

facturer with Corob’s TDF automated lines

electronic systems which process orders the

same moment they are sent.

In the near future, orders will be sent directly

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.

Corob – Colorful Supply Chain Revolution

34…35

At a trade show in Detroit, Michigan in1998, a Swisslog representative met theDirector of Business Development forMagneMotion, a young high-tech companyco-founded in 1996 by Professor RichardThornton, a former Massachusetts Instituteof Technology professor who had been doing research in the area of linear motorpropulsion for over three decades.

MagneTrak

Together they decided that the electro-magnetic technology being developed byMagneMotion could provide the coreconstituent of an automated transport tech-nology which would revolutionize currentwarehouse and process link applications. Thetechnology was efficient and offered manyalternatives to traditional transport systems.While having been well-received, Magne-Motion had encountered difficulty in get-ting potential customers to take the finalstep to commit to industrializing the systemand bring it to market.

Swisslog was willing to take that step. An

agreement was made to develop a prototype

using MagneMotion’s linear motor propulsion

technology and Swisslog’s reputable supply

chain solutions.

The result is MagneTrak, the automation logis-

tics response to increasing customer demand

for state-of-the-art solutions. MagneMotion

develops the software, electronics and mechan-

ical components to propel, power and steer the

transport vehicles, and Swisslog provides the

software necessary for the overall warehouse

management system. The two programs form a

completely integrated communications system:

handling an order from receipt by the ware-

house system to delivery at a specific location.

MagneTrak stands out among its competitors

due to the unique options it provides. Relying

entirely on linear synchronous motor propulsion,

magnetic guidance and magnetic switching,

MagneTrak has eliminated almost all moving

parts and gears including the bus bar used for

power and data transfer thereby drastically

improving reliability and reducing maintenance

requirements. Its speed and precision far exceed

that provided by traditional handling systems,

and its positioning sensor capabilities allow

orders to be located and modified with the click

of a mouse.

High Potential for e-Businessand High Tech Applications

All of these advantages make MagneTrak

particularly appropriate for the demands of the

quickly expanding e-business industry. Its

ability to manage high numbers of individual

payloads of up to 100 kg quickly and efficiently

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.

Cleanliness and low maintenance costs com-

bined with the previously mentioned features

also make MagneTrak extremely attractive

to the semiconductor and electronics industries.

The First Project

While creating the MagneTrak prototype, Swiss-

log was approached by a world-renowned Swiss

supplier of luxury mechanical goods to help

design a very demanding warehouse and trans-

port system to meet its increasing needs. The

value and fragility of the product being handled

was a major concern for the Swiss manufactur-

er. Upon seeing the advantages of MagneTrak,

the Swiss manufacturer readily accepted the

idea. Fully aware that the new handling system

was still in its preliminary phase, but highly

convinced of its superior performance compared

to traditional systems, the client expressed a

willingness to order in advance and wait for the

finished product. In this way, the developer of

an innovative new technology, MagneMotion,

found a partner with whom to bring the prod-

uct to market, Swisslog, and this team was

then able to sell the result of this partnership,

MagneTrak, to a demanding and receptive

customer.

The Nuts & Bolts (or absence thereof) of MagneTrak

MagneTrak was developed based on years of

academic research carried out by Professor

Richard Thornton. This work was then applied

to develop a handling system. The sophisticated

and complex system is able to handle a high

number of diverse payloads in a quick and

precise manner.

36…37

All acceleration, braking and steering is per-

formed 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 mag-

netic 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

system is achieved by dividing the track into

blocks with a controller for each one. A central

control which has overall command and opti-

mizes traffic flow throughout the whole system

serves a vital function. However, the system

can operate safely even if the central control is

completely disabled.

Each vehicle has a unique identification in the

control system. This control architecture also

permits immediate detection of any failure in

the system, the shutting down of that segment,

and the ability to work around it thereby avoid-

ing any shutdown or interruption in the trans-

port of material.

The joint development of two very capable

industry players, MagneTrak, is the answer to

greater demands for security and efficiency by

both traditional and e-business customers.

MagneTrak positions itself above other material

handling systems by increasing speed, accuracy

and cleanliness while minimizing maintenance

costs and system disruptions.

Innovation – From Professor to Provider

Richard Thornton, a former professor of Electri-

cal Engineering at the prestigious university

MIT for over forty years, conducted research in

the areas of moving magnetic fields and elec-

tronics and authored more than sixty papers.

Upon his retirement from MIT, Professor

Thornton made a transition from academia to

the private sector by applying three decades

of research to developing an automated

transport technology for a market demanding

innovative alternatives to conventional material

handling systems.

To do this, he co-founded MagneMotion in

1996. Their applications for automated material

handling for warehouses and distribution cen-

ters and their ability to scale the systems to

large and small payloads with a wide range of

transport needs made MagneMotion an obvious

choice for Swisslog, a leading provider of supply

chain solutions.

MagneTrak

Supply chain services do not often comprisethe core competence of many companies. Themore software is becoming an integral partof every supply chain solution, the strongerthe trend to outsource these tasks. In orderto free up necessary resources to concentrateon their main business areas, an increasingnumber of Swisslog customers are makingthe strategic decision to direct all availablemanpower and resources to their areas ofcore competence. Swisslog is well positionedto meet this increasing demand for out-sourcing and to completely take over thetechnical operation of customers’ logisticsfacilities.

24-7 – There when needed

For Swisslog customers, the most importantadvantage is that the full operating costsfor the facility’s operation can be clearlycalculated in advance. The customer benefitsfrom cost savings through economies ofscale, concentration of all resources on thecore business, continuous transfer of thelatest technology and the easing of internalmanagement’s tasks. By outsourcing supplychain management, companies may thenutilize their internal resources in the mostoptimal manner, cut costs in non-strategicareas and take advantage of the knowledgeand expertise of outside specialists.

38…39

With the Customer Support (CS) market grow-

ing, Swisslog continuously invests time and

resources to further develop its capacities in

this area. Its global network of Customer

Support specialists, almost 800 in 22 countries,

enables Swisslog to maintain a local presence

and closeness to its customers, thereby keeping

its promise to be a lifetime partner providing

individual consulting and support services to

each customer.

Having abandoned the classical customer

support model of reactive repair service and

advice in favor of the proactive customer care

approach long ago, Swisslog endeavors to anti-

cipate problems before they occur. The Swisslog

customer support team provides its customers

with consulting and assistance around-the-

clock, starting in the planning phase and lasting

throughout the lifetime of the supply chain

systems.

This method of proactive customer care is

accomplished through fault prevention and

maintenance of supply chain systems assured

by comprehensive service 24-7.

An Expert Help Desk manned by a team of soft-

ware specialists and local service technicians

ensures that nearly all system disturbances

and fault reports are solved either by phone,

Internet or locally.

Swisslog’s Customer Support philosophy of

putting a qualified, reliable team at the cus-

tomer’s disposal 24-7 is carried out by a CS

staff equipped with sound technical knowledge,

communication skills and social skills. By

recruiting young forward-thinking employees,

Swisslog is then able to provide a team that is

capable of monitoring and optimizing a logistics

system continuously throughout its entire

service life.

New Framework for Supply Chain Control

Schüco, a leading German window frame com-

ponent manufacturer, was experiencing

numerous problems with its logistics control

system, supplied by a Swisslog competitor, and

dissatisfied by complicated and time-consuming

emergency and failure restoration procedures

resulting from the highly specific structure

of its control system. As a result, the company

decided to look for a competent service

provider.

Swisslog’s Customer Support was called upon

to supply the latest control systems with a

standardized structure and program architec-

ture, running on a common and reliable

hardware platform. Swisslog’s scope of supply

was to include interfaces between the new

systems and Schüco’s host system as well as

state of the art support equipment for trouble-

shooting and intervention.

The new hardware and software and the entire

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,

Swisslog Customer Support built a test system

to simulate the interfaces and to check the

functionality of the entire system.

When the time came, Swisslog took over. The

old equipment was dismantled, the new compo-

nents installed, commissioning was completed

and testing was performed. By January 1st the

system was fully operational and Schüco

was able to resume production on January 2nd

as planned.

The Schüco example demonstrates Swisslog’s

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 effi-

cient and effective manner possible. Whether

the expert called in to modify a third party

installation or the original provider of a cus-

tomer’s system, Swisslog is the comprehensive

solutions provider who guarantees continued

support.

40…41

The Swisslog Millennium

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.

Design

Implementation

Operation and maintenance

Modernization

Implementation

Operation and maintenance

To be ready and confident to meet the demands

of the event, Swisslog introduced a successful

program to increase awareness of the Year

2000 issues. Regular reporting and monitoring

by the Customer Support network ensured

Swisslog got off to a good start. At the begin-

ning, it was necessary to carry out a detailed

inventory of all systems in a structured and

professional manner. In cooperation with the

local Y2K coordinators from each country,

Customer Support contacted every client to

offer Swisslog’s Y2K services.

Contracts and components from external sup-

pliers that were crucial to Swisslog’s customers

and their operational systems were checked so

that every conceivable microprocessor-embed-

ded system received a satisfactory Y2K declara-

tion. If necessary the customer’s system under-

went a detailed analysis and inventory of all

systems, equipment, hardware, software and

applications. The Y2K analysis reports included

all statements from 3rd party suppliers, along

with any recommendations for modifications

and upgrades. After installing recommended

modifications or patches to make the system

Y2K compliant, an on-site test was performed.

During the latter part of 1999, Swisslog com-

pleted 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

in the event of any major disruptions. Some

critics have questioned whether the high cost

of this massive effort was necessary. “Was the

money well spent? Of course it was.”

The results are long lasting. Today Swisslog’s

customer database is extensive and accurate,

and the customers’ systems are in excellent

shape. Swisslog’s internal hard- and software

systems are also in great condition. All compa-

nies that have managed their Y2K planning

well are in an excellent position to implement

all forms of online business systems.

Outsourcing – the way to full facility servicing

Swisslog’s 1999 signing of maintenance con-

tracts for two major logistics installations

by Queensland Property Investments (QPI) in

Australia is a prominent result of Swisslog’s

investment in Customer Support services for

this expanding market and demonstrates

client demand to outsource tasks that are not

part of their core competence.

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

basis covering operations for 16 hours daily and

carrying out preventive maintenance for eight

hours at night. QP2 is manned on a 24-hour

basis for a six-day work week with similar

operating conditions.

Swisslog provides full maintenance for the

facilities with all maintenance engineers being

Swisslog employees thereby allowing the cus-

tomer to apply its human resources to areas

where it has proven skill and expertise.

Peacock – a well orchestrated transition to the third millennium

Peacock, a company in the Otto Versand Group,

supplies computer hardware and software to

the wholesale and retail markets. Peacock’s

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.

42…43

During a second phase in 1998, Swisslog sup-

plied a comprehensive upgrade for the Oracle

system that had been in place at Peacock for

many years, similarly making it fit for the mil-

lennium. As a final measure in 1999 Swisslog

updated the system display, a minor, scheduled

modification that was deliberately planned for

1999.

With its long-term planning and efficient

implementation of all the necessary upgrades,

Swisslog helped its customer Peacock make the

change to the new millennium safely without

any loss of performance to any of its systems.

The key to success, however, is not only the

smooth transition to the year 2000, but also the

overall improvement in the cost-effectiveness

of the system that will allow Peacock to supply

its customers even more efficiently in the

future.

Dividend The Board of Directors will propose to the

Annual General Meeting on 17 May 2000 that a

dividend of CHF 2.50 per registered share be

paid out.

Investment policySwisslog aims to expand its presence worldwide

in the markets for Supply Chain Software,

Supply Chain Solutions, and Supply Chain

Systems & Products. Customer proximity, a

comprehensive range of services and a broad

geographic base are crucial to success.

Swisslog’s affirmed goal is to finance its inter-

nal growth through Swisslog generated funds.

To secure further growth through acquisitions,

the Board of Directors will propose to the

Annual General Meeting on 17 May 2000 that a

conditional capital increase be carried out

through the issue of a convertible bond with

pre-emptive rights for Swisslog shareholders.

Capital structureAs of 31 December 1999, 2,752,000 registered

shares at CHF 10 par value were outstanding

and entered in the Commercial Register. This is

the same number entered as of 31 December

1998.

Swisslog held neither authorized nor conditional

capital as of 31 December 1999. (The Board

of Directors will propose to the General Meeting

on 17 May 2000 that conditional capital be

created. See investment policy.)

DerivativesAs of 31 December 1999 there were no war-

rants in circulation issued by Swisslog or third

parties on the company’s registered shares.

Registration limitUpon introduction of the Federal Act on Stock

Exchanges and Securities Trading (“Stock Ex-

change Act”) on 1 January 1998, the percentage

limit (transfer restriction) imposed on the entry

of registered shares in the company’s share

register as stipulated in Art. 6 para. 2 of the

Articles of Association was automatically

rescinded.

The Articles of Association of Swisslog Holding

AG no longer contain a percentage ceiling on

the registration of shares. The Articles of Asso-

ciation have merely retained a nominee ruling

(Art. 6 para. 4) which stipulates that no more

than 5 percent of the registered share capital

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

company.

The object of this ruling is to prevent anyone

from anonymously securing control over

Swisslog Holding AG.

Shareholders’ duty to disclose holdingsThe shareholders of Swisslog Holding AG are

subject to the disclosure requirements of the

Stock Exchange Act. Under Art. 20 of the Stock

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

falls below a threshold of 5, 10, 20, 331⁄3, 50

or 662⁄3 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

CH-8021 Zurich

Phone +41 1 229 29 16

Fax: +41 1 229 29 35

Investor Relations

Under Art. 21 of the Stock Exchange Act, the

company, for its part, is obliged to publish any

such information that it receives.

Shareholders who, as of 1 January 1998, had a

holding of at least 5 percent of the voting rights

of Swisslog Holding AG are granted a period

of 3 years within which to make their disclosure,

provided they do not increase this holding to

the next highest threshold during this time.

Decision not to include opting-out and opting-up clausesSwisslog Holding AG has consciously decided

against writing into its Articles of Association

either an opting-out or an opting-up clause

which would waive or restrict the obligation im-

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

the Stock Exchange Act, a shareholder who

either directly, indirectly or by joint arrangement

with third parties acquires shares of Swisslog

Holding AG and thereby exceeds the threshold of

331⁄3 percent of the voting rights (whether

enforceable or not) is required to submit a pur-

chase or exchange offer to all shareholders of

Swisslog Holding AG. Moreover, the minimum

price stipulations defined in the Stock Exchange

Act will also apply to any such offer.

Own sharesAs of 31 December 1999, the Swisslog Group

held a total of 14,350 registered shares of

Swisslog Holding AG with a book value of CHF

1.8 million. These registered shares are carried

in the books of Swisslog Management AG at an

average price of CHF 126.

Remuneration for the Board of DirectorsThe remuneration paid to the Board of Directors

in 1999 took the form of an allocation of

5,250 registered shares of Swisslog Holding AG.

44…45

Shareholder structureApproximately 2,000 registered shareholders are

entered in the share register. Principal share-

holders were as per 31 December 1999:

• Chase Nominees Ltd, London

• Henderson Investors Ltd, London

• B.V.B.A. Group 2000 Participatie, Antwerp

ListingThe registered shares of Swisslog Holding AG

are traded on the main board of the Swiss

Exchange SWX.

The number of shares traded daily in 1999

averaged 7,825 with a mean volume of

CHF 1.6 million.

Securities ID numbers, ticker symbolsSecurities ID number: 675 227

ISIN: CH0006752270

Telekurs, Dow Jones: SLOG

Reuters: SUSZn

Key dates for the investor’s diaryPress conference and

analysts’ meeting: 14 April 2000

Annual General

Meeting: 17 May 2000

Half-year report: 22 August 2000

ContactJuhani Anttila

Delegate of the Board of Directors

Swisslog Holding AG

Webereiweg 3

CH-5033 Buchs/Aarau

Switzerland

Phone (direct) +41 62 837 95 12

Fax +41 62 837 95 56

e-mail swisslog@swisslog.com

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.

Swisslog at a glance – an overview for investors

Swisslog: the market view

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

Share price development of registered shares, monthly averages

46…47

1999 1998 1997 1996 1995

Price of registered shares 1) High CHF 475 186 125 83 72

Low CHF 114 95 86 61 54

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.

IVIII I II III IV I II III IV I II III IV I II III IV I II III IV I2000199919981997199619951994

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Organization48…49

Board of Directors of Swisslog Holding AGand Swisslog Management AGTruls D. Berg Chairman through 2002

Konrad Peter Vice-Chairman through 2002

Juhani Anttila Delegate through 2002

René Garo Member through 2001

Hans Hulsbergen Member through 2002

Guido Patroncini Member through 2002

AuditorsPricewaterhouseCoopers AG, Basel

Group AuditorsPricewaterhouseCoopers AG, Basel

Management CommitteeJuhani 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 AGWebereiweg 3

CH-5033 Buchs /Aarau

Phone +41 62 837 95 37

Fax +41 62 837 95 10

Swisslog Management AGWebereiweg 3

CH-5033 Buchs /Aarau

Phone +41 62 837 95 37

Fax +41 62 837 95 10

Telelift GmbHSiemensstrasse 1

D-82178 Puchheim

Phone +49 8980 00 10

Fax +49 8980 00 11 11

Transnorm System GmbHFörster Strasse 2

D-31177 Harsum

Phone +49 5127 402 0

Fax +49 5127 440 0

Transnorm System GmbHZiegelhüttenweg 4

D-65232 Taunusstein-Neuhof

Phone +49 6128 97 600

Fax +49 6128 97 6044

Walther Rohrposttechnik GmbHHansacker 5 + 7

D-26655 Westerstede

Phone +49 4488 8 38 90

Fax +49 4488 68 66

DenmarkDigitron ABFriis Hansens Vej 2

DK-7100 Vejle

Phone +45 75 85 81 33

Fax +45 75 85 95 60

FinlandCimcorp OySammontie 5

FIN-28400 Ulvila

Phone +358 2 6775 111

Fax +358 2 6775 200

Corob OySammontie 5

FIN-28400 Ulvila

Phone +358 2 6777 700

Fax +358 2 6777 701

FranceDigitron Benelux N.V.14, Rue des Cinq Perches

F-77645 Chellex-Cedex

Phone +33 1 60 95 06 06

Fax +33 1 60 95 06 15

Digitron Translift S.A.151, Avenue Aristide-Briand

BP 2275

F-68068 Mulhouse-Cedex

Phone +33 3 89 32 65 65

Fax +33 3 89 59 75 51

Swisslog Holding (France)90, avenue des Champs-Elysées

F-75008 Paris

Teledoc S.A.137, avenue Louis Roche

F-92635 Gennevilliers-Cedex

Phone +33 1 40 85 72 10

Fax +33 1 40 85 72 19

Great BritainCorob Service Ltd.706 Stirling Road, Trading Estate

GB-Slough, SL1 4SY, Berkshire

Phone +44 1753 756 553

Fax +44 1753 570 407

Digitron Ltd.Units 2 /3, Regents Court

Far Moor Lane

GB-Redditch B98 OSD, Worcs.

Phone +44 1527 517 333

Fax +44 1527 517 344

Digitron Ltd.706 Stirling Road,

Trading Estate

GB-Slough, SL1 4SY, Berkshire

Phone +44 1753 528 545

Fax +44 1753 570 407

Digitron Translift Ltd.Hallcroft Road

GB-Retford DN22 7PT, Notts.

Phone +44 1777 707 511

Fax +44 1777 860 778

Transnorm System Ltd.Ashchurch Industrial Estate

GB-Tewkesbury GL20 8TD

Gloucestershire

Phone +44 1684 291 100

Fax +44 1684 291 550

Telelift (UK) Ltd.Unit 2, The Old Flour Mill

Queen Street

GB-Emsworth P010 7BT

Hampshire

Phone +44 1243 377 131

Fax +44 1243 377 133

Europe

BelgiumDigitron Benelux N.V.Kernenergiestraat 47-49

B-2610 Wilrijk

Phone +32 3 830 38 00

Fax +32 3 828 89 26

GermanyCimcorp GmbHMonreposstrasse 53

D-71634 Ludwigsburg

Phone +49 7141 38 360

Fax +49 7141 38 36 10

Digitron-OWL GmbHMonreposstrasse 53

D-71634 Ludwigsburg

Phone +49 7141 22 600

Fax +49 7141 22 6055

Digitron-OWL Service GmbHMartin-Schmeisser-Weg 6

D-44227 Dortmund

Phone +49 231 758 9500

Fax +49 231 758 9512

Digitron-OWL-Service GmbHZiegelhüttenweg 4

D-65232 Taunusstein-Neuhof

Phone +49 6128 97 600

Fax +49 6128 97 6044

Louis Schierholz GmbHArsterdamm 110

D-28277 Bremen

Phone +49 421 8406 0

Fax +49 421 8406 202

Europe

ItalyCorob S.p.a.Via Agricoltura 103

I-41038 San Felice s.P. /MO

Phone +39 0535 66 30

Fax +39 0535 66 36 00

Digitron Italia S.r.l.Via Columella 40

I-20128 Milano

Phone +39 02 2707 111

Fax +39 02 2707 1150

Digitron Translift S.r.l.Via Rondò Bernardo, 28

I-10092 Beinasco/TO

Phone +39 011 358 08 18

Fax +39 011 358 15 47

NetherlandsCorob Color Robots B.V.Energieweg 10

NL-3641 RT Mijdrecht

Phone +31 297 285 121

Fax +31 297 286 221

Digitron Benelux B.V.P.O. Box 576

NL-4100 AN Culemborg

Phone +31 345 53 11 88

Fax +31 345 53 07 36

Transnorm System B.V.Energieweg 10

NL-3641 RT Mijdrecht

Phone +31 297 285 121

Fax +31 297 286 221

NorwayDigitron-Munck ASNedre Rommen 5

N-0988 Oslo

Phone +47 22 78 95 00

Fax +47 22 78 95 10

Digitron-Munck ASP.O. Box 2433 Solheimsviken

N-5829 Bergen

Phone +47 55 59 53 00

Fax +47 55 59 53 01

SwedenCorob Scandinavia ABDatavägen 6

S-436 32 Askim

Phone +46 31 748 1850

Fax +46 31 287 172

Digitron ABBrodalsvägen 13

S-433 38 Partille

Phone +46 31 336 60 00

Fax +46 31 336 60 08

Schierholz Svenska ABBrodalsvägen 13

S-433 38 Partille

Phone +46 31 336 61 70

Fax +46 31 336 60 12

Transnorm System ABCarl Trügers väg 13

S-590 12 Boxholm

Phone +46 142 557 00

Fax +46 142 555 55

SwitzerlandCorob International AGBahnhofstrasse 96

CH-5001 Aarau

Phone +41 62 837 95 37

Fax +41 62 837 95 10

Digitron-OWL AGErlenstrasse 32

CH-2555 Brügg/Biel

Phone +41 32 374 22 00

Fax +41 32 374 24 99

Digitron-OWL AG Webereiweg 3

CH-5033 Buchs /Aarau

Phone +41 62 837 41 41

Fax +41 62 837 44 99

Digitron-OWL Service AG Erlenstrasse 32

CH-2555 Brügg/Biel

Phone +41 32 374 22 00

Fax +41 32 374 24 99

Digitron-OWL Service AG Webereiweg 3

CH-5033 Buchs /Aarau

Phone +41 62 837 41 41

Fax +41 62 837 41 35

Swisslog Translift AGRainacherstrasse 47

CH-6010 Kriens / LU

Phone +41 41 329 88 00

Fax +41 41 329 88 99

Swisslog Software AGBahnhofstrasse 96

CH-5001 Aarau

Phone +41 62 834 15 00

Fax +41 62 834 17 95

Czech RepublicSchierholz Dopravni Technika s.r.o.Repna 20

CZ-321 00 Pilsen-Litice

Phone +420 19 78 28 272

Fax +420 19 78 28 272