    SG Holdings Group DX Strategy© 2006 - SG Holdings Co.,Ltd.All rights reserved. © 1999 - Sagawa Express Co.,Ltd. All rights reserved. © 2010 - SG SYSTEMS Co.,Ltd.All rights reserved. © 2020 by Future Architect, Inc.    Importance of DX Strategy in theLogistics IndustryDue to the rapid decrease in the working population associated with the declining birthrate and aging population in Japan, it has become increasinglydifﬁcult for the logistics industry to secure the personnel required to maintain logistics as logistics volume increases in the e-commerce market.
The SG Holdings Group is promoting automation and labor saving through the utilization of technology to continue the stable provision of socialinfrastructure in the form of logistics.
Going forward, we will constantly provide optimal solutions for customersby partnering with other companies in the same industry and other industries including start-ups basedon an open Group-wide IT infrastructure, promoting further DX through the utilizationof technologies such as IoT, AI and robotics, and further evolving total logistics.Growth Strategy = DX Strategy03DX Strategy

04Overview of DX Measures

05Evolution of Digital Infrastructure

06[Case Study]Value through Digital Infrastructure

07Improving Operation Efﬁciency

08Strengthening of Services

09DX Promotion System

10DX Strategy Roadmap

11© 2006 - SG Holdings Co.,Ltd.All rights reserved. © 1999 - Sagawa Express Co.,Ltd. All rights reserved. © 2010 - SG SYSTEMS Co.,Ltd.All rights reserved. © 2020 by Future Architect, Inc.    Growth StrategyDX StrategyThe SG Holdings Group targets the entire logistics industry, and provides solutions for increasing customersʼ competitive advantages through the strengthening of totallogistics functions. We have positioned “DX” as an important strategy in order to achieve the sustained development of this unique business model.

The entire logisticsindustry is our targetStrengthening oftotal logistics functionsCustomerProvision of total logisticsEntirelogistics market

24Approx.

Expresspackagedeliverytrillion yenTruck transportationmarketApprox.

14 trillionyenGlobalTMS    Express packagedelivery marketApprox.

3PLSG Holdings Group DX Strategy3 trillionyenSource: Japan Association for Logistics and Transport “Logistics in Numbers 2019”; Yano Research Institute Ltd. “Logistics Market 2019”* Entire logistics industry: According to Logistics in Numbers 2019, the total operating revenue of the logistics industry (trucking industry, JR Freight, coastal shipping industry, international shipping industry, harbor transportation industry,air cargo business, transportation business using railways, transportation business using international shipping, transportation business using airways, warehousing industry, truck terminal industry) in FY2017* Trucking business: According to Logistics in Numbers 2019, the total operating revenue of the trucking business in FY2017* Express package delivery business: Logistics Market 2019© 2006 - SG Holdings Co.,Ltd.All rights reserved. © 1999 - Sagawa Express Co.,Ltd. All rights reserved. © 2010 - SG SYSTEMS Co.,Ltd.All rights reserved. © 2020 by Future Architect, Inc.    DX StrategyThe goal of the SG Holdings Groupʼs DX Strategy is to contribute to the realization of a sustainable society through the resolution of issues faced by society and customers.
In order to achieve this goal, we will engage in “evolution of digital infrastructure,” “improving operation efﬁciency” and “strengthening of services.”Understanding medium- to long-term risksand business opportunitiesGoalSolving societyandcustomer issuesContribution toa sustainable societyEstablishment of a sustainedcompetitive advantageMeasuresStrengtheningof servicesImprovingoperationefﬁciencyEvolution of digitalinfrastructure© 2006 - SG Holdings Co.,Ltd.All rights reserved. © 1999 - Sagawa Express Co.,Ltd. All rights reserved. © 2010 - SG SYSTEMS Co.,Ltd.All rights reserved. © 2020 by Future Architect, Inc.    Overview of DX MeasuresAs mentioned above, DX measures are made up of three measures: evolution of digital infrastructure, improving operation efﬁciencyand strengthening of services. In each of these, we actively conduct open innovation through partnerships with diverse stakeholders such as customers anddevelopment partners, and accelerate and develop initiatives.

Overview of SG Holdings Groupʼs DX MeasuresStrengthening of servicesImproving operation efﬁciencyOfﬁceoperationsTMSGOAL®

Expansion of platform servicesthrough partnerships with customersand other companiesGlobalPartnering with other companiesin the same industry and other industriesOpenInnovationPartnershipwithcustomersDeveloptngFrontoperationsPartnershipwith venturecompaniesPartnership with development partnersmen

TestiFurther acceleration of agiledevelopment and ongoing strengtheningof internalization of developmentImprovement of productivity throughcollaboration with other companiesand utilization of advanced technologyDesign

Requirdeﬁ ementnitionsRob

otIoTFurther utilization of advanced technologythrough partnerships with othercompaniesʼ services and venture companiesEvolution of Digital Infrastructure© 2006 - SG Holdings Co.,Ltd.All rights reserved. © 1999 - Sagawa Express Co.,Ltd. All rights reserved. © 2010 - SG SYSTEMS Co.,Ltd.All rights reserved. © 2020 by Future Architect, Inc.    Evolution of Digital InfrastructureStrengtheningof ServicesImprovingOperation EfﬁciencyEvolution of Digital InfrastructureIn the “evolution of digital infrastructure,” we will further accelerate DX through agile development, utilization ofadvanced technology and further expansion into DX investment based on the departure from legacy systemsand internalization of development and maintenance that have been achieved until now.

Acceleration of DX through further investment followingthe outgrow from legacy systems and internalization of productionPeopleGoods and dataMoneyInternalization ofdevelopment and maintenanceOutgrow from legacy systemsOngoing reduction of IT costsFurther acceleration ofagile developmentFurther utilization ofadvanced technologyFurther expansion ofDX investmentDev

AIelopRobotIoTmentIT costsExpansion ofstrategic investment

TestingGroupwide platformDesign

Requirdeﬁ ementnitionsBig dataReduction of IT costsFreightLogisticsAccountsGlobal

FYPayment© 2006 - SG Holdings Co.,Ltd.All rights reserved. © 1999 - Sagawa Express Co.,Ltd. All rights reserved. © 2010 - SG SYSTEMS Co.,Ltd.All rights reserved. © 2020 by Future Architect, Inc.    [Case Study] Value through Digital InfrastructureThe Group is using IT to visualize major KPIs such as unit price, number of packages, cost, quality and capacity. This enables proﬁt management of each package.
We have achieved stable business growth through the continuation of efforts to receive appropriate freight tariffs based on the visualized proﬁtability of packages.

Realization and effect of data-driven managementNumber of packageshandled (100 million)Groupwide platform(Big data)Unit price(yen)13.214.312.712.512.5613LoadingratioNumberofpackagesUnit price644641549Delivery

460Operation13.112.7TimeCost13.014.0'13486'14503'15509'16511'17'18'19'20'21Operating incomeCapacityFY2013/331billion yenFY2021/3101.7billion yen© 2006 - SG Holdings Co.,Ltd.All rights reserved. © 1999 - Sagawa Express Co.,Ltd. All rights reserved. © 2010 - SG SYSTEMS Co.,Ltd.All rights reserved. © 2020 by Future Architect, Inc.    Improving Operation EfﬁciencyStrengtheningof ServicesImprovingOperation EfﬁciencyEvolution of Digital InfrastructureIn the “Improving operation efﬁciency,” we are seeking to improve efﬁciency through DX for logistics operationsat the core of the Group such as the Sales Drivers® (SD) of Sagawa Express, and backyard operations supporting these.
We will improve productivity of operations related to logistics even more than in the past.

Improvement of productivity through collaboration with othercompanies and utilization of advanced technologyDriver operationsWarehouse operationsOfﬁce operationsPartnerships with companieswith data and algorithmsStrengthening of R&D partnershipswith venture companies, etc.

Utilization of AI-OCR, etc.
developed in houseImprovement of productivity ofSDs and delivery partnersFurther effective utilization ofadvanced technologyFurther improvement ofefﬁciency of backyard operationsPresentDigital deliveryslip information

AIAbsentRobotAbsentIOTElectricity usageinformationHR

AIAI-OCRAccountingAGVRPAGeneralaffairsLegalaffairs© 2006 - SG Holdings Co.,Ltd.All rights reserved. © 1999 - Sagawa Express Co.,Ltd. All rights reserved. © 2010 - SG SYSTEMS Co.,Ltd.All rights reserved. © 2020 by Future Architect, Inc.    Strengthening of ServicesStrengtheningof ServicesImprovingOperation EfﬁciencyEvolution of Digital InfrastructureIn “strengthening of services,” we will engage in deeper partnerships not only within the Group but also with customers and other companiesin the same industry, expand logistics “platform” services and seek to resolve logistics issues.The three pillars of TMS, GOAL® andGlobal provided as total logistics realize the strengthening of services through the creation of optimal platforms for each of these.

Expansion of platform services through partnerships withcustomers and other companiesTMSGOAL®

GlobalData linkage with sendersand delivery partnersData linkage on warehouse anddelivery capacity within industriesAPI linkage with companies related tocross-border e-commerceProvision of package andvehicle matching servicesProvision of optimal logisticssolutions across companiesProvision of consistentglobal servicesTMS platformGOAL® platformGlobal platformSuppliersLogisticspartnersAPIlinkageE-commercesolutioncompaniesE-commercemalls© 2006 - SG Holdings Co.,Ltd.All rights reserved. © 1999 - Sagawa Express Co.,Ltd. All rights reserved. © 2010 - SG SYSTEMS Co.,Ltd.All rights reserved. © 2020 by Future Architect, Inc.    DX Promotion SystemLed by SG Holdings handling the formulation of strategy, we are promoting DX strategy by partnering with Group companies with strengths in each areasuch as Sagawa Express.The system is being created by SG Systems, which has a long track record in the area of logistics x IT.
Furthermore, we will actively pursue alliances with a variety of partners in both strategy and execution.

SG Holdings Groupʼs DX Promotion SystemSG Holdings GroupSG HoldingsStrategy- Commitment -Group ManagementStrategy MeetingsIT (and DX) StrategyCommitteeSagawa Express and Group companiesPlanningExecution- Open innovation -AcceleratorProgramVenture BusinessGrand PrixSG SystemsCreationDX strategypartner companiesStrategy formulation and promotion,human resource development supportVenture companiesNew business and service planningOther companies in the sameindustry and other industriesBusiness and service partnershipsVenture companies- Agile delivery -DX and ITSpecialist SystemPartnerAllianceAdvanced technology research and developmentDX and IT PersonnelDevelopment ProgramDevelopmentpartner companiesSystem development, maintenance and operation© 2006 - SG Holdings Co.,Ltd.All rights reserved. © 1999 - Sagawa Express Co.,Ltd. All rights reserved. © 2010 - SG SYSTEMS Co.,Ltd.All rights reserved. © 2020 by Future Architect, Inc.    DX Strategy RoadmapThe SG Holdings Group has already overcome the “2025 Digital Cliff” pointed out by the Ministry of Economy, Trade and Industry in 2018, and is engaged in theenhancement, creation and transformation of business. In future, we will also engage in solving social issues through further promotion of DX strategy.

Resolution ofsocial issuesFuture（SDGs）PresentPastOvercoming the“2025 Digital Cliff”Strengtheningof ServicesImprovingOperationEfﬁciencyEvolution ofDigitalInfrastructure●GOAL® service●Platform service(TMS/GOAL®/Global)●Smart API service●TMS service●Providing drivers with information●Big data analysis (cost management)●Reduction of IT costs●Outgrow from legacy systemsandinternalization of production ofsystems●Improving efﬁciency of driverandwarehouse operations using AI,robotics, etc.
●Improving efﬁciency of backofﬁceoperations through RPA/AI-OCR,etc.
●Ongoing IT cost reduction andexpansion of DX investment●Creation of an agile developmentsystem●Open Innovation for:- resolution of social issues- resolution of industry issu

es●Utilization of advanced technology- fundamental labor savingEnhancement,creation andtransformationof businessand data for:- dramatic improvement of productivity●Ongoing evolution of digital infrastructure for:- further normalization ofIT costs- expansion of agile delivery© 2006 - SG Holdings Co.,Ltd.All rights reserved. © 1999 - Sagawa Express Co.,Ltd. All rights reserved. © 2010 - SG SYSTEMS Co.,Ltd.All rights reserved. © 2020 by Future Architect, Inc.