ECR Europe Board Meeting 18 March / 2005 Global Scorecard Review Focus on Implementation Measures, Benchmark Results and Objectives Jim Flannery Managing Director- Customer Development Procter & Gamble Global Operations

The Global Scorecard

The Global Scorecard A World Wide Industry Approach to Track and Measure the Implementation of Standards and the Resultant Business Improvement Hard Business Outputs –(KPIs like inventory Levels, out-of-stocks, order to delivery cycle time, service levels) Implementation of Global Standards –(Foundational elements like barcodes, Electronic communication) Implementation of Collaborative Best Practices –(like Category Management, Data Synchronization or CPFR)

The Global Scorecard A World Wide Industry Approach to Track and Measure the Implementation of Standards and the Resultant Business Improvement Hard Business Outputs –(KPIs like inventory Levels, out-of-stocks, order to delivery cycle time, service levels) Implementation of Global Standards –(Foundational elements like barcodes, Electronic communication) Implementation of Collaborative Best Practices –(like Category Management, Data Synchronization or CPFR) For those who have not seen the 2004 changes to the Footprint, you will note the elevation of ECR Europe’s Collaborative Shopper Value Creation work as a Foundational Strategy for Demand Creation Activity

The Global Scorecard A World Wide Industry Approach to Track and Measure the Implementation of Standards and the Resultant Business Improvement The Process: Once a year, since 2002, complete the GCI Compliance Scorecard Winter / Spring Case Studies & Improvement Plans Fall Board Meeting Review Results and Progress July – Sept. Complete Scorecards Spring Board Meeting Review Improvement Plans & Launch next year cycle

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The GCI Compliance Scorecard looks like this….. Qualitative Assessment of Capabilities (not going to spend much time here) Quantitative Assessment of Resultant Key Performance Indicators

Quantitative Assessment of the Implementation GS-1 Standards and Business Processes

Global Commerce Initiative Compliance Scorecard 2004 Benchmark Results Winter / Spring Case Studies & Improvement Plans Fall Board Meeting Review Results and Progress July – Sept. Complete Scorecards Spring Board Meeting Review Improvement Plans & Launch next year cycle

So How Did We Do? PARTICIPATION # of Scorecards (+78%) # of Companies (+18%) Countries  NA  EMEA  LA  Asia (+130%) 185 (+68%) 29 (+16%) 67 (+168%) Growth of Participation Was driven by Companies Broadening their geographic representation To be a better measurement tool, we need to reach out to more companies.

There are 11 Implementation Measures –The first 4 are focused on the use of GTINS, or barcodes at various stages in the supply chain.

The Global Trade Item Number is a globally unique number to identify trade items, and is therefore the foundation for Global e-commerce. “Umbrella" term used to describe the entire family of EAN/UCC codes, including EAN/UCC-8, UCC-12 (UPC), EAN/UCC-13, and EAN/UCC/DUN-14. What is a GTIN ?

Product & Shipment Identification – GTIN at Consumer Unit Level Use of EAN/UCC 14 digit Global Trade Identification Number (GTIN) at the consumer item level including (1) the ability to store and process 14 digit numbers in your interface with your trading partners, (2) the ability of all point-of-sale systems in your company if you have them to scan EAN*UCC-13, UPC-12 and EAN*UCC-8 barcode symbols and (3) application of automatic data capture (ADC) for bar-coding scanning and/or radio frequency applications (RFID). SimpleWeighted Total92.4%92.2% NA86.3%90.4% EMEA94.4%98.3% LA100% Asia84.2%76.3% Nothing Planned Plans Agreed Pilots Started Roll-out Started Full Implementation European Analysis- GTIN at Consumer Unit Level # of RecordsBusiness TypeCum. $US ValueWtd. Result 90 Manufacturers $58.4Billion97.9% of Units allocated a GTIN 28 C&C / Retailers / Wholesalers $76.7Billion98.6% of Units allocated a GTIN 118 All $138.1Billion98.3% of Units allocated a GTIN Discussion – Why Not 100%? Because there are items transacted that do not have barcodes today (flowers, bulk, fresh) These items require RSS technology

Product & Shipment Identification – GTIN at Trade (Case, Carton) Unit Level Use of EAN/UCC system (14 digit Global Trade Identification Number (GTIN) at the Trade Unit level (case, carton) and application of automatic data capture (ADC) for bar-coding scanning and/ or radio frequency applications (RFID). SimpleWeighted Total86.5%74.9% NA84.7%69.4% EMEA88.3%91.9% LA99.9%100% Asia79.8%82.3% Nothing Planned Plans Agreed Pilots Started Roll-out Started Full Implementation European Analysis- GTIN at Trade Unit Level # of RecordsBusiness TypeCum. $US ValueWtd. Result 89 Manufacturers $57.5Billion96.4% of Trade Units allocated a GTIN 27 C&C / Retailers / Wholesalers $82.2Billion88.7% of Trade Units allocated a GTIN 116 All $139.7Billion91.9% of Trade Units allocated a GTIN Discussion The largest GAP is the lack of GTINs application at the “Inner pack ” level. It appears that the 89 responding manufacturers do a better job than is “averagely” seen by the retailer segment.

Product & Shipment Identification – Serial Shipping Container Code (SSCC) Use of Serial Shipping Container Code, at the pallet / container level using the EAN*UCC Company prefix as it’s base for unique identification on a global basis. SimpleWeighted Total42.5%65.7% NA46.8%75.7% EMEA50.8%39.8% LA0% Asia16.6%19.7% Nothing Planned Plans Agreed Pilots Started Roll-out Started Full Implementation European Analysis- Use of Serial Shipping Container Codes # of RecordsBusiness TypeCum. $US ValueWtd. Result 55 Manufacturers $42.6Billion78.8% pallets/ UL’s labeled with SSCC 27 C&C / Retailers / Wholesalers $83.2Billion19.8% pallets/ UL’s labeled with SSCC 82 All $125.8Billion39.8% pallets/ UL’s labeled with SSCC Discussion. It appears that the 55 responding manufacturers do a better job than is “averagely” seen by the retailer segment. This is a capability underutilized in Europe.

Product & Shipment Identification (GTIN) Violations What % of items sold / received have exceptions to the Global Trade Identification Number (GTIN) allocation guidelines?. SimpleWeighted Total2.7%3.0% NA2.4%3.5% EMEA2.0%1.1% LA0.9%2.9% Asia5.1%3.8% European Analysis- % of items with Know GTIN Allocation Rules Violations # of RecordsBusiness TypeCum. $US ValueWtd. Result 43 Manufacturers $42.2Billion1.4% of items have know violations 26 C&C / Retailers / Wholesalers $74.3Billion1.0% of items have know violations 69 All $116.6Billion1.1% of items have know violations Discussion. It appears that far fewer companies are tracking / measuring data quality. (30% less records than most other measures) Those that are measuring know they have errors that need to be fixed. Since “you manage what you measure” and since “data quality” is the root of synchronization benefit – this should be a high priority.

Location Identification – Global Location Identification Number (GLN) Use of EAN/UCC Global Location Identification Number (GLN) to identify either physical or logical locations where Supply Chain events, transactions or hand-offs occur. SimpleWeighted Total50.8%66.0% NA26.4%62.8% EMEA71.6%82.1% LA49.5%69.6% Asia18.8%13.4% Nothing Planned Plans Agreed Pilots Started Roll-out Started Full Implementation European Analysis- % Shipping / Receiving Locations Allocated a GLN # of RecordsBusiness TypeCum. $US ValueWtd. Result 85 Manufacturers $57.1Billion69.8% of ship / Rec. locations allocated a GLN. 28 C&C / Retailers / Wholesalers $85.4Billion90.3% of ship / Rec. locations allocated a GLN 113 All $142.5Billion82.1% of ship / Rec. locations allocated a GLN Discussion. It appears that Retailer use of the standard is outpacing manufacturers. A barrier has been the lack of GLN Allocation rules (like GTIN allocation rules). These allocation guidelines are set to be published in June 2005.

Use of the Electronic Product Code as a unique identification using RFID tags the appropriate level (pallet, container, traded unit or consumer unit) for the industry segment. Electronic Product Code (EPC) SimpleWeighted Total NA EMEA LA Asia No Implementation to Measure yet Nothing Planned Plans Agreed Pilots Started Roll-out Started Full Implementation

Use of the EAN.UCC GPC (Global Product Classification) standards to classify and categorise products in the areas of forecasting, planning, searching, procurement, category management and global data synchronization in the communication both internally within the organizations and between trading partners.. Product Classification Standards SimpleWeighted Total17.0%10.0% NA25.6%9.9% EMEA16.8%10.1% LA15.8%5.0% Asia18.8%11.0% Nothing Planned Plans Agreed Pilots Started Roll-out Started Full Implementation European Analysis- GTINs catalogued consistently with GPC Standards # of RecordsBusiness TypeCum. $US ValueWtd. Result 96 Manufacturers $65.6Billion17.6% consistent with GPC Standards 6 C&C / Retailers / Wholesalers $48.6Billion0.0% consistent with GPC Standards 102 All $114.2Billion10.1% consistent with GPC Standards Discussion. Product Classification Standards new in Mid-2004 Fast Moving Consumer Goods including Food, Beverage, Tobacco completed first. Manufacturers just starting to implement. Gen. Merchandise, DIY, Hardlines, Apparel to follow Retailers need multiple categories available to use the capability –This critical mass of categories should be available now.

Global Data Synchronization The establishment, loading, registering and synchronizing of item and party data based on EAN.UCC standards (GDS Network) SimpleWeighted Total16.3%12.2% NA16.6%9.9% EMEA18.7%20.8% LA10.6%4.6% Asia 8.7%3.0% Nothing Planned Plans Agreed Pilots Started Roll-out Started Full Implementation European Analysis- % Sales Synchronized via Standards Compliant Data Pool Note: in 2005, measure will be adjusted to read “GS-1 Certified Data Pool” # of RecordsBusiness TypeCum. $US ValueWtd. Result 97 Manufacturers $66.7Billion21.2% of sales synchronized 11 C&C / Retailers / Wholesalers $65.4Billion20.4% of sales synchronized 108 All $132.1Billion20.8% of sales synchronized Discussion. Results are probably overstated relative to new “certified” measure versus simply “standards compliant” GDSN Roadmap / GlobalRegistry now in place. Results should grow. Sinfos, WWRE, Transora, GXS, GS-1UK Data Pool, UCCNet (and 4 other) Data Pools now “Certified” The “work” is to get non-certified data pools “certified” or move to a certified data pool. Only 11 (versus average 28) retailers responded to this measure.

Use of Electronic Message Capability Use of standard electronic messages to support the product replenishment process between trading partners. These include orders, advanced shipment notices (or despatch advice), receiving advice and invoices. Messages should be transmitted using EDI via EANCOM, web-EDI or XML standard formats. SimpleWeightedSimpleWeighted Total52.5%86.9%44.8%82.8% NA73.0%94.6%65.7%91.2% EMEA56.3%71.7%51.6%66.1% LA41.5%39.4%29.0%35.8% Asia44.2%48.7%28.4%35.1% % of Orders% of Invoices Nothing Planned Plans Agreed Pilots Started Roll-out Started Full Implementation European Analysis- % of Orders & Invoices transacted via EDI or XML # of RecordsBusiness TypeCum. $US ValueWtd. Result Manufacturers $70.7Billion $67.8Billion 62.2% of orders EDI or XML 57.6 % of invoices EDI or XML 29 C&C / Retailers / Wholesalers $85.4Billion79.6% of orders EDI or XML 72.9% of invoices EDI or XML All $156.2Billion $153.2Billion 71.1% of orders EDI or XML 66.1% of invoices EDI or XML Discussion. Electronic Messaging for orders and invoices remains an underutilized capability in Europe. In this case, it appears that the participating retailers make more use of the capability than retailers “averagely” seen by suppliers.

Retailer Checkout Capability What % of Checkouts can scan a 13 Digit Barcode? What % of Checkouts can scan Reduced Space Symbology (RSS)? SimpleWeightedSimpleWeighted Total97.6%99.9%17.8%6.3% NA99.8% 1.7%0.3% EMEA96.6%99.9%** LA Asia99.0%99.8% % can scan 13 Digit GTIN % can read RSS European Analysis- Check-Out Capability to read barcodes # of RecordsBusiness TypeCum. $US ValueWtd. Result 29 <5 C&C / Retailers / Wholesalers $85.4Billion ** 99.9% checkouts can scan 13 Digit barcode N/A% of checkouts that can read RSS Discussion. RSS Standards are new – Sunrise 2008 Date Establishes

Implementation Measures 2004 Benchmark Goal Timeframe % of consumer units allocated GTIN % Jan 2008 Requires RSS % of cases/cartons/inners allocated a GTIN % Jan 2007 Gap is “inners” % of pallets/unit loads labeled with SSCC % Jan 2007 % of item exceptions to GTIN allocation guidelines % 3.0< 1 Jan 2006 This is all about clean data % of shipping or receiving locations that have been allocated a GLN % Jan 2007 Requires GLN allocation rules % of orders transacted via EDI or XML % Jan 2005 % of invoices transacted via EDI or XML % Jan 2006 % of sales with synchronized master data between trading partners via standards compliant data pools % Jan 2007 From 13 – 26 in 05, 26 – 50 in 06 % of GTINs that are catalogued consistently with Global Product Classification Standards % Jan 2007 % of checkouts that can scan a 13 digit barcode % Jan 2005 % of checkouts that can scan Reduced Space Symbology (RSS) % Jan 2008 We now have Benchmark Data to Establish GLOBAL Goals, Timelines and Measure Real Progress

Implementation Measures WW 2004 Benchmark WW Goal Europe 2004 Benchmark Europe goal % of consumer units allocated GTIN% (1/08) 98.3 % of cases/cartons/inners allocated a GTIN% (1/07) 91.3 % of pallets/unit loads labeled with SSCC% (1/07) 39.8 % of item exceptions to GTIN allocation guidelines % 3.0<1 (1/06) 1.1 % of shipping or receiving locations that have been allocated a GLN % (1/07) 82.1 % of orders transacted via EDI or XML% (1/05) 71.7 % of invoices transacted via EDI or XML% (1/06) 66.1 % of sales with synchronized master data between trading partners via standards compliant data pools % (1/07) 20.8 % of GTINs that are catalogued consistently with Global Product Classification Standards % (1.07) 10.1 % of checkouts that can scan a 13 digit barcode % % of checkouts that can scan Reduced Space Symbology (RSS) % (1/08) ** What Goals, Timelines and Measures Will You Set for European Manufacturers Objectives?

A Quick Look at Key Performance Indicators

Criterion – EUROPE Totals Units Sample total revenue US$m# Records 2004 Sample Weighted Avg 2003 Simple Average 2002 Simple Average Key Performance Indicators Service Level / Unit Fill Rate% On-Time Delivery% Manufacturer/Supplier's Finished Goods Inventory Cover days Retail Distribution Centre Inventory Cover days Retail Store Inventory Coverdays On-Shelf/Point-of-Sale Out-of- Stocks % Lead Timehours Distribution Costs (% of sales value)% Invoice Accuracy - Master Data% Invoice Accuracy%

Criterion – EUROPE MANUFACTURERS Key Performance IndicatorsUnits Sample Weighted Avg Sample total revenue US$m# Records Service Level / Unit Fill Rate % On-Time Delivery % Manufacturer/Supplier's Finished Goods Inventory Cover days Retail Distribution Centre Inventory Cover days Retail Store Inventory Cover days On-Shelf/Point-of-Sale Out-of-Stocks % Lead Time hours Distribution Costs (% of sales value) % Invoice Accuracy - Master Data % Invoice Accuracy % Criterion EUROPE C&C / RETAILERS / WHOLESALERS Key Performance IndicatorsUnits Sample Weighted Avg Sample total revenue US$m# Records Service Level / Unit Fill Rate % On-Time Delivery % Retail Distribution Centre Inventory Cover days Retail Store Inventory Cover days On-Shelf/Point-of-Sale Out-of-Stocks % Lead Time hours Distribution Costs (% of sales value) % Invoice Accuracy - Master Data % Invoice Accuracy %

Key Performance Indicators and Implementation Measures

QUESTIONS ?

Implementation Measures WW 2004 Benchmark WW Goal Europe 2004 Benchmark Possible Europe goals % of consumer units allocated GTIN% % by Jan 2008 % of cases/cartons/inners allocated a GTIN% % by Jan 2007 % of pallets/unit loads labeled with SSCC% % by Jan 2007 (weighted average) West 60, East 30 % of item exceptions to GTIN allocation guidelines % 3.0<11.1< 1 by Jan 2006 % of shipping or receiving locations that have been allocated a GLN % % by Jan 2007 (under discussion) % of orders transacted via EDI or XML% (2005) % by Jan 2007 (weighted average) West 80, East 30 % of invoices transacted via EDI or XML% (2006) % by Jan 2007 (weighted average) West 70, East 20 % of sales with synchronized master data between trading partners via standards compliant data pools % % by Jan 2007 (via certified data pools) % of GTINs that are catalogued consistently with Global Product Classification Standards % % Jan 2007 % of checkouts that can scan a 13 digit barcode % to be confirmed by retailers % of checkouts that can scan Reduced Space Symbology (RSS) % Under discussion Proposed Targets for e-commerce standards (manufacturer perspective)