Collaborative Planning, Forecasting and Replenishment (CPFR) Steve Whited & Dennis Van Deusen

Objectives Define and understand CPFR Understand CPFR Goals, Costs and Benefits Describe CPFR at MeadWestvaco Consumer & Office Products (MCOP)

CPFR Defined An Established process where by Vendor and Retailer communicate forecasts in order to better align common strategic goals. Synchronization of supply and demand will improve each party’s overall performance. Planning Forecasting Replenishment

CPFR Cost/Benefit Costs Programming;Software Enhancements; EDI Dedicated Analysts - increased payroll Retailer may charge you to participate Potential fees if not successful Benefits More accurate forecasts Improve fill rate and in stocks = better sales Reduce Vendor and Retailer inventory levels Reduced “fire drills” & premium freight; Competitive Edge

About MCOP - Sidney 87 years in the dated goods business Keith Clark, AT-A-GLANCE, Mead, MeadWestvaco,MWV Products Brands Customers Commercial Inventory Management Program - late '80’s VMR/VMI: ARIES model developed (Cornell University) in use 1990.

Commercial Market Inventory Management Focus- dated goods sold to wholesalers and contract stationers “Simplified, low tech” CPFR MCOP Analysts work directly with major accounts Annual meetings, weekly teleconferences Focus on annual numbers, major ordering events, units Sales Rep. administered program for smaller accounts Stock Order Guides Inventory Monitors Overstock returns and transfers

CPFR MeadWestvaco’s version of CPFR Vendor creates the forecast. Identifying exceptions is a shared responsibility. Forecasts are for a full season and are not broken down by week/month. Forecasts are calculated and communicated in what we anticipate the Retailer will sell, not what we will ship them. Weekly conference calls are used to review sales trends, adjust forecasts and deal with any “issues.” Replenishment is done in various methods. Direct to store Ship to warehouse Cross-Docks

The Retailers use many means to evaluate success of the program Comp sales. Gross Margin Dollars generated. In Stock percentage - an extreme challenge in our category. Lost Sales Dollars. On time and Complete. Measurements

A Representative Time Table December – Marketing Generates a proposed Mix for Next year’s implementation based upon current POS. January – Proposed Mix is presented to retailers. It includes display transition and forecasted unit and dollar sales. A line review with the Retailer is completed for current selling season. April – Retailer communicates mix. Vendor adjusts forecasts based on sku drop/adds. Vendor and Retailer to review replenishment timeline and adjust forecasts based upon finalized mix.

Time Table Continued May/June – Initial shipments to Retailer for new products. Retailer transitions displays in store. September – Vendor and Retailer review early POS and adjust forecasts based upon trends. October through December – Vendor ramps up shipments. Vendor and Retailer communicate shipping schedules and timelines. They also review in stock percentages and any out of stocks. December/January – Retailer incurs majority of sales. Planning cycle begins again with marketing review of current POS to determine mix for next year.

Other Initiatives have impact on CPFR Periodically Retailers have new programs or initiatives that have an impact on CPFR Change in method of shipment Freight Collect programs Sku Reduction Merchandising Changes

Conclusion Define and understand CPFR Understand CPFR Goals, Costs and Benefits Describe CPFR at MeadWestvaco Consumer & Office Products (MCOP)