06 th April 2012 Backroom Improvement ～ Double Deck Trolley Operation ～

1 Action 1.Implement Double Deck Trolley operation 2.Control ordering 3.BR and loading bay management Go live Mar 2012 Backroom Improvement Objective To increase sales and GP from normal item Target figure 50% reduce back room inventory

To Implement Double Deck Trolley Target 1. To set up back room layout. 2. To set up rules and regulation and educate staff. 3. To set up new operation process flow. (change working way) 4. Store manager to monitor the progress. ※ Store manager leadership is necessary in order to be successful. Store operation ◆ 50% reduce BR inventory ◆ OOS 100 SKU ◆ Loss below 1.0% 50% Reduction in BR inventory ▼ Reduction of 20 Million 2

Target Inventory – GMS Store 3

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Target Inventory – MaxValu 5

1.High inventory at back room and loading bay. 3.Can’t recognized merchandise by SKU in gondola at BR. Current Status (Grocery and Non Food) 4.Fail to replenish. /delay replenish. 5.Difficult to order. Can’t count qty in BR and can’t get proper sales qty. 2.Can’t use loading bay, and unloading at outside loading bay. Damaged, Expired  PA ZERO 1)It takes time to find merchandise. 2)Many steps from receiving ~ stage ~ replenish. 1)No ordering 2)Duplicate ordering 1)DC lorry has long waiting time.  Can’t make delivery schedule. 2)Receiving out from CCTV.  Loss from loading bay. 6

Loading bay condition To Be Condition Staging area (keep CR) Receiving area 7

Passage way To Be Condition 8 Operation CR Pallet Trolley

BR stock To Be Condition Visibility of merchandise 9

Improvement Cycle Flow 10 CR Management Improve BR Condition Speed Up Replenishment On-Time Delivery Accurate Ordering 1.CR Loss 2.BR Loss 3.OOS 4.High Inventory 5.No window time delivery IMPROVE SALES & GP

11 Double Deck Operation Expected Result 2. Improve replenishment TIME 3. Minimize no replenish 4. Eliminate no ordering and duplicate ordering 5. Minimize PA ZERO at BR (Damaged and expired) 1. Reducing the operation flow By improving the visibility of merchandise

12 Action plan Store Merchandising 1.Control promotion ordering Qty and delivery timing. 2.Immediate action for promotion balance. 3.Improve supplier delivery ratio. SCM 1.Making delivery schedule by store. 2.Set up standard BR and loading bay layout. 1.Set up Double Deck Trolley operation. (Layout & education) 2.Implement ordering meeting by store. 3.Set up new ordering method. 4.Follow schematic plan. 5.Immediate action of PA ZERO and GRN. 6.Making progress report. 7.Complete receiving within 45min for DC lorry.

13 Making Report on every Monday (Sunday closing) Double Deck Trolley – Inventory Progress Report

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Double Deck Trolley – Setup Phrase Preparation Delivery Operation (On-Going) 15

Double Deck Trolley – Organization Store Team HQ Team MMD Dept Admin Dept Foodline Dept SCM Dept SOS Dept DDT project team Merchandising Dept Organization Store Manager Layout, Operation process, Inventory Control FIFO sticker, Loading bay, Passageway, Inventory Report Make Line, Fixed asset (DDT Loss) 16

Double Deck Trolley – (1) Meeting & Introduction VenueEach respective store involved Attendee Store - Store Manager *(Leader) - Admin Manager - Foodline Manager *(Key Person) - Grocery Division Leader & GL - MMD Manager & Officer *(Note Take) HQ - SOS Department - SCM Department Date1 Month before delivery date Agenda Introduction of trolley Schedule and planning Meeting & Introduction 17

Double Deck Trolley – (2) Nearest Store Rawang Klang Valley Bandar Puchong Nearest Store 18

Double Deck Trolley – (3) Set Department to Implement Beverage Confectionary FOODLINE Grocery/Nonfood Division Set Department to Implement All Grocery/Non food 1 st Batch 2 nd Batch 19

Double Deck Trolley – (4) Confirm Backroom Layout LAYOUT Overall floor layout Current and New Detailed section layout Entrance of SL/BR Location of loading bay Location of backroom by department Location of department in selling floor Detailed numbers of DDT parking lot Detailed of measurement of each passageway Perishable Confectionary Nutritious Beverage HBC Lift MMD Bay1Bay2Bay3 Oil Rice Super Saver Liquor Noodle Produce Meet Fish D&D HBC D&D OilConfectionary RiceBeverage m 8.0m Beverage 20

MMD Office Double Deck Trolley – (4) Confirm Backroom Layout Selling Floor Pallet Promo 1.Passageway -Main passageway -Sub passageway 2. Cage Category Item (Milk Powder, Liquor & HBC) 3.Setup 3 Type: - Pallet Item - Promotion Item - Normal Item Cage Category - Milk - Liquor HBC Loading Bay 21

Double Deck Trolley – (4) Confirm Backroom Layout Keep Passageway Clear 1.8 m Passageway Alert Sign Painted on the floor Minimum 1.8 m 22

Double Deck Trolley – (4) Confirm Backroom Layout Fast Moving Item Normal Moving Item 100 Plus 1.5L Coke 1.5L JS Mineral Water 1.5L Promotional Item Promotion Indication, rules, period 23

Double Deck Trolley – (4) Confirm Backroom Layout 1.DD Trolley: - Fast moving category nearest selling floor entrance [Zone A] Example: Trolley No. 1: - Distance with selling floor entrance 3 times Trolley No 31: - Distance with selling floor entrance >5m - Frequency replenish daily <3 times Selling Floor 123 Zone A Zone D MMD Office Zone C Zone B Cage Category - Milk - Liquor HBC Loading Bay Cage Category - Milk - Liquor HBC Pallet Promo 24

Double Deck Trolley – (5) Set DDT Category Label 25

Double Deck Trolley – (5) Set DDT Category Label Trolley No. 1 SOYA BEAN 1 Liter Trolley No. 2 SOYA BEAN - 6 X 325 ml - Bottle Based on Category 2 Gondola = 1 Category NOT necessary 1 Gondola/Trolley 1 2 Change

Double Deck Trolley – (5) Set DDT Category Label Fast Moving Item Item Code DDT 3 UNIT for Replenish 27

Double Deck Trolley – (5) Set DDT Category Label 28 Keep Passageway Clear 1.8 m JS Mineral WaterCoke 1.5L DDT No. 23 DDT No. 24 DDT No. 25 PALLET No. 23 PALLET No. 24 PALLET No. 25

Double Deck Trolley – (6) Prepare Indication Sheet Setting 1.Brand 2.Itemized 29

Double Deck Trolley – (6) Prepare Indication Sheet A4 Paper Color Beverage Group YELLOW Coffee Group PINK Snack Group DARK GREEN *Other colors for the other category shall be confirmed later by SOS Dept. 30 Chocolate Group LIGHT GREEN All Process 2 BLUE Pet Food/Air Freshener Party Goods & Insecticide PURPLE Cleaning Group ORANGE Frozen & Chiller Group WHITE - GROCERY -- NON FOOD -- D & D -

Double Deck Trolley – (6) Prepare Indication Sheet 1. Slide in indication sheet from top 2. Punch hole using hole puncher 3. Attach cable tie through trolley’s handle 31

Double Deck Trolley – (7) Keep Empty Cartrack Heavy Duty ShelfEmpty CartrackDouble Deck Trolley Maximum up for 2 week On DDT Delivery DayBefore DDT Delivery Day 1 Cartrack = 2 DDT 32

Double Deck Trolley – (8) Transfer Merchandise to Cartrack Store the period & quantity Inform SCM Dept 33

Reduce Unnecessary Item Double Deck Trolley – (9) Inventory Mgmt – PA, GTN, GRN Merchandise Good Condition Bad Condition PA ZeroInventory Level Keep inside empty cartracks Overstock Normal inventory level GRN / Clearance / control ordering 34

Double Deck Trolley – Expected Condition Before Delivery 35 Sample of draft DDT parking lot before delivery day of Double Deck Trolley

Double Deck Trolley – Setup Phrase Preparation Delivery Operation (On-Going) 36

Double Deck Trolley – (12) Support Pairing Store 37

Double Deck Trolley – (12) Support Pairing Store 38

Double Deck Trolley – (13) Receiving DDT *Confirmed delivery date shall be advised due to shipping progress 39

Double Deck Trolley – (13) Receiving DDT Admin Manager Fixed Asset Tagging 40

Double Deck Trolley – (13) Receiving DDT – Definition Double Deck Trolley Middle Shelf Bottom Shelf Short name DDT Maximum 100KG Maximum 300KG 41

Double Deck Trolley – (13) Receiving DDT – Definition Front sideRear side *Have break pedal *Have Category Label AEON Kuantan - 8 PET 1.5 L AEON Kuantan Store: 1031 Trolley No: 8 *Have Trolley Label 42

Double Deck Trolley – (14) Set Up Indication Sheet 43

Double Deck Trolley – (17) Confirm Final Layout Minimum gap must be 1.4 meter for passageway & turning radius 1.4m 44

Double Deck Trolley – (18) Paint on The Floor Sample of trolley parking Bandar Puchong 45

Double Deck Trolley – (18) Paint on The Floor Numbers painted RED on the floor Line painted YELLOW on the floor Parking line suggested using permanent paint on the floor instead of sticker 46

142 cm 9 Double Deck Trolley – (18) Paint on The Floor 1 parking lot ≈ 0.71m 2 / 7,100cm 2 50 cm 38 cm Thickness of yellow line = 6 cm Number centered on the floor 6cm 142 cm 47

Double Deck Trolley – (18) Paint on The Floor 48 Sample 1 Parking lots in straight shape 2-way traffic flow Maintain passageway Keep Passageway Clear 1.8 m 1314

Double Deck Trolley – (18) Paint on The Floor Sample 2 Parking lots in slanting shape Reduced trolley number Maintain passageway Keep Passageway Clear 1.8 m

Double Deck Trolley – (18) Paint on The Floor 50 Sample 3 XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX Keep Passageway Clear 1.8 m Parking lots in cage type Maintain passageway Cage remains

Double Deck Trolley – (18) Paint on The Floor 51 Sample 4 Keep Passageway Clear 1.8 m Parking lots in cage type Maintain passageway 28 Cage removed

Double Deck Trolley – Setup Phrase Preparation Delivery Operation (On-Going) 52

Double Deck Trolley – Conventional (Old) Process Flow DC Store Receiving Replenish Stack to BR Cart RackLong TrolleyBR Shelf Long Trolley 123 Current process DC delivery Cart Rack Check replenish item Store Selling floor 4 4 To find replenish item 5 Transfer to trolley 67 BR ShelfLong Trolley Stack to BR BR Shelf FIFO 53

Double Deck Trolley – New (Improved) Process Flow Store Receiving Cart Rack Use reserve /transit DDT Permanent DDT Convert to Fixed DDT / set by category (BR) 1 3 NEW PROCESS DC delivery 2 Replenish Convert to LT DDTCart Rack DC Stand by reserve DDT Complete replenish everyday  Set up replenish rules (Minimum 1time replenish per DDT) 54

Double Deck Trolley – New (Improved) Process Flow Fixed parking location Keep at BR 4 5 FIFO Sticker Attached FIFO sticker every Monday morning 6 Clearance Bring all DDT to selling area and check 100% by Line staff Monday 2:30pm-5:00pm -Review ordering result, -To check aging, Attached the FIFO sticker by MMD responsibility Replenish by staff -Check OCW job quality -To find out of schematic -To find unnecessary item (Damaged, end promotion (GRN), Expired) 55

Double Deck Trolley – Sample RA/Staff Allocation Staff 1 56 DDT No. 001  015LANE No. 1 Staff 2LANE No. 2DDT No. 016  030 Staff 3LANE No. 2DDT No. 031  040 Staff 4LANE No. 3DDT No. 041  055 Staff 5LANE No. 4DDT No. 056  061 Staff 6LANE No. 5DDT No. 062  068 Staff 7LANE No. 6DDT No. 069  073 Staff 8LANE No. 7DDT No. 074  078 Staff 9LANE No. 8DDT No. 079  090 Using KawajunUsing DDT

Double Deck Trolley – FIFO Sticker Right hand side of the DDT Every Monday Must complete 100% 57 FIFO from top to bottom

Double Deck Trolley – Operations Location Layout Parking Lot Number Arrangement by SKU Replenish by Trolley No 58 Loose Item on Top

Double Deck Trolley – Safety Handling Must always in BRAKE ON condition Only BRAKE OFF when navigating the DD Trolley 59

Double Deck Trolley Setup – Rules & Regulations Must NOT higher than the handle height level X - Middle Shelf height - beverage, oil, - Weekly Cleaning Schedule 60

Double Deck Trolley – Store Operations Do not PUSH when navigating except when parking the Double Deck Trolley (DDT Always PULL when navigating the Double Deck Trolley (DDT) 61 X

Double Deck Trolley – Store Operations Middle shelf MUST ALWAYS TAGGED onto the handle’s of the Double Deck Trolley (DDT DO NOT REMOVE the middle shelf at any time from the Double Deck Trolley (DDT) 62 X

Double Deck Trolley – Store Operations Merchandise ARRANGED BY SKU in the Double Deck Trolley (DDT NOT ARRANGED BY SKU in the Double Deck Trolley (DDT) 63 X

Double Deck Trolley – New Merchandise ARRANGED BY SKU in the Double Deck Trolley (DDT NOT ARRANGED BY SKU in the Double Deck Trolley (DDT) 64 X

Double Deck Trolley Setup – Warranty, Defect etc. Standard Warranty 1 Year by Supplier *Does not cover damage by negligence cases and/or of overweight capacity to: Mr. Wis & Mr. Nishikawa Picture of parts involved & incident report Must be reported within 24 hours 65 *Parts available, changed by store GA

Double Deck Trolley - Video 66

Store action Double Deck Trolley – Implementation Schedule 67

-This slide ends here – ありがとう THE END 68