1. MAXIMIZING PROFIT THROUGH COLLABORATION ECR Developments in Russia

2. ONCE UPON A TIME, THERE WAS A MARKET… Decreasing consumer growth High competition Emergence of new channels Emergence of highly efficient new entrants Adversarial relationship among industry players Focus on trading rather than meeting consumer needs Less profit Higher costs

3. THAT WAS THE USA IN 1992! Retailers and Manufacturers agreed to launch a collaborative initiative “to meet consumers needs better and faster at less cost” They called it Efficient Consumer Response

4. ECR IS A CULTURAL CHANGE IN THE WAY YOU DO BUSINESS OPTIMIZING SUPPLY (ordering, OOS, logistics, inventory,…) COLLABORATION Integrate operations Eliminate barriers Manufacturer Retailer Reduce non value- added activities Drive-out unnecessary costs Increased Consumer demand MORE PROFIT! CREATING DEMAND (assortment, promotions, new products,…) Technologies ECR is a collaborative effort to optimize business processes reduce costs that do not add value in order to provide value to consumers increase profit

5. ECR BRINGS SIGNIFICANT SAVING TO ALL PLAYERS ECR concept is so universal and compelling that it has been adopted by the retail industry in Canada, Europe, Australia and South America. AUSTRALIA CASE STUDY In 1996, the Australian retail industry identified potential savings of $1 billion by following more efficient practices and over $700 million in inventory reduction By 1999, they had saved $300 million in operating costs and a further $300 million in inventory reduction. However, due to industry growth, they estimated that the further saving potential was still $1 billion in operational costs and $750 million in inventory USA CASE STUDY Started in 1993, it is estimated that ECR was affecting up to 30 percent of entire industry volume by 1998. The US retail industry has estimated cost saving on replenishment processes to 40% and on pricing and promotions activities to 38% Sources: FMI, ecraustralasia

6. WHY ECR IS RELEVANT TO RUSSIA TODAY Source: CISLink 2003 1. Decreasing growth 2. Increasing costs 3. Decreasing margins 4. Increased competition 8%17% 5. Trade consolidation 6. Adversarial relationship 7. Ideal timing

7. THE SIMPLE TRUTH There are only two major processes for the FMCG industry: CREATING AND MAINTAINING CONSUMERS DEMAND (brand management - marketing) CREATING ACCESS FOR THE CONSUMERS TO BUY THE PRODUCT (trade marketing - sales - supply) ECR is the ability to anticipate, respond to and satisfy consumer demand It is the responsibility of the suppliers to create consumers. It is the responsibility of the retail trade, in partnership with suppliers, to create the most favorable environment for the consumers to want to shop with them.

8. Nobody wins when the supply is not ideal and promotions are not well implemented, neither the manufacturers, retailers or consumers!

9. CURRENT ECR DEVELOPMENTS IN RUSSIA Retailers Automated auctions Automated ordering systems Manufacturers Upgrading internal processes Automated inventory tracking systems Hand-held salesmen tools Category management Industry ECR Board Product coding Enablers Data exchange tools Electronic signature technology Training

10. 30% SUPPLIERS ARE ACTIVELY WORKING ON ECR / CATEGORY MANAGEMENT Source: CISLink 2003

11. KEEP UP WITH THE MARKET! Where will your company be 1 or 2 years from now in terms of costs and quality of service? => Can you afford to wait any longer Time for some strategic choices => What is your competition doing? Learn new ways of working => Category management => Optimized replenishment Set-up appropriate data transfers capabilities Train your organization

12. Transition is happening very fast. To be ready a year from now, you need to start today! For more information, contact us at 363-02-05 or at info@cislink.com Thank you!