1. Action for Improving Supply Chain Efficiency - A Report to ECR China Board Supply Chain Efficiency Committee, ECR China Zhengzhou, Nov 6th, 2008

2. 2 1. Action Plan  Order Fulfillment Improvement Improve Supply Chain efficiency by enhancing order fulfillment, focusing on fill rate and lead Time reliability.  Supply Chain Standard Development Improve Supply Chain efficiency by driving the development of standards including pallet, truck and dock standards. Action plan made in May and updated in Oct

3. 3 2. Implementation Review – Order Fulfillment Improvement  Define & Align Order Fulfillment KPI (by Apr 2008) Define KPIs (Fill Rate / Lead Time Reliability). Align on KPI data source & calculation. details  Analyze KPI to list reasons & approaches (by May 2008) Share KPI from Supplier & Retailer side. Identify root reasons for unqualified performance. Workshop for listing key reasons and proposed approaches for improvement focusing on various functions. details

4. 4  Implement improvement approaches with pilot committee members (May 10th – Oct 2008) Jointly implement the approaches in pilot retailers and suppliers Monitor progress and share information among pilot members on regular base Review and wrap-up the pilot implementation 2. Implementation Review – Order Fulfillment Improvement

5. 5  Pallet standardization chosen as 1 st focus (Oct) Palletization of logistics operation agreed as the near future development orientation 1.2 X 1.0m regarded as the most preferred pallet size Members agreed to suggest to the standard when new stores or DCs opening Key players from the market needed for driving the change - international suppliers preferred for the leadership 2. Implementation – Standards Development

6. 6 3. Next Step – Order Fulfillment Improvement  Deploy updated approaches to all committee members (Nov 2008 – May 2009) Update the approaches based on the conclusion from pilot implementation Implement the updated approaches within all committee members.  Promote the concept and solution via ECR (Nov 2008 – Dec 2009) Standardize concept, KPIs and measurement within ECR members. Promote the solution within ECR for further supply efficiency improvement and extend it to the two industries.

7. 7 3. Next Step – Standards Development  Assess current China standards and processes being followed from retailers and suppliers (Feb 09) Via survey completion Areas: Data Flows, Physical Truck, Transportation Systems, Loading Standards, Receiving Capability  Align on the current and ideal state for each standard (TBD)  Prioritize the areas where the committee will focus (TBD)

8. 8 3. Next Step – Standards Development  Develop a plan for testing the focus areas (TBD)  Promote the concept and solution via ECR (TBD) Standardize concept within ECR members. Learn from other regions where it makes sense

9. 9 3. Next Step – Sub-Committee Work  Participants Members involved in action plan: Tesco, Nestle, Coca-cola, IBM, P&G, Mengniu Group, Johnson & Johnson, Watson's, Wal-Mart, Metro Members started implementation: Coca-cola, Nestle, P&G, Colgate, Metro More members & attentions from company management are needed!

10. 10 3. Next Step – Sub-Committee Work  Quarterly review meeting  More chance for communications & professional gathering  More chances for detailed case driven discussion for Supply Chain efficiency enhancement

11. 11 Thanks for your attention! Denny Yang & Leland Jiang Co-leader of ECR Supply Chain Efficiency Committee 1425 Zhenbei Road, Shanghai 200333, P.R.China Tel: 021-2207- 8542 Email: yibin.yang@Metro.com.cn@Metro.com.cn

12. 12 Back up

13. 13 KPIsFormulaData SourceRemarks Fill Rate (FR) (Order Qty – Short Qty) / Order Qty Metro Goods Management System (will be MDW in near future) 1. Over delivered Qty is excluded. 2. Calculation is based on actual goods receiving date. Lead Time Reliability (LTR) Late Delivered Qty / Total Delivered Qty Defined KPI 2. Action Plan & Status back

14. 14 2. Action Plan & Status KPI Report (sample) back

15. 15 back 1). Supplier Responsibility taking 50% Stock Availability Price / Payment Issue Quality Issue Minimum Order Qty (MOQ) Improper Ordering and Delivery Period setting 1). Promotion Management 2). Mutually Good Forecasting 3). Harmonized Ordering info. Communicate with Supplier About Metro Standard Temporarily block the article in Metro system 1). Review MOQ setting 2). Mutually Good Forecasting 3). Central Order Review with supplier and update If necessary. Reason Approach Key Reasons & Approaches 2. Action Plan & Status

16. 16 back Store does not Input goods receiving date in time Reason 1). Review Ordering related SOP if needed 2). Discipline store ordering behavior by training ect. Approach 1). Define the main problem (e.g. art. Status) 2). Master Data Clearance Project involving Supplier / Retailer Incorrect Master Date Store does not place order in regulated way Discipline the goods receiving staff in store via his / her superior Key Reasons & Approaches 2. Action Plan & Status 2). Retailer Responsibility Taking 25% 3). Common Issue taking 25%