Copyright 2009 METRO Cash & Carry China Member of METRO Group

Integration of Logistics Distribution Drives Supply Chain Optimization

-- Collaboration among producer, retailer, and 3PL to drive change in FMCG & retail industry
METRO, P&G, Unilever, Vinda, UPM, Supor, and Sinotrans Logistics

Shanghai, China
August, 2011

Member of METRO Cash & Carry China Page 2 2
Food Retail
Self-service
Wholesale
Nonfood
Specialty
Department
Stores
Buying (MGBI)
Logistics
(MGL)
Advertising
(MGA)
Real Estate
(MAM)
IT
(MGI)
METRO GROUP
2,200+ outlets in 33 countries
Over 280,000 employees
2011 sales 67 billion Euros
METRO Cash & Carry
700+ stores in 30 countries
Over 120,000 employees
2011 sales 31 billion Euros
METRO Cash & Carry - A Core Brand of METRO Group
Company Introduction
Member of METRO Cash & Carry China Page 3
Strong Foothold across China
METRO Cash & Carry China
Market Entry: 1995
54 stores in 39 cities across
China with 3 investment focus:
Bohai Bay, Yangtze River Delta,
Pearl River Delta
8,500+ employees
3 million professional customers
2011 sales 1.5 billion Euros
Shanghai (HQ)
Company Introduction
Member of METRO Cash & Carry China Page 4
Focus on Professional Customers
Hotels
Restaurants
Caterers
Cafes & pubs
Lorem ipsum Dolor sit Lorem ipsum Dolor sit Lorem ipsum Dolor sit
HoReCa Trade SCO
Small retailers
Kiosks
Petrol stations
Street markets
Social services
Companies
Offices

Company Introduction
Member of METRO Cash & Carry China Page 5 Page 5
Tailor-made to the specific needs of our professional customer
Each brand provides complete solutions as basis for successful business
Own Brands: Focus on Top 6 Brands
Company Introduction
Member of METRO Group METRO Cash & Carry China
Innovative Ideas
Page 6
1. With its newly established distribution network, retailer integrates producers existing
distribution (cover all METRO stores and over 1000 producers/suppliers integrated)

1. Logistics distribution integration drives overall supply chain optimization (started from
logistics distribution integration, whole OTC process covered)

2. Collaboration among producer, retailer, and 3PL to drive change in FMCG industry

Member of METRO Group METRO Cash & Carry China
Content
Case Background:
Logistics Distribution Integration Needed for Supply Chain Excellence

Logistics Distribution Integration:
Driving Supply Chain Optimization of METRO, P&G, Unilever, Vinda, UPM, Supor, and
Sinotrans Logistics

Further Implementation Plan: Becoming an Engine of Supply Chain Excellence in the
Industry

Page 7
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In China, most big producers already have their distribution network, while recently many retail
giants have started to build up their own distribution network.
Any chance to integrate the distribution networks and build up the supply chain excellence for both
parties?
Case Background
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Challenge: Can big producers existing distribution be
integrated into retailers distribution network?

Producer/Supplier
Retailer/
Wholesaler
Retailer/
Wholesaler
Producer/Supplier
Distribution System
Distributor
Distributor
Logistics System
Producer/Supplier
Retailer/
Wholesaler
Retailer/
Wholesaler
Producer/Supplier
Distribution System
Distributor
Distributor
Logistics System
Integrated
Distribution
System
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Opportunity: Logistics Distribution Integration Enable
Supply Chain Excellence
Improved and well-
controlled logistics service:
punctuality, traceability,
reliability
Leaned supply chain &
better chance for
profitability for both parties:
no need for distributor
Enhanced quality and
quantity control
Simplified and efficient
ordering, order processing,
invoicing, payment &
administration
Overall enhanced cost
effectiveness for both sides
Efficient goods receiving at
DC & store
Shelf Ready Package
Backhaul sharing & pallet
delivery
RFID and EDI Master Data and GDSN
Member of METRO Group METRO Cash & Carry China
Content
Case Background:
Logistics Distribution Integration Needed for Supply Chain Excellence

Logistics Distribution Integration:
Driving Supply Chain Optimization of METRO, P&G, Unilever, Vinda, UPM, Supor, and
Sinotrans Logistics

Further Implementation Plan: Becoming an Engine of Supply Chain Excellence in the
Industry

Page 11
Member of METRO Group METRO Cash & Carry China
P&G is a Company of Brands
P&G Growth Strategy
Touching and improving more consumers lives in
more parts of the world more completely
Member of METRO Group METRO Cash & Carry China
Case I: P&G and METRO
- Operation Model Change:
Page 13
METRO Store
METRO Store
METRO Store
P&G DC
P&G DC
P&G DC
P&G Plant
P&G Plant
METRO Store
METRO Store
METRO Store
P&G DC
P&G DC
P&G DC
P&G Plant
P&G Plant
METRO DC
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Achievements
P&G and METRO: Increase of on-time delivery
(+3.1%), decreased quantities of order (-70.9%)
and invoice (-94.2%)
P&G and METRO: Better chance and flexibility
(e.g. to consolidate goods via multiple DCs) to
serve business of urgent orders, promotion, peak
season and etc.
Case I: P&G and METRO
- Performance Improvement
P&G and METRO: Enable further supply chain optimization (e.g. palletized delivery, selective check, speed-up store goods
receiving and etc.)
P&G: Simplified and efficient OTC processing (order, invoice and payment, -19% workload) and days (-1day)
P&G: Shorter stock days even with P&G supply term change (-2days)
METRO: Order scale increase helps to gain more discount from P&G (+15.4%)
0 200 400 600 800 1000 1200 1400
after
before
Invoice Consolidation Order Consolidation
number of invoice decreased 94.16%
number of order decreased 70.90%
Member of METRO Group METRO Cash & Carry China Page 15
Excellent Collaboration in Supply Chain Management
between P&G and METRO China
Set-up quarterly supply
chain top2top meeting and
identify improvement
opportunity & plan
Jointly won ECR (Efficient
Consumer Response) China
Golden Award by order
fulfillment improvement
project
Started distribution
integration in Eastern
China and 40% of METRO
volume covered
Jointly won ECR China
Platinum Award again by
logistics integration
project
Built up EDI link at order
level and strongly support
the business development
and supply chain
performance improvement
Jointly won ECR China
Platinum Award jointly by
integrated information flow
project
Extend distribution integration
cross the country
Extend EDI link at dispatch and
receive advice levels
Fully implement automatic GDSN
Introduce palletized distribution
2013-2015
Optimization of logistics distribution,
e.g. rolling out palletized distribution,
shelf unloading, GR optimization,
backhaul sharing, etc.
Innovation for overall Supply chain
performance improvement, e.g.
optimized order proposal, shelf-
ready-package, joint planning and
forecasting, etc.
Target: leader in excellent supply
chain collaboration in FMCG & retail
industry
2009 2010 2011 2012
Major Supply Chain KPI Status
(2009 - May, 2012)
Member of METRO Group METRO Cash & Carry China
in China (refer to as UL below)
Page 16
In 1923, Lever Brother established its soap business in Shanghai
In 1986, Unilever restructured itself in China
Now, China has become one of Unilevers strategic focus in developing and emerging market

- Over 5,000 local employees

- Provide more than 20,000 job opportunities

- Largest production base in Group

- A global research centre

- A global purchase centre
We now have
Member of METRO Group METRO Cash & Carry China
Supply Chain and Sustainability
Page 17
environmental impact
business growth
Collaboration is key
It is to double the size of Unilever while at
the same time reducing our environmental
impact
Member of METRO Group METRO Cash & Carry China
Unilever
Distributor
Case II: Unilever and METRO
- Operation Model Change:
Page 18
Unilever Plant
cold-chain
METRO DC
cold-chain
METRO Store
(in some regions)
METRO Store
(in some regions)
Unilever DC
cold-chain
Unilever DC
cold-chain
METRO Store
(in some regions)
METRO Store
(in some regions)
Unilever DC
ambient
METRO DC
ambient
Unilever DC
ambient
Unilever Plant
ambient
Unilever Plant
ambient
Unilever Plant
cold-chain
Member of METRO Group METRO Cash & Carry China Page 19
Achievement
Unilever & METRO: For all sales lines (including
Ice-cream, Food Retail, HPC and Food Solutions)
on-time delivery increases 2.5% and order
fulfillment increases 2.4%
Unilever & METRO: Quantities of order and
invoice decrease 74.9% and 94.3% individually

Unilever & METRO: Better logistics support on business increase, especially during promotion and peak season (e.g. CNY)
period
Unilever & METRO: Explored opportunity of supply chain optimization from both sides (e.g. backhaul transport, inventory
planning, on-shelf availability improvement, pallet delivery and etc.)
Unilever: Shorter stock days approximately 3 days
Unilever: Simplified and efficient OTC processing (order, invoice and payment, -15% workload) and days (-3days)
Case II: Unilever and METRO
- Performance Improvement
0 500 1000 1500 2000 2500 3000
after
before
Invoice Consolidation Order Consolidation
number of invoice decreased 94.26%
number of order decreased 74.97%
Member of METRO Group METRO Cash & Carry China
Case III: Vinda and METRO
- Operation Model Change:
Page 20
Vinda Plant METRO DC
METRO Store
(in tier 1-2 cities)
METRO Store
(in tier 3 cities)
Vinda DC
Vinda Plant
METRO Store
(in tier 1-2 cities))
METRO Store
(in tier 3 cities)
Vinda DC
Vinda Distributor
Vinda Branch
Member of METRO Group METRO Cash & Carry China
Case III: Vinda and METRO
- Performance Improvement
Page 21
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
Late Delivery Fill Rate
before after
Achievement
Vinda & METRO: Consolidated delivery helps logistics distribution cost decrease (-38.3%)
Vinda & METRO: Good progress of on-time delivery (+5.6%) and fill rate (+5.5%)
Vinda & METRO: Big improvement on stock control and urgent order fulfillment for bundle pack products from both
wholesaler and producer sides
Vinda : Good practice on OTC process consolidation. Nowadays, standardized OTC process and related KPI system becomes one
of the benchmarks for Vindas other sales channels.
Member of METRO Group METRO Cash & Carry China Page 22
UPM Plant METRO DC
METRO Store
(in some regions)
METRO Store
(in Eastern China)
UPM Plant
METRO Store
(in some regions)
METRO Store
(in Eastern China)
UPM DC
Case IV: UPM and METRO
- Operation Model Change:
Member of METRO Group METRO Cash & Carry China
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
Late Delivery Fill Rate
Case IV: UPM and METRO
- Performance Improvement
Page 23
before after
Achievement
UPM & METRO: Consolidated delivery helps logistics distribution cost decrease (-24.0%)
UPM & METRO: Significant improvement of on-time delivery (+22.6%)
UPM & METRO: Recognized operation on full-way pallet delivery from plant to stores
UPM & METRO: Better opportunity to maintain store stocks and balance cost & customer service
UPMDecreased administration cost via optimized OTC process
UPMSale growth with better distribution coverage
Member of METRO Group METRO Cash & Carry China Page 24
Supor Plant
Supor
Distributor
Supor Branch
Case V: Supor and METRO
- Operation Model Change:
METRO Store
(in some regions)
METRO Store
(in some regions)
METRO Store
(in Wuhan)
Supor Plant
METRO Store
(in some regions)
METRO Store
(in some regions)
METRO Store
(in Wuhan)
METRO DC
Member of METRO Group METRO Cash & Carry China
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
Late Delivery Fill Rate
before after
Page 25
Case V: Supor and METRO
- Performance Improvement
Achievement
Supor & METRO: Consolidated delivery helps logistics distribution cost decrease (-11.3%)
Supor & METRO: Trackable step of on-time delivery (+7.7%) and fill rate (+8.4%)
Supor & METRO: Stable order size and more optimized order frequency
Supor & METRO: Better business supports during peak season and promotion
Supor: Remarkable total sales channel cost decrease compared with direct trade and distributor
Supor: sales expansion resulted from efficient distribution network
Member of METRO Group METRO Cash & Carry China
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Page 26
With the operation of METROs integrated
distribution network, Sinotrans Logistics entered
into Retail/FMCG contract logistics market in 2007
and developed its business approximately 8 times
during last 4 years

Today, with the efferent operation and excellent
customer service, Sinotrans Logistics becomes one
of the leading contract logistics service providers in
China and serves many top 500 and well-known
domestic FMCG companies, including Wrigley,
Kimberly-Clark, Kraft & Cadbury, AB Food &
Beverages, LEE KUM KEE, UNI-PRESIDENT, Auchan,
Carrefour and etc.
Case VI: Sinotrans Logistics and METRO
- 3PL: growing-up together with retailers distribution network
Member of METRO Group METRO Cash & Carry China
0%
100%
200%
300%
400%
500%
600%
700%
2007 2008 2009 2010 May, 2011
Integrated Distribution via METRO Logistics System
Number of Suppliers
Metro Integrated
Distribution Share
Number of
Suppliers
Page 27
METROs Practice in Integrating Distribution Logistics
with Suppliers
Since 2004, METRO China started to build-up its
national logistics distribution network for both
ambient and perishable products
More than 1000 medium & small suppliers
integrated into METROs logistics distribution
networks
The integrated logistics distribution have
significantly contributed to METROs business
and expansion by
Standardized and excellent service
Cost effectiveness
Continuously increased volume
Relying on METROs integrated logistics
distribution, many medium and small suppliers
have their businesses successfully growing and
expanding cross the country
Member of METRO Group METRO Cash & Carry China
Content
Case Background:
Logistics Distribution Integration Needed for Supply Chain Excellence

Logistics Distribution Integration:
Driving Supply Chain Optimization of METRO, P&G, Unilever, Vinda, UPM, Supor, and
Sinotrans Logistics

Further Implementation Plan: Becoming an Engine of Supply Chain Excellence in the
Industry

Page 28
Member of METRO Group METRO Cash & Carry China
Together with other retailers and producers, were driving change to
build up supply chain excellence in FMCG & retail industry!
Page 29
Member of METRO Group METRO Cash & Carry China
Collaboration Creates Excellent
Supply Chain!


Copyright
This concept is intended only for the purpose of presentation and is the intellectual property of METRO Cash & Carry >Please insert your
country. Passing on to third parties as well as the use and exploitation of the presentation either in whole or in part is expressly
forbidden.

METRO Cash & Carry China
METRO Jinjiang Cash & Carry Co., Ltd.
Procter & Gamble (China) Ltd.
Unilever China
Vinda Trade Co., Ltd.
UPM-Kymmene (Changshu) Paper Industry Co., Ltd.
Wuhan Supor Cooker Co., Ltd.
Sinotrans Logistics Development Co., Ltd.

Contact Denny Yang
Head of Supply Chain Management & Logistics
METRO Jinjiang Cash & Carry Co., Ltd.
1425 Zhenbei Road, Shanghai 200333, China
Tel: +86 021 2207 8542
Email: yibin.yang@metro.com.cn