New Ways of Working Together Pat Conklin, Chief Customer Officer, Procter & Gamble- Asia

DRAFT V-9 July 2010 New Ways of Working TogetherPat Conklin, Chief Customer Officer, Procter & Gamble- Asia The light bulb was not invented from continuous Innovation of a Candle

We have been talking about Collaborative Commerce and Collaboration for years. Efficient Consumer Response was founded on the Strategies of: Efficient Assortment Efficient Replenishment Efficient Promotion Efficient New Item Introduction The Case for Change The case for change Yet today’s Supply Chain is STILL filled with waste….

“Stores are over SKU’d” The Case for Change New SKUs Registered Average Items in a Typical Supermarket Source: Global Commerce Initiative New Ways of Working Together

Inventories are too high The Case for Change “There is too much of the stuff consumers don’t want and not enough of what they do.”

Out-of-stocks persist The Case for Change

The Case for Change Trading partners continue to focus on business minutiae instead of shoppers

“The best way to predict the future is to invent it.” • – Alan Kay, noted computer scientist Forces and trends that have the potential to significantly alter the industry’s value chain over the next decade.

The industry must Redefine the 2016 Value Chain Trading Partners must more readily and freelyShare Information In their Bi-Lateral relationships The industry must Develop New Ways of Working Together

New Ways of Working Together –A Consumer Goods Forum Initiative Colleen GOGGINS Worldwide Chairman, Consumer Group JOHNSON & JOHNSON Jean-Paul AGON Chief Executive Officer L’OREAL Bob MCDONALD Chairman, President & Chief Executive Officer THE PROCTER & GAMBLE COMPANY Brenda C. BARNES Chairman & Chief Executive Officer SARA LEE CORPORATION Project Leaders Sir Terry LEAHY Chief Executive Officer TESCO PLC Warren F. BRYANT Chairman NATIONAL ASSOCIATION OF CHAIN DRUG STORES Eckhard CORDES Chairman of the Management Board & Chief Executive Officer METRO AG Mike DUKE President & CEO Wal*Mart Lars OLOFFSON Chief Executive Officer CARREFOUR GROUP Stefano PESSINA Executive Chairman ALLIANCE BOOTS John RISHTON Chief Executive Officer Royal Ahold Motoki OZAKI President Kao Michael KOK Group CEO Dairy Farm Paul POLMAN Chief Executive Officer UNILEVER

Strategic Issues Between Trading Partners Other Data Sharing Opportunities Documentation, Education, Communication Guiding Principles and Frameworks Best Practices/ Standards Share Results Specific Measures & Priorities Common Goals, Common Measures Focus on Consumer Connected Business Information Prepare People for New World Share Our Supply Chain Consumer/ Shopper Satisfaction • StrategyAlignment • JAG Framework • Common Goals & Measures • Information Sharing* • EPC • Data Sync • Knowledge, Skills & Capabilities • Incentives & Rewards • organisation Design • Sustainability • Cross Industry Integration • Integrated Supply Chain New Ways of Working Together Eliminate supply chain disruptions, enable growth Industry Track (Collaborate) Trading Partner Track(Competitive Advantage) *Note: Utilizations of Industry Standards

Strategic Issues Between Trading Partners Other Data Sharing Opportunities Documentation, Education, Communication Guiding Principles and Frameworks Best Practices/ Standards Share Results Specific Measures & Priorities Common Goals, Common Measures Focus on Consumer Connected Business Information Prepare People for New World Share Our Supply Chain Consumer/ Shopper Satisfaction • StrategyAlignment • Joint Business Planning • Common Goals & Measures • Information Sharing* • EPC • Data Sync • Knowledge, Skills & Capabilities • Incentives & Rewards • organisation Design • Sustainability • Cross Industry Integration • Integrated Supply Chain New Ways of Working Together Eliminate supply chain disruptions, enable growth Industry Track (Collaborate) Trading Partner Track(Competitive Advantage) *Note: Utilizations of Industry Standards

Encourage bi-lateral collaboration Based on clear, fact-based understanding of market context and trends (P&G) Establish True Scorecards based on trading partners strategies as well as operational and financial objectives Embrace joint long-term planning Annual planning is often insufficient IP protection and trust Implement longer term planning processes Focus on Consumer

Common Goals and Common Measures Based on a common language GS1 “Trading Partner Performance Management” Standard Global Data Synchronization Connected Business Information

Five Elements of Change? Change Action Plan Measures / Rewards Vision Skills Change Resources Action Plan Measures / Rewards Skills Confusion Resources Action Plan Measures / Rewards Vision Anxiety Resources Action Plan Gradual Change Vision Skills Resources Action Plan Measures / Rewards Vision Skills Frustration False Starts Measures / Rewards Vision Skills Resources Prepare People for New World

Understand the Barriers and Enablers to long term, shopper focused business planning Transform people performance incentives and rewards Build knowledge, skill and capability sets Design organisational structure around consumer needs and drivers Prepare People for New World

Industry and trading partners must do things differently Adopt more sustainable business practices Collaborative Transport Management, Empty Miles Share Our Supply Chain

An Integrated Approach to Better Business Results Focus on the Consumer will not work if goals and measures are not shared, or if supporting rewards and structures are not in place Connect our Business will not work if the connection point is not the shopper or if there are no mutual goals or the supply chain is still viewed as “yours versus mine” Prepare our Peoplewill be insufficient if there is not a clear, shopper focused business plan focusing the organization, or if there are not the common goals, common measures and information visibility to act on. Share our Supply Chainwill not be possible without understanding how every decision impacts the shopper, or if the way we measure success is different. Too often we optimize components of the supply chain, but sub-optimize the whole Focus on Consumer Connected Business Information Prepare People for New World Share Our Supply Chain • StrategyAlignment • JAG Framework • Common Goals & Measures • Information Sharing* • EPC • Data Sync • Knowledge, Skills & Capabilities • Incentives & Rewards • organisation Design • Sustainability • Cross Industry Integration • Integrated Supply Chain

So, what do we do about it? New Ways of Working Together will require: • Leaders who inspire by example • Honesty, Integrity and Credibility • Transformation of Business information • Visible • Connected • Accurate • Informative • Actionable • Relevant

So, what do we do about it? The NWWT Opportunity • Take responsibility for the current state • Expand your view to include all stakeholders • Collaborate effectively across the supply chain in the name of the customer experience. • Change outdated structures. • Modify incentives or rewards that do not result in behaviors that positively impacts the consumer. • Seek to understand and adjust non-compatible processes.

New Ways of Working Together Pat Conklin, Chief Customer Officer, Procter & Gamble- Asia