Enhancing Store Inventory with Customer Demand-Driven Replenishment

2. Improve Store In-Stock Rates Customer Demand Driven Replenishment Reduce Overall Inventory Reduce Supply Chain Costs Scott Craig - Delhaize America Mark Lyktey and Jason Gintert - PepsiCo Warehouse Delivered January 2012

3. Agenda Supply Chain Big Bets Case Study Defined Point Of Sale Impact • Store Inventory Impact Customer Demand Driven Replenishment Pilot Inventory Tracking Key Performance Indicator Tracking What’s Next

4. Customer Demand Driven Replenishment Supply Chain Big Bets • Business Benefits (Source: Retail Solutions, Inc) • 12% To 27% Lower DC Inventory • 21% To 77% Decrease In DC Out Of Stocks • 20% Decrease In Store Level Out Of Stocks • Delhaize Piloted Program With Another CPG Vendor • Forecast Accuracy Improved By 30% • Met Or Exceeded All Goals • Estimated Inventory Reduction 30% • Predecessor - Rapid Replenishment • Upside Includes Increases In Stock, Reduces Reclaim, Etc. 4

5. Agenda Supply Chain Big Bets Case Study Defined Point Of Sale Impact • Store Inventory Impact Customer Demand Driven Replenishment Pilot Inventory Tracking Key Performance Indicator Tracking What’s Next

6. Case Study Defined Standard Vendor Managed Inventory (VMI) Customer Demand Driven Replenishment Upstream Supply Chain Vendor Managed Inventory (VMI) Pilot Food Lion Warehouse Food Lion Store PepsiCo DC PepsiCo Plant Pilot Goals - Penetrate to Store • Increase Store In- Stock Rates by 0.75% • Decrease Food Lion overall Inventory by 5% • Reduce Supply Chain Costs by 0.5%

7. Agenda Supply Chain Big Bets Case Study Defined Point Of Sale Impact • Store Inventory Impact Customer Demand Driven Replenishment Pilot Inventory Tracking Key Performance Indicator Tracking What’s Next

8. Customer Demand Driven Replenishment Pre-Pilot Conventional VMI Customer Demand Driven Replenishment • DC Inventory • DC Inventory Pilot Goals • Forecast • Store Inventory • Forecast • Customer • Demand • Driven • Replenishment • (CDDR) • Sales Growth • Inventory Efficiency • Enhance replenishment • Enhance promo forecast • DC • Customer • Replenishment • Safety Stock • Safety Stock • POS DC Warehouse Withdrawals DC Warehouse Withdrawals Headlines:

9. Point Of Sale Impact Vendor Managed Inventory Pilot Food Lion Warehouse Food Lion Store Pepsi DC DC to DC 1 day later • Store to DC every 2 to 4 days POS identifies trends 3 days earlier Headlines: • Accelerates customer demand visibility to the manufacturer • Enables reaction within the promotional period • Increases accuracy of demand signal

10. POS Promotional Sales Realization Total Day 19 Day 16 Day 13 Day 10 Day 7 Day 4 Day: Day 1 100% Planned Delivery 50% 30% 20% Event POS Sales Exceeding Original Projection Actual Delivery 50% 20% 30% 110% +10% • Headlines: • Sales Growth through higher in-stock • Customer Demand Driven Replenishment based of POS • POS data yields information to support decisions

11. POS Inventory Efficiency Total Day 19 Day 16 Day 13 Day 10 Day 7 Day 4 Day: Day 1 100% Planned Delivery 50% 30% 20% Event POS Sales Below Original Projection Actual Delivery 50% 70% 15% 5% • Headlines: • POS data yields information to support decisions • Inventory Efficiency

12. Agenda Supply Chain Big Bets Case Study Defined Point Of Sale Impact • Store Inventory Impact Customer Demand Driven Replenishment Pilot Inventory Tracking Key Performance Indicator Tracking What’s Next

13. Store Inventory Effect Vendor Managed Inventory CDDR VMI Planner Food Lion Store Food Lion Warehouse 4 days 2 days Upcoming Promotion 2 days Promo Quantity • Partial Decision • Excess Inventory VMI Option 2 days • Complete Decision • Balanced Network Inventory Promo Quantity CDDR Option

14. Agenda Supply Chain Big Bets Case Study Defined Point Of Sale Impact • Store Inventory Impact Customer Demand Driven Replenishment Pilot Inventory Tracking Key Performance Indicator Tracking What’s Next

15. Customer Demand Driven Replenishment Pre-Pilot Conventional VMI Customer Demand Driven Replenishment Pilot Goals • DC Inventory • DC Inventory • Customer • Demand • Driven • Replenishment • (CDDR) • Sales Growth • Inventory Efficiency • Enhance replenishment • Enhance promo forecast • DC • Customer • Replenishment • Forecast • Store Inventory • Forecast DC Warehouse Withdrawals DC Warehouse Withdrawals • Safety Stock • Safety Stock • POS Headlines:

16. Agenda Supply Chain Big Bets Case Study Defined Point Of Sale Impact • Store Inventory Impact Customer Demand Driven Replenishment Pilot Inventory Tracking Key Performance Indicator Tracking What’s Next

17. Pilot Inventory Tracking 32.24% April June May

18. Agenda Supply Chain Big Bets Case Study Defined Point Of Sale Impact • Store Inventory Impact Customer Demand Driven Replenishment Pilot Inventory Tracking Key Performance Indicator Tracking What’s Next

19. Pilot Results by Month Store In Stock 0.9% Point of Sale 20.9%

20. Pilot Results by Month DC on Hand 32.2% Unsaleables 49.9%

21. Agenda Supply Chain Big Bets Case Study Defined Point Of Sale Impact • Store Inventory Impact Customer Demand Driven Replenishment Pilot Inventory Tracking Key Performance Indicators Tracking What’s Next

22. What’s Next Future Goals • Jointly Capture Sales • Improve Inventory Efficiency • Increase Collaboration • Anticipate Customer Demand • Build Efficiencies Expansion • Q2 2012 • Expand automated processes • Roll Out to all Delhaize lanes • Measure & Publish Results Collaboration Automation • Q1 2012 • Apply automation & enable EDI 830 • Enhance Processes • Perfect on Food Lion Gatorade lanes Proof of Concept • Q2, Q3 & Q4 2011 • Manually perform Customer Demand Driven Replenishment • Enhance Processes • Measure & Publish Results Blue Printing Demand Intelligence • Q1 2011 • Brainstorm VMI Enhancements • Manufacturer/Retailer jointly devise strategy