Collaborative Planning, Forecasting and Replenishment (CPFR) Steve Whited & Dennis Van Deusen

1. Collaborative Planning, Forecasting and Replenishment (CPFR)Steve Whited & Dennis Van Deusen

2. Objectives • Define and understand CPFR • Understand CPFR Goals, Costs and Benefits • Describe CPFR at MeadWestvaco Consumer & Office Products (MCOP)

3. CPFR Defined • An Established process where by Vendor and Retailer communicate forecasts in order to better align common strategic goals. Synchronization of supply and demand will improve each party’s overall performance. • Planning • Forecasting • Replenishment

4. CPFR Cost/Benefit • Costs • Programming;Software Enhancements; EDI • Dedicated Analysts - increased payroll • Retailer may charge you to participate • Potential fees if not successful • Benefits • More accurate forecasts • Improve fill rate and in stocks = better sales • Reduce Vendor and Retailer inventory levels • Reduced “fire drills” & premium freight; Competitive Edge

5. About MCOP - Sidney • 87 years in the dated goods business • Keith Clark, AT-A-GLANCE, Mead, MeadWestvaco,MWV • Products • Brands • Customers • Commercial Inventory Management Program - late '80’s • VMR/VMI: ARIES model developed (Cornell University) in use 1990.

6. Commercial Market Inventory Management • Focus- dated goods sold to wholesalers and contract stationers • “Simplified, low tech” CPFR • MCOP Analysts work directly with major accounts • Annual meetings, weekly teleconferences • Focus on annual numbers, major ordering events, units • Sales Rep. administered program for smaller accounts • Stock Order Guides • Inventory Monitors • Overstock returns and transfers

7. CPFR • MeadWestvaco’s version of CPFR • Vendor creates the forecast. Identifying exceptions is a shared responsibility. • Forecasts are for a full season and are not broken down by week/month. • Forecasts are calculated and communicated in what we anticipate the Retailer will sell, not what we will ship them. • Weekly conference calls are used to review sales trends, adjust forecasts and deal with any “issues.” • Replenishment is done in various methods. • Direct to store • Ship to warehouse • Cross-Docks

8. Measurements • The Retailers use many means to evaluate success of the program • Comp sales. • Gross Margin Dollars generated. • In Stock percentage - an extreme challenge in our category. • Lost Sales Dollars. • On time and Complete.

9. A Representative Time Table • December – Marketing Generates a proposed Mix for Next year’s implementation based upon current POS. • January – Proposed Mix is presented to retailers. It includes display transition and forecasted unit and dollar sales. A line review with the Retailer is completed for current selling season. • April – Retailer communicates mix. Vendor adjusts forecasts based on sku drop/adds. Vendor and Retailer to review replenishment timeline and adjust forecasts based upon finalized mix.

10. Time Table Continued • May/June – Initial shipments to Retailer for new products. Retailer transitions displays in store. • September – Vendor and Retailer review early POS and adjust forecasts based upon trends. • October through December – Vendor ramps up shipments. Vendor and Retailer communicate shipping schedules and timelines. They also review in stock percentages and any out of stocks. • December/January – Retailer incurs majority of sales. Planning cycle begins again with marketing review of current POS to determine mix for next year.

11. Other Initiatives have impact on CPFR • Periodically Retailers have new programs or initiatives that have an impact on CPFR • Change in method of shipment • Freight Collect programs • Sku Reduction • Merchandising Changes

12. Conclusion • Define and understand CPFR • Understand CPFR Goals, Costs and Benefits • Describe CPFR at MeadWestvaco Consumer & Office Products (MCOP)