1. Using ECR Scorecard in
Supply Chain Collaboration
Case Alko and Pernod Ricard

2. Agenda
Background information
• Company presentations
• Limitations to cooperation
Using ECR scorecard in collaboration
• History of using scorecard
• Intermediate vs. full global scorecard
• Tracking development
Examples of joint projects based on scorecard findings
• Efficient unit loads
• Product identification standards
• Collaborative forecasting
Summary and recommendations

3. Parent Company Pernod Ricard
Parent Company Pernod Ricard
Europe’s largest and the world’s second largest alcohol company
• Headquarters in Paris
• Turnover 7.2 billion € (2008/2009)
• Production in 70 countries in 113 production facilities
• Personnel in total over 19.300
• Over 20 products on the premium spirits TOP 100 list (Impact Databank)
Grown through several international acquisitions
• Seagram 2002
HELSINKI: PRF HEADQUARTERS
• Allied Domecq 2005
• V&S 2008 TURKU: PRODUCTION & LOGISTICS
PERNOD RICARD NORDIC
Pernod Ricard Nordic is responsible for
wines and spirits business in the Nordic
countries and the Baltics
STOCKHOLM: PRN HEADQUARTERS
3

4. Pernod Ricard Finland
Pernod Ricard Finland in Figures
Headquarters in Helsinki, production and logistics facilities in Turku
• Employees in total ca. 200
• Turnover ca. 70 million € (2008)
The second largest wine & spirits company in Finland
• Market share 25 %
• Manufactures, imports, markets, sells and distributes around 400 domestic
and international alcohol products
IMPORT RETAIL SALES (ALKO)
43 % 85 %
HORECA & WHOLESALERS
LOGISTICS CENTRE, TURKU
4%
Total ca. 30,000 bottles
EXPORT
10 %
OWN PRODUCTION, TURKU
DUTY FREE / TRAVEL RETAIL
55 % 1%
4

5. Alko Company Presentation
Alko Inc.
Independent, entirely state-owned company
• Administered and supervised by the Ministry of Social Affairs and Health
• Founded in 1932
344 retail stores in Finland
• Net sales 1170,2 million euros
• Personnel 2700
• Assortment 2200 SKUs, of which ca. 60% are wines
Function is laid down in the Alcohol Act and Degree
• Sole right in Finland for the retail sale of alcoholic beverages containing
over 4.7 per cent of alcohol by volume, based primarily on reasons related
to social and health politics
• Required to be impartial towards all suppliers, ensured by a public listing
procedure and retail sale of alcoholic beverages
Alko has a specific obligation to consider the different aspects of
social, economic and ecological responsibility

6. Limitations to Cooperation
Because of Alko’s monopoly status cooperation is limited
• All suppliers must be treated equally
⌐ Cooperation on demand side (category management) therefore difficult
⌐ Cooperation on supply side (logistics) is easier
• Standards are the same for everyone EDI and product information
Supplier base very heterogeneous
• Suppliers and products from all over the world
• Long supply chains and lead times
Best practices will be eventually applied to all suppliers
• Included in Alko’s requirements for suppliers
• May be used by Pernod Ricard in other markets as well

7. ECR Scorecard Focus Areas
Demand Management Enablers
Demand Strategy and Capabilities Common Identification Standards
Collaborative Shopper Value Creation Standard Electronic Messages
Optimize Optimize New Product
Optimize Promotions Global Data Synchronization
Assortments Introductions
Supply Management Integrators
Supply Strategy and Capabilities Collaborative Planning and Forecasting
Respponsive Integrated Demand
Operational Excellence Cost/Profit and Value Measurement
Supply Driven Supply

8. Practices for Using ECR Scorecard
Cooperation under the “ECR banner” since 1999
• Annual meetings between key personnel (steering group)
• Using ECR scorecard to pinpoint joint projects
• Follow-up meetings several times per year
Focus from “enablers” to ”integrators”
• From e.g. it system compatibility and EDI to end-customer satisfaction
Using KPIs to track development
• Service level from logistics center to stores and from stores to consumers
• Store order timeliness
• Picking errors in warehouse
Experience of both “intermediate” and “full global” scorecards

9. Intermediate vs. Full Global Scorecard
Intermediate Full Global
Easy to understand + Comprehensive
+ +
Fast to use + Enables comparison to other
Pros
companies and industries
Uniform with the ECR framework + Uniform with the ECR framework
+
- Does not cover all relevant areas - Takes time to use
Cons
- Scale is too general - Some questions are too vague or
general
- Scale in some questions too short - Scale in some questions too short

10. Finding Development Areas
Considerations
Automated Store Ordering Product Flow Techniques Efficient Unit Loads (EUL)
POS-Scanning and perpetual inventory systems replace The degree that optimised product flow techniques have been Improve efficiency & effectiveness of supply chains by
Score General Meaning manual counting for store re-stocking. Adjustments are implemented considering consumer service level and total promoting harmonisation and integration of transport and
anticipated and applied to order calculation. supply chain costs. storage items.
No harmonisation and integration of unit loads along the supply
0 Nothing planned Wholly manual system to track inventory and re-order product. Product Flow alternatives are not considered.
chain.
Plans agreed but have Plan to use handheld devices routinely to record shelf inventory Strategic plans are being developed to implement alternative EUL are being taken into consideration.
1 not yet started needs, combined with manual inventory to calculate stock re- product flow techniques when appropriate. Benefits understood Plans approved to harmonize secondary (like outer cases) &
implementation order. Adjustments are made on a manual basis. at conceptual level. tertiary items (like pallets).
Handheld devices are used to record shelf inventory needs, Pilots of different product flow alternatives have been completed Pilots with some trading partners to use harmonized tertiary and
Pilot tests being
2 conducted
combined with manual inventory to calculate stock re-order. with a few trading partners in a few categories (e.g. fresh). secondary items / modular spaces to assess costs and benefits;
Adjustments are anticipated. Benefits still only understood at conceptual level. analysis of supply chain to reduce handling steps.
Full implications of alternative product flow techniques are
Scanning and perpetual inventory systems replace manual
understood and broader usage is being implemented. Criteria
Roll-out of counting for store re-stocking. Results are not optimal due to Expanded use of harmonized items along the supply chain
3 implementation started issues with inventory record accuracy and compliance to plan-o-
on when/how to use the different product flows techniques have
eliminates unproductive assembly and disassembly operations.
been established. Benefits are quantified and supported by
gram.
ABC.
Scanning and perpetual inventory systems are used and Design of secondary & tertiary items and unit loads suits
Benefits of flow alternatives are understood and reflected in
supported by robust inventory record accuracy and plan-o-gram category requirements to the shelf and supply chain flow:
4 Fully implemented
compliance. Processes, eg. re-order cycles, can be adjusted
distribution methodologies. DC layout supports implementation.
optimal utilization of available space and minimal handling for
Benefit calculation is fully supported by ABC.
based on category requirements. all products and all distribution channels.
Current score
Short term goal
Current score equals short-term goal

11. Choosing Joint Projects
Focus Area Concept Common Score
S1. Supply Strategy & Capabilities Strategic Direction 4
People & Organization 3
Information Management 3
S2. Responsive Supply Automated Store Ordering 3
Continuous Replenishment 0
Supply Management
Product Flow Techniques 3
Transport Optimization -
Efficient Unit Loads 3
S3. Integrated Demand Driven Supply Synchronized Production 4
Integrated Suppliers 1
S4. Operational Excellence Reliable Store Operations 3
Reliable Distribution 3
Reliable Production 4
Reliable Stock Loss Management 4
Reliable On-Shelf Availability Management 4
E1. Common Identification Standards GTIN at Consumer Unit Level 4
GTIN at Trade (Case, Carton) Unit Level 1
Serial Shipment Container Code (SSCC) 1
Global Location Number (GLN) 0
Electronic Product Code (EPC) 1
Enablers
Product Classification Standards 0
E2. Use of Electronic Message Standards Electronic Messages for Supply 4
Electronic Messages for Planning, Forecasting and Replenishment 0
Electronic messages for Master Data 0
E3. Global Data Synchronization Global Data Synchronization 0
Data Quality 3
I1. Collaborative Planning and Forecasting Collaborative Planning 2
Integrators
Collaborative Forecasting 2
I2. Cost/Profit and Value Measurement Activity Based Costing (ABC) 3
Consumer Value Measurement 0

12. Examples of Joint Projects
Efficient Unit Loads
Sales volume varies heavily by SKU
• Products are given space (faces) on shelves based
on sales volume
• Inventory turnover in stores is largery based on
delivery unit size
• Cost in the warehouse and stores are based on
⌐ deliveries (orders)
⌐ rows per order
⌐ SKUs per carton
Estimating efficient delivery unit sizes together
• Products (litres) per delivery
• Optimal carton size for each product (e.g. 6 or 12
bottles)
• Using wheeled dolly-pallets for the high volume
products

13. Examples of Joint Projects
Product Identification Standards
Very strict inventory management in the whole alcohol supply chain
Deliveries are carefully received in all Alko stores
• Suppliers are currently required to mark each carton with Alko’s own product
number (6 digits)
• In practise difficult to implement, because the products are procured from all
over the world and the same cartons are used in several markets
• Printing separate stickers to each carton is prohibitively expensive
Almost all cartons have a bar code printed by the manufacturer or packager
• Code types used include EAN/GTIN-13, EAN-14, EAN-128 etc.
• No universal practise or standard in carton markings
Alko’s store IT system was enhanced to read practically all code types
• The system recognizes the product and proposes the right number of SKUs in
the carton
• Faster and easier receiving in the stores
• Fewer receiving errors

14. Examples of Joint Projects
Collaborative Forecasting 1/3
Example 1: Seasonal product with a very accurate collaborative sales estimate
Final weeks’ demand slightly higher than estimated
• product availability secured by buffer stocks
• practically no end-of-season obsolete inventories
Slight variations caused
by e.g. weather
Beginning of the
season as estimated
Forecast
Actual sales
2008 41 2008 42 2008 43 2008 44 2008 45 2008 46 2008 47 2008 48 2008 49 2008 50 2008 51 2008 52

15. Examples of Joint Projects
Collaborative Forecasting 2/3
Example 2: Seasonal product with higher demand than estimated
Extra stock arrives to save the peak
season and minimize out-of-stocks
Huge peak in demand caused by external
factors e.g. review in a newspaper
• momentary out-of-stock
Collaborative decision is made
to increase the availability
Actual demand starts to deviate
from estimate already in the
beginning of the season
Forecast
Actual sales
2008 41 2008 42 2008 43 2008 44 2008 45 2008 46 2008 47 2008 48 2008 49 2008 50 2008 51 2008 52

16. Examples of Joint Projects
Collaborative Forecasting 3/3

17. Developing the ECR Scorecard
Scorecard scale is in some cases too short
Some questions too general or vague
• Vocabulary could be more extensive in order to avoid misunderstandings
related to terminology
Too detailed options
• Sometimes higher requirements are easier to fulfill than the lower ones
• Some points are not applicable to all markets and product areas
• Customized scorecards for e.g. non-food stores and suppliers?
Translations still not perfect
Using color symbols (”traffic lights”) enable quick status check

18. Summary and Recommendations
ECR Scorecard provides a good framework and structure for Supply
Chain Collaboration
• Recognizing joint development areas and projects
• Tracking development
• One-time practice is useful, but regular use brings greater benefits
• Possibility to benchmark with other countries and businesses
Recommendations
• Ensure top management commitment
• Take your time for preparations and for the scorecard meeting itself!
• Don’t get stuck in the details
• Choose an inspiring location for the scorecard fulfilling session
• Participants from all organizational levels (operational and management)

19. Thank You!
tuomas.kokkonen@alko.fi
petri.vainio@pernod-ricard-nordic.com