September 24, 1998 Presented by: ECR Unsaleables Committee Co-Chairs

September 24, 1998September 24, 1998

Presented by: ECR Unsaleables Committee Co-Chairs Presented by: ECR Unsaleables Committee Co-Chairs

Al Graham, Chairman & CEO, The Oshawa Group Al Graham, Chairman & CEO, The Oshawa Group Limited Limited

Brian Mirsky, President, Campbell Soup Company LtdBrian Mirsky, President, Campbell Soup Company Ltd

ECR Unsaleables Committee - ECR Unsaleables Committee - Progress ReportProgress Report

Let’s Review … A Case for ChangeLet’s Review … A Case for Change

Trading PartnersTrading Partners

• Were not satisfied with previous joint industry Were not satisfied with previous joint industry recommendationsrecommendations

• No incentive to reduce the incidence of unsaleables.No incentive to reduce the incidence of unsaleables.

Distributors Distributors

• Did not feel they were adequately compensated. Did not feel they were adequately compensated.

• The handling rate did not cover their costs.The handling rate did not cover their costs.

Manufacturers Manufacturers

• Saw unsaleables as ever increasing cost with no Saw unsaleables as ever increasing cost with no accountability.accountability.

ECR Vision - to eliminate / minimize ECR Vision - to eliminate / minimize unsaleables in the supply chainunsaleables in the supply chain

ECR Unsaleables Recommendation - ECR Unsaleables Recommendation - Objective;Objective;

““To facilitate a cost effective reduction in the To facilitate a cost effective reduction in the incidence of unsaleables products through incidence of unsaleables products through fair and equitable practices.”fair and equitable practices.”

• Be compatible with the philosophy & principles of ECRBe compatible with the philosophy & principles of ECR• Address & resolve issues in a least cost manner, with anAddress & resolve issues in a least cost manner, with an• Accountability & a monitoring-audit capability.Accountability & a monitoring-audit capability.• Unacceptable practices should bear the costUnacceptable practices should bear the cost• Not for profit solution.Not for profit solution.

ECR Unsaleables ECR Unsaleables Solution - PrinciplesSolution - Principles

ECR Unsaleables ECR Unsaleables Solution - ComponentsSolution - Components

• Recommendation includes handling rates Recommendation includes handling rates which more accurately reflects distributors which more accurately reflects distributors costs.costs.

• Distributor compensation for unsaleables is Distributor compensation for unsaleables is determined by performance versus a determined by performance versus a declining industry benchmark.declining industry benchmark.

What’s new in 1998…What’s new in 1998…….. Progress report….. Progress report

CCGD Board endorsed the recommendation.CCGD Board endorsed the recommendation.November 24, 1997 FCPMC members voted yesNovember 24, 1997 FCPMC members voted yesJanuary 1, 1998 - Ontario Roll-out beganJanuary 1, 1998 - Ontario Roll-out beganMarch 1, 1998 - User’s Guide publishedMarch 1, 1998 - User’s Guide publishedJuly 21, 1998 - Joint industry recommendation for July 21, 1998 - Joint industry recommendation for

a National Roll-out to commence November 1, a National Roll-out to commence November 1, 1998.1998.

So How Are We Doing So So How Are We Doing So Far?Far?

Top Line Observations Top Line Observations of the Ontario Roll-outof the Ontario Roll-out

• Prior to the roll-out, the average rate of incidence for Prior to the roll-out, the average rate of incidence for the industry was measured at 15 items / $10,000 retail the industry was measured at 15 items / $10,000 retail sales.sales.

• Three distributors are currently participating in the Three distributors are currently participating in the Ontario roll-out.Ontario roll-out.

• All 3 are performing below the current industry All 3 are performing below the current industry benchmark of 13 items / $10,000 retail sales. benchmark of 13 items / $10,000 retail sales.

• Representing collective performance 13% below the Representing collective performance 13% below the previous year’s industry average.previous year’s industry average.

There is a Lot of Work Still There is a Lot of Work Still to be done….to be done….

Next StepsNext Steps

• National Roll-out to begin November 1, 1998.National Roll-out to begin November 1, 1998.

• Regional Seminars will be conducted during Regional Seminars will be conducted during October / NovemberOctober / November

• Evaluation of 1998 Ontario roll outEvaluation of 1998 Ontario roll out

– evaluation of handling rates and,evaluation of handling rates and,

– declining benchmarks going forwarddeclining benchmarks going forward

• Work groups to address product categories Work groups to address product categories outside the current recommendation.outside the current recommendation.

• We now have actionable data & the incentive to We now have actionable data & the incentive to act on it.act on it.

• Trading partners will have to initiate dialogues Trading partners will have to initiate dialogues to address identified issues.to address identified issues.

Next Steps Next Steps continued…continued…

Further development of the trading Further development of the trading partners rolespartners roles

What can youWhat can you do next? do next?

• If you haven’t already, buy a User’s Guide.If you haven’t already, buy a User’s Guide.

• Attend the breakout session.Attend the breakout session.

• Who should attend?Who should attend?