Joint Business Plan NESTLE and TESCO in Poland

1 Joint Business PlanNESTLE and TESCO in PolandNESTLE and TESCO in PolandJanusz Selwa TESCO Polska ( Poland )Michal Rubaszko NESTLE Polska ( Poland ) TESCO operates currently inTESCO GloballyTESCO in PolandTESCO in PolandTESCO is a thirdplayer on Polish retail market and first HM chain in Poland . HYPERMARKETSDDS1K + SAVIAAreaNo. of sku No. of outlets 4 12 k m22 - 3 k m21 k format structureNESTLE in PolandNESTLE in PolandConfectioneryBeveragesCulinaryInfa nt NutritionLodyWatersCerealsFoodServicesPe t FoodWhat is Joint Business Business 5 years ago, Nestl in the UK had a negative growth rate with TESCO , at a time when TESCO was increasing it s share of the UK Grocery market.

2 Issues included:It all started with the UKWhat is Joint Business Planning?What is Joint Business Planning? A fragmented Nestl approach to the TESCO Business No endorsement by Senior Management to the plans No issue escalation processWhat is Joint Business Planning?What is Joint Business Planning? Business Unit Sales networkJBP 2= JBP1 + Key Initiatives + 3=JBP2 + focus on key categories + + - TESCO attempted to mirror Wal-Mart Suppliers Management Model Request to form TeamsSales networkFragmented ApproachEasy to Attack Difficult to do BusinessDEATH SPIRALL isten, Acknowledge, Explore and RespondUnderstood what was Really.

3 Really ImportantTOP Management Driven JBP 1 It worked + Flexibility on How we Delivered Shared What was Important to UsINTERVENTION2002/32004/52005/62006/720 03/42001/2 What is Joint Business Planning?What is Joint Business Planning?Trade TermsActivity PlanTraditional negotiationsAnnual NegotiationsTraditional negotiationsJointly Aligned Shopper Based PlanNegotiate the gapsJBP incl. TTJBP processSharing objectivesWhat is Joint Business Planning?What is Joint Business Planning? Greater listening and understanding on both sides Increased trustFundamental changes Increased trust Increased transparency and visibility of Business Shared more and aligned plans together Joint ownership responsibility / mutual goalsEach Category Produces and Agrees a Business plan +111%+21%+174%+44%% Profits (Mio)+30%+30%+106%+68%% Turnover (Mio)2009200820072006+111%+21%+174%+44%% Profits (Mio)+30%+30%+106%+68%% Turnover (Mio)

4 2009200820072006 plan ProgramOverall KPI TargetYTD AchievedWhat Needs To Be DoneBy WhoWhen Does it Need to be Done ByQ1 Q2Q3Q4 Next StepsI Can Get What I Want 150m in 3 years 33m category growth (2006 YTD)Petcare step change 3 year growth plan2006/945% market share within 12wks of launchWIPF irst for innovation:- Format plan for ALL NPD, NPD highlighted as a % in JBP, Prioritised NPD based on Size of Prize 2006/7 Drive 1m incremental sales at RSVS ales Test v Control B:+.

5 + On-Shelf Availability through better in-store support, using "Always Available"2006/7 Provide category expertise to support every range review for every TESCO formatProvide best-in-class category insight for every TESCO Lifetime LoyaltyJointly agreed 12 month healthier plan worth TBCm RSVT esco & NESTLE to agree a plan for "Helping you be healthier everyday" with significant focus on selected categories2006/7We Try To Get It Right First Time100%75%No Invoicing Queries - All invoices processed accurately and paid on time2006/7100%WIPNew products setup on system within

6 12wks of launch2006/7We Deliver Consistently Every DayWinning the Treble: Promotions, NPI, Petcare growthJointly agree best-in-class processes for the above2006/7 Focus on Colloborative Planning:1] Reduce Failed To Arrive (FTAs) (less than 1%)2] Seasonality3] Base Sales2006/7We Make Our Jobs Easier to DoRoll-out across all NESTLE categoriesVendor Managed Inventory (VMI)2007/895% of range in and implement innovative RRP and MU solutions where it makes people's jobs easier2006/7We Always Save Time and MoneyPhased roll-out across all Nestl categoriesEfficient Checking - To enable faster vehicle turnaround at TESCO Depots2006/7 Better, Simpler, CheaperBe Responsible, Fair and HonestTBCTBCTBCBe a Good NeighbourTBCTBCTBCYTD Range.

7 - TripThe Way We Work TogetherCUSTOMEROPERATIONSCOMMUNITYPlan ProgramOverall KPI TargetYTD AchievedWhat Needs To Be DoneBy WhoWhen Does it Need to be Done ByQ1 Q2Q3Q4 Next StepsI Can Get What I Want 150m in 3 years 33m category growth (2006 YTD)Petcare step change 3 year growth plan2006/945% market share within 12wks of launchWIPF irst for innovation:- Format plan for ALL NPD, NPD highlighted as a % in JBP, Prioritised NPD based on Size of Prize 2006/7 Drive 1m incremental sales at RSVS ales Test v Control B:+.

8 + On-Shelf Availability through better in-store support, using "Always Available"2006/7 Provide category expertise to support every range review for every TESCO formatProvide best-in-class category insight for every TESCO Lifetime LoyaltyJointly agreed 12 month healthier plan worth TBCm RSVT esco & NESTLE to agree a plan for "Helping you be healthier everyday" with significant focus on selected categories2006/7We Try To Get It Right First Time100%75%No Invoicing Queries - All invoices processed accurately and paid on time2006/7100%WIPNew products setup on system within

9 12wks of launch2006/7We Deliver Consistently Every DayWinning the Treble: Promotions, NPI, Petcare growthJointly agree best-in-class processes for the above2006/7 Focus on Colloborative Planning:1] Reduce Failed To Arrive (FTAs) (less than 1%)2] Seasonality3] Base Sales2006/7We Make Our Jobs Easier to DoRoll-out across all NESTLE categoriesVendor Managed Inventory (VMI)2007/895% of range in and implement innovative RRP and MU solutions where it makes people's jobs easier2006/7We Always Save Time and MoneyPhased roll-out across all Nestl categoriesEfficient Checking - To enable faster vehicle turnaround at TESCO Depots2006/7 Better, Simpler, CheaperBe Responsible, Fair and HonestTBCTBCTBCBe a Good NeighbourTBCTBCTBCYTD Range: - TripThe Way We Work TogetherCUSTOMEROPERATIONSCOMMUNITYWhat is Joint Business Planning?

10 What is Joint Business Planning? A simple document sets out the annual Business against all parts of the TESCO steering wheel and a set of agreed Joint targets Reviewed every period between Account Manager and Buyer using the Blue, Red Amber Green traffic light processTARGETSREVIEW BRAG Business PLAN95%95%95%91%Service Level+ + Margin+111%+21%+174%+44%% Growth95%95%95%91%Service Level+ + Margin+111%+21%+174%+44%% GrowthBe a Good NeighbourGrow Sales xxxm, + categories' sales through good Joint Business PlansBuild a Joint Business plan for every Format2006/7 Maximise Profit xxxm, +xx%xx%, + categories' profit and margin through good Joint Business Plans2006/7An agreed Induction plan used by both partiesDevelop a Joint Induction plan for all NESTLE - TESCO employees (including Helping Hands / TWIST)