As the world's second largest retailer, Carrefour maintains a long history of innovation and accomplishment.

Founded in 1959, Carrefour has essentially defined the way the world shops. In 1961, the company opened the retail industry's very first hypermarket, which offered customers a wide range of both food and non-food products under the same roof. Currently, Carrefour has more than 9,200 stores throughout 29 countries in Europe, Asia and Latin America.

To transition Carrefour's decentralized logistics network to a centralized logistics strategy.

To improve order accuracy for supplier deliveries and outbound deliveries while providing distribution network visibility.

To reduce inventory and increase stock assortment at the store level.

Cotia-Penske established an 800,000 square foot distribution facility in Sao Paolo and a 39,000 square foot facility in Espirito Santo. Cotia-Penske now receives all shipments from suppliers, cross-docks and consolidates shipments to individual stores.

Cotia-Penske implemented its proprietary Warehouse Management System software to track orders from inception to delivery. Barcode scanning has increased inventory accuracy to 99.97 percent and outbound accuracy is at 99.89 percent.

The average number of days that inventory stays on the store shelf has been reduced by 30 percent. Stock assortment has increased, allowing stores to provide a wider range of goods to consumers.

In Brazil, Carrefour maintains an impressive presence as one of the country's largest retailers. With 96 hypermarkets, 122 supermarkets and seven distribution centers, Carrefour employs a sophisticated network of distribution, transportation and warehousing operations. In January 1999, Carrefour began a company-wide effort to standardize and streamline its operations at every level. When it came to logistics, Carrefour encountered a substantial challenge. Because each store was responsible for its own supply chain, there were no predefined standards and processes for inventory tracking, shipping and ordering. Each store would work directly with

suppliers to order and ship inventory, without any means to track the movement of goods through the supply chain. Carrefour decided to employ a lead logistics provider (LLP) to transition its logistics operations to a centralized network. In 1999, the company turned to Cotia-Penske, a joint venture between U.S.-based Penske Logistics and Brazilian distributor Cotia Trading. Cotia-Penske had previously worked with Ford Motor Company in Brazil and demonstrated both the local knowledge and retail experience needed to deliver Carrefour an efficient, centralized logistics network. Centralizing the Logistics Network to Optimize Carrefour's Supply Chain After closely studying and analyzing Carrefour's operations, Cotia-Penske presented Carrefour a new logistics design in March 1999. Cotia-Penske developed a three-pronged approach that consisted of the following core components:

New Distribution Facilities: Two main distribution centers would be built to store and distribute non-perishable inventory throughout the network Warehousing Technology: Cotia-Penske would implement warehouse management software and scanners to track inventory Load Planning: Cotia-Penske would perform all load planning to maximize trailer cube utilization and shipment consolidation.

With Carrefour's acceptance of the new centralized network design, CotiaPenske immediately broke ground on the new distribution center facilities. The first facility, located in Osasco, Sao Paolo, was initially developed at 450,000 square feet, but soon expanded to 800,000 square feet. The new distribution center would service all stores located within an 800-kilometer radius. As most of Carrefour's stores are located around Sao Paolo, the Osasco facility would be prepared to handle the majority of volume moving through the region. Cotia-Penske hired approximately 800 staff to run the distribution center's operations. The second facility would be located in Vitoria, Espirito Santo. This facility would serve the remainder of Carrefour's stores located in the states of southeast Brazil. Significantly smaller, this facility would measure approximately 39,000 square feet and require 30 staff to keep operations running. Carrefour's stores range from large hypermarkets to smaller supermarkets. Hypermarkets stock an average of 36,000 items and require larger quantities per delivery, while supermarkets often require constant picking of smaller quantities. Carrefour lacked a single system by which to manage inventory

flow throughout the supply chain. As a result, Carrefour could not determine the optimal amount of specific goods to be stored in the distribution center at any given point in time. To achieve supply chain visibility, Cotia-Penske spent three months developing a proprietary Warehouse Management System (WMS) software solution specifically designed to meet Carrefour's needs. The WMS software would integrate with Carrefour's existing ERP system to receive orders from individual stores. It would then automate the planning of outbound shipments and coordinate transportation. All products would be scanned by more than 220 RF scanners to validate and reconcile inventory. As a result, inventory would be visible and manageable from the moment it entered the distribution facility until delivery. With two new distribution centers and Cotia-Penske's WMS system, CotiaPenske could now tackle load planning for Carrefour. By consolidating shipments and closely tracking inventory demand, Cotia-Penske would ensure trucks left the distribution center with as full of a load as possible. Within six months, Cotia-Penske had successfully executed its network design. Stores were no longer hassled with multiple supplier shipments and Carrefour was able to track and forecast inventory demand. From the Warehouse to the Consumer: Cotia-Penske Delivers Powerful ResultsThe benefits of centralizing its logistics network have been many for Carrefour, all of which translate into a substantial reduction in distribution costs and an increased level of supply chain visibility. For example, the average number of days that inventory stays on the store shelf has been reduced by 30 percent. Barcode scanning has increased inventory accuracy to 99.97 percent. With an outbound order accuracy of 99.89 percent, stores are now receiving the right products at the right time. Many of the greatest benefits Cotia-Penske has provided to Carrefour can't be measured. In a time when shoppers want a wider variety of products, CotiaPenske has allowed Carrefour to increase their stock assortment with less inventory on hand. This allows individual stores to offer more goods to their customers, thus improving overall customer satisfaction and driving Carrefour's sales revenue. As the stores no longer have to work directly with suppliers, the amount of time and resources dedicated to inventory replenishment and delivery has been significantly reduced at the store level. Stores now contact the distribution centers directly to order goods and receive orders in fewer shipments.

Using Cotia-Penske's warehousing technologies and load planning services, trailer cube utilization has been maximized. Trucks are able to make more deliveries a day and loading times at the distribution center have been reduced. This has decreased Carrefour's overall transportation costs, while ensuring timely, superior service to its growing market. Cotia-Penske's original contract with Carrefour included 23 stores, with 50 stores added in the first year. Cotia-Penske has proved itself to be an exceptional LLP and business partner and, as a result, it now distributes to all 96 hypermarkets, 23 supermarkets and six smaller distribution centers. The Sao Paolo distribution center handles anywhere from 35 million to 48 million cases of inventory a year, averaging nearly 5,500 pallets a day. Carrefour and Cotia-Penske continue to work closely with one another to maximize productivity, decrease inventory and reduce costs. The amount of staff in the Sao Paolo facility was recently reduced to 600 as operations have become more streamlined. Carrefour meets with the Cotia-Penske team monthly to evaluate progress and discuss new ways to introduce efficiency into its supply chain.