ECRS Customers Excel with Revolutionary DemandFill Technology and LogicSync - enhanced ECRS Gateway

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1 ECRS Customers Excel with Revolutionary DemandFill Technology and LogicSync - enhanced ECRS Gateway Below is a glimpse into what three ECRS customers are achieving with Catapult and ECRS Gateway and topics they will discuss during the user conference panel. The purpose is to allow these innovative retailers a chance to share their experiences with their peers to improve inventory processes, reduce lost sales from out-of-stock and dead stock merchandise, improve inventory turns, manage margins, and elevate customer service. Panel Participants Tunie's Natural Grocery & Vitamin Supercenter Haley Roose, General Store Manager Tunie's stocks over 28,000 products within a 15,000 square foot space making it the largest natural grocery, vitamin, and nutrition store in the state of Florida. This large-format natural products super- center stands out in the marketplace by offering a wide range of supplements and grocery items at discount prices. In January of 2011, Tunie's replaced an existing point-of-sale system with ECRS's Catapult. To enhance the inventory management functionality already found in Catapult, Tunie's also implemented the ECRS Gateway service to facilitate communication between the store and over 200 suppliers for easier ordering, receiving, and price maintenance. Bi-Rite Market, San Francisco CA Scott Shimoda, Technology Administrator & Buyer Bi-Rite Market is a unique marketplace located in San Francisco that places emphasis on providing customers with locally produced, quality food with known ingredient sources. The small, but high volume, store is very selective about the products that are on their shelvesand its customers have come to expect product integrity and diversity.

2 A long-time user of Catapult, Bi-Rite recently decided to undertake the project of autoreplenishment using ECRS's DemandFill and ECRS Gateway technology. The goal of this was to get a handle on inventory processes that had gone astray, costing them time and money. Sunrise Natural Foods, Auburn & Roseville, CA John Gillespie, IT Manager & Owner's Son Sunrise Natural Foods is a family-owned health and natural products store with a focus on knowledgeable, personalized customer service and broad product range. In addition to delivering the largest nutrition selection in Sacramento, Sunrise also offers one-on-one product consulting to insure customers are choosing the right products for their individual needs. Sunrise has been an ECRS customer since 2008, and like Bi-Rite (see above), began moving to toward automated inventory replenishment and supplier integration about a year ago. Q & A ECRS: What were your goals in implementing ECRS Catapult with ECRS Gateway? Roose: We wanted the tracking and reporting functionality that Catapult offered and an easier way to manage inventory. Basically, we heard from ECRS about successes other customers were having and wanted to see if we could duplicate the time and resource savings they were experiencing.

3 Shimoda: We wanted to streamline our ordering and receiving processes with our largest vendor, maintain inventory through auto-reorder instead of manual counts, cut down on receiving time, better manage margins and costs, and know how much product we had at a given time. Gillespie: We wanted to move toward auto-reorder with DemandFill to insure the correct stock was coming in and shelves were consistently stocked with what our customers were purchasing. Catapult knows exactly what has been sold and when we need more. We were struggling with products being missed in manual counts and consequently losing sales from out-of-stocks. ECRS Gateway gave us the chance to consolidate multiple ordering platforms into one. Maintaining multiple ordering systems is tedious and just adds another step in the process. We also wanted to take advantage of the ease of price changes Gateway offered. Before we had to go through the entire invoice and see what item prices had changed and manually make the changes in our database, Gateway brings in the data which is converted into a Price and Cost Change worksheet in Catapult for each order. Our margins are also maintained because prices are correct. ECRS: Have your goals and expectations been met so far? Roose: Yes, absolutely. It saves us time and our inventory is more accurate. Shimoda: Yes, the hard part has been getting everyone in the store used to this new style of ordering and receiving. Until we started this project, we were not keeping inventory in the system and everything was manually doing counts and keeping track of inventory in our head. With Gateway in place, the only editing work we have to do is when an order is received and the vendor doesn't ship an item or ships the wrong item. Our inventory is much more accurate now. Gillespie: The only time I see product missing or have any issues is when returns aren't correctly counted back in to stock or the vendor ships incorrectly. It just works really well. It's awesome. ECRS: How many suppliers do you currently have automated through ECRS Gateway? Roose: We have 100+direct vendors, 85 of which are connected through ECRS Gateway. I add new vendors to the Gateway almost daily. Shimoda: We chose start with our largest supplier that provides the majority of our inventory. We hope to expand this to our smaller directs soon. Gillespie: We have about vendors that we order from regularly, four of these are linked via Gateway through LogicSync adapters and 20 go through the basic Gateway service. ECRS: How did Catapult inventory management and ECRS Gateway make inventory processes more efficient? Roose: It cuts down the time spent managing inventory and vendors dramatically. Before ECRS, we were walking the floor and manually writing orders or using multiple hand held units supplied by the individual vendor. Direct orders were called in or faxed. With Catapult, orders

4 are generated based on demand factors, and after approval, electronically transmitted to the supplier, even directs. For our LogicSync vendors, we also receive automatically generated Price and Cost change worksheets for new orders. Our inventory is updated with what shipped and prices updated based on our margins. This manages price updates more efficiently and takes significantly less time than manual entry. Before this system, ordering processes were a full time job, 40+ hours a week. It is now down to about 10 hours a week. Shimoda: It is much more reassuring when the order is generated in Catapult and transmitted to the vendor through ECRS Gateway. You can see when the order is received by the supplier and alerted if there is an issue. It just gives you a secure feeling. DemandFill consistently provides a clean order, eliminating human error from manual entry or incorrect counts. When ordering from our main vendor, it used to take up to 4 hours, and we did it 3 times a week. Now it takes about minutes per order and that includes spot checking and review. Receiving is much easier because Gateway transfers the completed order information to Catapult and a Price and Cost Change worksheet is generated based on the shipped order. Gillespie: The computer just doesn't mess up; people can miss ordering items or order the wrong thing. Using this system has made our inventory much more accurate with less time invested. Previously, for our main vendors we were spending hours a week ordering, that time has been reduced to about 20 minutes. It has also saved us a lot of time in receiving. We used to pull everything out of the boxes, line it up, and manually count each item and compare with the paper invoice. Now we scan the items using WebCAT and the system automatically compares items received with the electronic invoice brought in via the Gateway, and prices are automatically updated in the database. It used to take one hour for typical large order and that time has been reduced to 5-10 minutes. ECRS: How have these efficiencies impacted your job and the business? Roose: It has helped prevent out-of-stocks because ordering by visually scanning shelves and writing orders is prone to mistakes. We are now only out-of-stock if the vendor is out-of-stock. We have been able to reallocate time previously spent on inventory processes to meet with vendors and work out better deals. It makes us buy better, get better prices, and sales are not missed from out-of-stocks. Shimoda: DemandFill and ECRS Gateway have cut the time spent doing inventory processes in half and our inventory is more accurate. It has also helped us easily detect "no shows" from vendors. We average about $200 in product "no shows" every week now we can detect order and delivery discrepancies. Gillespie: Our sales were up 10% in 2011 compared to 2010 because we consistently had product in stock. I attribute this business growth directly to implementing this system and new processes. Our Buyers are able to spend more time interacting with customers and have more time to work with vendor reps to get better pricing and develop stronger relationships. Important Facts:

5 It's not all or nothing You do not have to put your entire store on auto-replenishment from day one. Our most successful customers use a combination of human and computer intelligence. You can choose to connect with as many, or as few, suppliers as you wish. We have some customers who are striving to use Gateway with all of their suppliers and some who choose to connect only with LogicSync ready suppliers. You will not be charged by supplier. You can add as many as you wish at any time. Prepare yourself and the store staff that inventory automation is a process and will not happen overnight. It takes time and attention to detail but the cleaner your data is going into inventory automation the better your results will be and the faster you will see ROI. ECRS does have resources to help you through this process. It's not about replacing human resources with technology. It is about maximizing the combined strengths of employees and technology to improve your business. Don't be fooled by imitators. Only ECRS has bi-directional ECRS Gateway with LogicSync and the revolutionary, proven DemandFill technology that automatically sets your re-order based on consumer demand and not arbitrary user settings. If your system doesn't have DemandFill technology, call ECRS today or stop by our booth # 3456 at Natural Products Expo West!