12 Strengthening our Network Supply Chain and Technology Positioned among the best in retail, our supply chain helps drive sales, reduce costs and ensure the availability of products our guests most want and need. Through continued investment in technology, infrastructure and operational improvements, we are pursuing initiatives that we believe will increase both our guestsGLYPH<213> satisfaction and our profitability. In order to sustain this competitive advantage, we have put our supply chain on the fast track. evelop. Deliver. Delight. Being first with new trends or products is one of the ways we delight our guests. And, shortening our merchandise lead times is one of the ways we maintain our fashion leadership position. To speed delivery of product to our storesGLYPH<213> shelves, we are using sophisticated online tools to design product and to negotiate pricing, production and delivery terms. D Additionally, we are leveraging the global expertise of AMC to identify reliable vendor partners, source materials and manufacture the high-quality, fashionable merchandise our guests expect. Our efforts in recent years have pro- duced a significant reduction in the length of our supply chain and we remain committed to achieving further improvements moving forward. To support our new store growth and better serve our existing stores, we continue to expand our distribution capacity and invest in leading-edge technologies. Our current distribution network includes 19 regional distri- bution centers (RDCs) and three import warehouses, with more than 90 percent of our general merchandise flowing through our RDCs. In addition, we are steadily expanding our self-distribution of dry grocery products, with nearly 50 percent of these items handled in-house in 2003. The recent integration of import warehouses into our supply chain adds an important dimension to our strategy. These facilities store seasonal and imported merchandise and allow us to funnel goods through our regional distri- bution centers to our stores as demand warrants. By providing incremental distribution capacity, these facilities also increase the effectiveness of our item segmentation strategy, allowing us to move high-demand items through our distribution process with greater priority. Technological enhancements in our RDCs continue to improve the productivity, accuracy and speed within our supply chain. ¥ In 2003, we began implementation of an electronic labeling system called Automated Receiving Technology (ART). This program utilizes real-time information In-Stock Levels Being in-stock on the items our guests want  is a key factor in delivering consistent guest satisfaction and generating strong incremental sales and profits. To achieve these results, we are focused on initiatives that optimize inventory flow and balance in-stock reliability with inventory control. We have made tremendous strides toward achieving our goals and believe we are well-positioned for the future.