- Breakout Session -- Breakout Session -Closeout Sales & DonationsCloseout Sales & Donations

Joint Industry Unsaleables Management ConferenceJoint Industry Unsaleables Management ConferenceJuly 2011July 2011

Agenda

• Introductory Comments• Manufacturer Process• Retailer/Wholesaler Process• Secondary Market Process• Hunger Relief• Concluding Remarks• Q&A

Jim SpaightLand O’Lakes

Land O’Lakes Closeout Sales and Donations

• Land O’Lakes from farm to table– Farmer owned co-op– Stewards in the communities we live and work

• Types of products for closeout sale/donation– Retail– Foodservice– Industrial

Land O’Lakes Closeout Sales and Donations

• Closeout Sale, Donation process– First run donations– What is wrong with the product– Where is it located– What is the value (our cost, in closeout market)

Jeff ThuneRetailer/Wholesaler Process

Retailer/Wholesaler Process

• Donations– Retail Perishable Programs– Cash Donations– Resource Commitments

• Building design, purchasing; etc.• Equipment and materials• Committee involvement

– Volunteer efforts

Retailer/Wholesaler Process

• Donations and Close-out Sales– Damage Reclamation Centers

• Vendor option• Swell allowances

– Distribution Centers• Remaining shelf life• Manufacturer direction

– Private Brands• Out-of-bounds• Out-of-market• Rebranding

Jeff Thune2ndMarket Solutions

Closeout Sales

• Manufacturer– Obsolete Inventory

• Aged• Excess• Damaged• Quality• Discontinued• Packaging/Formula Change• Seasonal

Closeout Sales

• Retailer– Obsolete Inventory

• Aged• Excess• Damaged• Discontinued• Seasonal• DRC product• Swell product

Closeout Sales

• Closeout Sale• Approved Closeout Customer

– Application process Capabilities Services

– Restrictions or guidelines No returns Remain in secondary market Private Brands Regionality

Closeout Sales

• Considerations– Days of remaining shelf life– Quantities– Item(s)– Product categories– Brand integrity

Closeout Sales

• Supply Chain Solution (Resource Recovery)• Partnership• Collaborative effort working together• Centralized process• Reporting capability• Recall tracking• Maximize return on unsaleables• Reduce unsaleables

Rod LanierConvoy of Hope

Kurt WelzFeeding America

Who is Feeding America?

Feeding America is:

• The nation’s largest hunger relief organization

• Over 200 food banks and food-rescue organizations, supporting more than 60,000 local charitable agencies

• Distributing more than 3 billion pounds of food and grocery products each year

• Feeding America’s Network serves 37 million hungry Americans every year

• A Vision to Create a Hunger-Free America

Nearly 1 in 6 people within the United States do not know where their next meal will come from- over 50 million Americans.

Donation Trending

National Manufacturer Food Donations are Declining

Changing Dynamics in Supply Chain•Past opportunities were based on traditional food waste model•Greater Efficiencies- lean process, waste reduction, cost control•Economic/ Consumer Demand- less volume and inventory movement•Increased Focus on Sustainability and alternative dispositions

Manufacturer Donations opportunities are highly variable on a month over month basis, with less opportunities due to current trending

Companies have dramatically different approaches to donating product driven by differing business objectives and capacities

Donation Opportunities

Dry, Frozen, Refrigerated Short-codedOutdated (w/ approv. ext.)DiscontinuedMislabeled Unlabeled / BritesTest productPromotional ItemsPrivate label / Licensed Packaging changesDamages

Line start up waste

Reformulations

Seasonal Items

Overruns

Customer returns

Food service sizes

Bulk Product

Low weights / Short fills

Excess Ingredients

Boxes, Containers

Shelving & Equipment

Donation Identification

Partnering in the Disposition Process

Source: A. T. Kearney analysis

Identify and Quantify the Waste

Explore Ways to Reduce the Waste

Recover and Donate the Remainder

Quantify Reduce Donate

• Where is food waste occurring?

• Why is there waste?• How much waste is there?• Who owns the waste?

• How can we reduce the amount of waste?

• How much waste will remain?

• What kind of waste is it?

• Is the waste edible? Can it be donated “as is”?

• If not, are there steps that can be taken to recover the waste?

• What is the cost of these steps?

Donation Management

Define Corporate Policy -Product (Off-spec, Code Dating, Damages, Returns)-Distribution (Warehouses, Stores, 3PLs)-3PLs (Licensed, Co-pack, Shipping, Unsaleables)-Transportation (Freight Damages, Refusals)

Identify Manufacturer Process Decision Points- Off-Spec- Bulk / Ingredient- Inactive / Excess

Create Corporate Culture- Clear Visibility to Opportunities - Timely Decision Making on Disposition- Product Donation Action Teams

Donation Benefits

• Centralized, Streamlined Process

• Local Goodwill & Community Support

• Brand Integrity, Security

• Savings- Storage, Transportation, Trash

• Recall Tracking, Reporting Capability

• Good Samaritan Act- Liability Protection

• Potential Tax Benefits

• Supports Sustainability Initiatives

Closeout Sales and Donations

• Closeout Sale and Donations– Product Condition – Financial Accountability– Corporate Citizenship– Maximize Closeout Sales and Donations

• Unsaleables Conference opportunity

Closeout Sales and Donations

Questions?