Inbound Innovation

Best Practices for Inbound Quality Management

Poll Question

Data collection 1

Collaboration with partners 2

Data analytics/benchmarking 3

Other 4

Nothing ~ we have it figured out 5

3

What is Missing

to Significantly

Reduce

Unsaleables?

4

• Mission driven, values-based, family company since 1916

• Led by the third and fourth generation of the Wegman family

• $8 billion in sales

• 92 store locations with 47,000 employees across six states

• 100 Best Company to Work For 20 straight years

Who Is Inmar?

• 4,600 employees across 30+ North American locations

• Clients served in 30 countries

• 36+ years of experience

• Process more than 650 terabytes of data, annually

• Manage over $73 billion a year in commerce value

• Focus areas: Supply Chain, Health Care, Promotions

5

A trusted intermediary between retailers, manufacturers, health systems and consumers

• Family owned, 25+ years, based in North Carolina

• 2,000+ associates across 50+ facilities nationwide

• Entrusted daily to make a memorable and measurable difference

• Focus areas: supply chain, retail, logistics

• Efficient, seamless transitions

• Multiplying customer value through execution, expertise and continuous improvement

6

Who is FHI?

7

Who is PepsiCo North America Nutrition?

Our goal is to build the undisputed, industry-leading nutritious food & beverage growth business of the future

• Global leader in Sports Nutrition fueling athletic performance since 1965

• The oldest original trademark. At 140 years, the most trusted health and wellness brands

• Leading producer of chilled juice in the world

• Largest Super Premium juice brand delivering sustainable practices and non-GMO goodness

How do we drive costs out of the

supply chain?

8

How does Wegmans

perform in the area of

Unsaleables?

Right case, right time

AND in the right

condition critical with

lower days of supply Our Journey…

We Do it Together

We COLLABORATE

with those who have

a stake in

unsaleables

9

GROUP

COLLABORATION

We COLLECT DATA

from the right parts

and in the right times

within the supply

chain

DATA

COLLECTION

We IDENTIFY the

issues that need to

be solved

ROOT CAUSE

ANALYSIS

Background

10

Upward trend in returns

related to damaged &

expired products

Damage accounted for

61% of unsaleables and

was 59% higher than

benchmark

Inmar confidential – do not copy, distribute or use without Inmar written permission, 2017

Focus on Damage Reduction

Opportunities

• The failure rate on pallets evaluated at the Wegmans DCs was significantly

higher than the Inmar-Tracked National Benchmark.

• The rate of shipper damage for product on poor pallets was 40% higher

than for product on good pallets.

• Case damage rates for some suppliers and categories were as much as 7x

benchmark, and often exhibited damage related to unit load build and

handling.

DC Focus:

Shipper damage

rates 3x and

consumer units

6x benchmark

11

Retail Shelf: Consumer unit damage rates 59% higher than Benchmark, lower

inventory levels magnify issue

Opportunities exist to reduce overall damage significantly through training and

collaboration

Focus on Upstream approach to reduce flow of damage into network

Focus on Damage Reduction

Opportunities

12

PepsiCo Manufacturing

1 2 3

PepsiCo DC

Wegmans DC Retail Store

7 6

Warehouse Delivery Product Flow

4 5

• PepsiCo DC & Wegmans DC key data collection points

• Shared responsibility in data collection (manufacturer & customer)

• Retail damage data lagging indicator of upstream issues

Multiple product

“touch” points

throughout

Supply Chain

13

Inbound Inspection

Wegmans employs the

use of a professional

dock handling service.

Wegmans has engaged

FHI to:

• Perform visual inspection

• Remove obvious damage

• Align with FSMA

regulations

14

Data Collection

Quantity UPC Vendor PO#

Pallet Type Pallet Quality Reason Codes for

Damage

15

Damage Codes

Crushed Horizontal Crushed Vertical Stretchwrap

Torn (bag or case) Overhang Dented (cans/cases)

Leakage Infestation Damaged during

unloading

16

Each pallet raised &

thoroughly inspected 40% The rate of shipper

damage for product on

poor pallets was 40%

higher than for product

on good pallets.

Automated environment

where systems rely on quality

platforms to function

efficiently & without

interruption

17

Dashboard DAMAGE/VENDORS/ITEMS

Top 10 Vendors - Last 6 Weeks

Top Level

761

933

578

373

263 276

0

200

400

600

800

1000Total Damages - Last 6 Weeks

1488 1542

1258

1945

2681

852

0

500

1000

1500

2000

2500

3000

October November December January February March

Total Damages - Last 6 Months Vendor 2/11/17 2/18/17 2/25/17 3/4/17 3/11/17 3/18/17 Total

Vendor ABC 407 238 32 64 0 32 773

Vendor DEF 41 70 217 75 33 47 483

Vendor GHI 41 136 60 55 0 56 348

Vendor JKL 132 0 21 11 50 42 256

Vendor MNO 4 203 4 12 7 3 233

Vendor PQR 0 85 49 0 0 0 134

Vendor STU 0 64 38 2 0 0 104

Vendor VWX 3 4 5 5 25 12 54

Vendor YZA 2 3 9 11 2 11 38

Vendor ZZZ 0 2 2 22 11 1 38

UPC Scan Description Vendor Quantity

12345678910 GROCERY ITEM, 10 OZ Vendor ABC 186

24681024681 GROCERY ITEM, 20 OZ Vendor GHI 120

03333333333 GROCERY ITEM, 2LB Vendor DEF 110

00044455522 GROCERY ITEM, LG Vendor ABC 108

00007777777 GROCERY ITEM, 8.2 OZ Vendor DEF 104

11109876543 GROCERY ITEM, MED Vendor MNO 78

24242424242 GROCERY ITEM, 10 " Vendor STU 67

01234543210 GROCERY ITEM, 100 CT Vendor ABC 58

98765432109 GROCERY ITEM, 16 OZ Vendor GHI 50

12131415161 GROCERY ITEM, 5 LB Vendor ABC 47

Top 10 Items - Last 6 Weeks

18

Scorecarding DAMAGE/VENDORS/REASON

Top 10 Vendor Items – Last 6 Weeks

Vendor Level – Quaker VID 31994

41

136

60 55

0

56

0

20

40

60

80

100

120

140

160

02/11/17 02/18/17 02/25/17 03/04/17 03/11/17 03/18/17

Total Damages - Last 6 Weeks

Scanned Code Description Total

03000006083 NQKR LIFE CINN CEREAL 42

03000032122 NQUAK POPPED CHEDDAR 34

03000056084 NQKR LIFE VANILLA CEREAL 27

03000006211 NQKR CAP'N CRUNCH PEANUTBU 19

03000056084 NQKR LIFE VANILLA CEREAL 16

03000032160 NQKR INST OATMEAL FRUIT MX 15

01530044032 NPASTA RONI SHELLS/CHEDDR 11

03000044061 NQUAKER OAT SQUARES CL PK 11

03000006119 NQKR LIFE REG CEREAL 10

03000016954 NQUAKER POPPED RANCH 7

0

20

40

60

80

100

120

140

CrushedHorizontal

CrushedVertical

Dented(cans/cases)

Torn(bag or case)

Leakage

Dmgs by Reason Code - Last 6 Weeks

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

02/11/17 02/18/17 02/25/17 03/04/17 03/11/17 03/18/17

Damage % vs Industry Trend - Last 6 Weeks

Dmg % Industry Standard

19

PepsiCo Manufacturing

2

PepsiCo DC

3 4

Wegmans DC

5

6

Retail Store

7

Data Collection Overview

1

• PepsiCo

o Initiate data collection of inbound (PepsiCo) DC damage

o Implement consistent platform audit & compliance data

collection at DCs

o Alignment to review and respond to new Wegmans

scorecarding

• Wegmans

o Partner with FHI to collect inbound (Wegmans) DC

damage

o Share inbound damage scorecards with vendor partners

Commitment to Correlate Data throughout Supply Chain

PepsiCo DC -> Wegmans DC (inbound) -> Reclaim

20

21

Poll Results

21

Inmar confidential – do not copy, distribute or use without Inmar written permission, 2017 22

CALL TO ACTION

Search out and raise awareness for the wealth of

actionable data available to address unsaleables

Partner with suppliers and third parties to identify

opportunities and address together

Measure results continuously

Commit and sustain – it’s an ongoing process,

not an event

1

2

3

4

23

24

Questions