“Your Product has been Refused

Now What?!”

“..unsaleable products represent avoidable costs that affect the entire value chain, estimated to be a $15 billion annual cost to the industry…..root causes of these costs are often misunderstood, leading to incremental profit leakage” **

** According to a recent report published by GMA, FMI and Deloitte

8 Years Ago Customers were seeking…

Assistance in the quest for Perfect Order Fill Rates that were measurable

Tighter management of customer convenience returns► overstocks; promotions; discontinued products

Metrics for logistic related delivery exceptions► order changes; order entry errors; mis-ships

Control of OS&D events that was consistent & immediate

Factor in the SKU value when determining to return product

Root cause determination/action plans/execution

Reduced cycle return times

Single chain of control for all product exceptions

Pre-established processes for production irregularities

or withdrawals

Solution Design

Apply structure► Create a call center and introduce technology to give structure and

discipline to the return process so that best practices may be applied consistently.

Establish rules► Establish business rule sets specific to each customer, product group

and temperature, customized by client that were consistently applied to identify products for return, donation, or destruction. Thus, eliminating non-value added transportation expenses.

Centralized control and accountability for product

Identify return cycle times

Execute transportation

Identify actionable events to continuously improve upon

Return comprehensive and actionable program reporting

Stakeholders to the Value Proposition

Manufacturers ► Measures ability to achieve Perfect Order Fulfillment

► Create organizational accountability within your own network

► Consistent, intentional handling of product exceptions to maintain a preferred chain of control of the brand. This prevents branded products ending up in unauthorized venues or becoming astray.

► Quantitative analysis determines the disposition result

► Evaluation of SKU value and restocking costs compared to transportation cost to return product. No product returned if the cost of returning is greater than the product value.

Stakeholders to the Value Proposition

Manufacturer (cont.)► Database of all donation locations is available to direct carriers to the

closest drop spot minimizing additional charges

► Donation certificates signed by the driver that product has been donated to a specific authorized charitable entity

► Tracks inventory value

► Dramatically improves cycle return time to active inventory

► Database allows:

• Analysis of exceptions by warehouse, carrier, receiver or SKU

• quicker resolution of customer deductions

• Increases the efficiency of staff resolving deductions and credits

Stakeholders to the Value Proposition

Charities► Largest and quickest access to product nationwide

► High degree of product integrity

► Better access to longer shelf lives

Carriers► Timely resolution and communication to the carrier minimizes

detention and the unprofitable use of driver’s hours of service

► Database of all donation locations is available to direct carriers to the closest spot to drop product and move on to the next load quickly

Retailers► Eliminates pressure to take in and hold unwanted product

► Gets carriers off the premise and on to their next load quickly

Mature Customer Event Trends 2005-2009

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What Changed?

Order Minimums, Return Policies, Quality Improvements,

Customer Service Error Reduction, Order communication improvements

Sample of 2009 Event Codes

49% Customer Refusals 33% Customer no longer wants the product

15% Code date/shelf life

15% Not on PO or did not order

8% Customer ordered error

6% Order was cancelled

4% Duplicate order

12% 20+ other misc reasons

15% Damage

10% Carrier Issue

9% Shortage

8% Customer Convenience

6% Overage

<3% Withdrawals/Other

Sample of 2009 Event Disposition Codes

Product Disposition Totals► 46,000,000 lbs of food products

► 2,500,000 cases

► $62,000,000 in retail value

Disposition Classification Summary by Product Value► $40,000,000 returned

► $3,400,000 donated

► $3,400,000 destroyed

► $8,600,000 accepted or shorted

► $6,600,000 other including re-delivery, re-consignment, re-worked

Hunger in America

Nearly 1 in 6 people in the United States do not know where their next meal will come from

That’s 49.1 million Americans► 16.7 million children (1 in 5)

► Nearly 40% of households served by Feeding America have one working adult

► The number of individuals who were food insecure increased 36% over 2007 and the number of children increased 35% over 2007

The need is growing: Demand for food assistance is up 30% on average vs. YA► Unemployment a key factor

* Household Food Security in the United States, 2008; 2009 Food Bank Survey

How Feeding America Works

Feeding America’s Network Scope

AK HI PR

FEEDING AMERICA MEMBER

[NETWORK ALSO INCLUDES

MEMBERS IN AK, HI & PR]

Liability Protection

Bill Emerson Good Samaritan Act

Protects you from liability when you donate to a non-profit organization

Protects you from civil and criminal liability should the product donated in good faith later cause harm to the needy recipient

Standardizes donor liability exposure. You or your legal counsel no longer have to investigate liability laws in 50 states

Sets a floor of "gross negligence" or "intentional misconduct" for persons who donate grocery products

http://www.usda.gov/news/pubs/gleaning/appc.htm

Benefits of Donating

Security and integrity of brands

Nationwide network of 501(c)(3) charities

Savings in dumping fees: $4,000 per truckload

91% of consumers have a more positive image of companies that support a good cause

86% of consumers are likely to switch brands when a product is associated with a good cause

67% of Food Shippers of America member companies have donated to Feeding America in the past 12 months

Your Contacts:

Bill Thomas Feeding America - Vice President of Product Development

312-641-6611 bthomas@feedingamerica.org

Peg Collins-Sarinyamas Feeding America - Director of Transportation

312-641-6516 pcollinsarinyamas@feedingamerica.org

Feeding Americaformerly named America’s Second Harvest