Inbound Innovation. Best Practices for Inbound Quality Management

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2 Inbound Innovation Best Practices for Inbound Quality Management

3 Poll Question 1 Data collection What is Missing to Significantly Reduce Unsaleables? Collaboration with partners Data analytics/benchmarking Other 5 Nothing ~ we have it figured out 3

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 4

5 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 A trusted intermediary between retailers, manufacturers, health systems and consumers 5

6 Who is FHI? 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

7 Who is PepsiCo North America Nutrition? 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 Our goal is to build the undisputed, industry-leading nutritious food & beverage growth business of the future 7

8 How do we drive costs out of the supply chain? 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 8

9 We Do it Together GROUP COLLABORATION DATA COLLECTION ROOT CAUSE ANALYSIS We COLLABORATE with those who have a stake in unsaleables We COLLECT DATA from the right parts and in the right times within the supply chain We IDENTIFY the issues that need to be solved 9

10 Background Upward trend in returns related to damaged & expired products Damage accounted for 61% of unsaleables and was 59% higher than benchmark 10

11 Focus on Damage Reduction Opportunities DC Focus: Shipper damage rates 3x and consumer units 6x benchmark 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. Inmar confidential do not copy, distribute or use without Inmar written permission,

12 Focus on Damage Reduction Opportunities 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 12

13 Multiple product touch points throughout Supply Chain PepsiCo Manufacturing PepsiCo DC Warehouse Delivery Product Flow PepsiCo DC & Wegmans DC key data collection points Shared responsibility in data collection (manufacturer & customer) Retail damage data lagging indicator of upstream issues Retail Store Wegmans DC 13

14 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

15 Data Collection Quantity UPC Vendor PO# Pallet Type Pallet Quality Reason Codes for Damage 15

16 Damage Codes Crushed Horizontal Crushed Vertical Stretchwrap Torn (bag or case) Overhang Dented (cans/cases) Leakage Infestation Damaged during unloading 16

17 Each pallet raised & thoroughly inspected 40% Automated environment where systems rely on quality platforms to function efficiently & without interruption The rate of shipper damage for product on poor pallets was 40% higher than for product on good pallets. 17

18 Dashboard DAMAGE/VENDORS/ITEMS Top Level Total Damages - Last 6 Months October November December January February March Top 10 Vendors - Last 6 Weeks Vendor 2/11/17 2/18/17 2/25/17 3/4/17 3/11/17 3/18/17 Total Vendor ABC Vendor DEF Vendor GHI Vendor JKL Vendor MNO Vendor PQR Vendor STU Vendor VWX Vendor YZA Vendor ZZZ Total Damages - Last 6 Weeks Top 10 Items - Last 6 Weeks UPC Scan Description Vendor Quantity GROCERY ITEM, 10 OZ Vendor ABC GROCERY ITEM, 20 OZ Vendor GHI GROCERY ITEM, 2LB Vendor DEF GROCERY ITEM, LG Vendor ABC GROCERY ITEM, 8.2 OZ Vendor DEF GROCERY ITEM, MED Vendor MNO GROCERY ITEM, 10 " Vendor STU GROCERY ITEM, 100 CT Vendor ABC GROCERY ITEM, 16 OZ Vendor GHI GROCERY ITEM, 5 LB Vendor ABC 47 18

19 Scorecarding DAMAGE/VENDORS/REASON Vendor Level Quaker VID Total Damages - Last 6 Weeks Damage % vs Industry Trend - Last 6 Weeks % /11/17 02/18/17 02/25/17 03/04/17 03/11/17 03/18/ % 2.00% 1.50% 1.00% 0.50% 0.00% 02/11/17 02/18/17 02/25/17 03/04/17 03/11/17 03/18/17 Dmg % Industry Standard Top 10 Vendor Items Last 6 Weeks Scanned Code Description Total NQKR LIFE CINN CEREAL NQUAK POPPED CHEDDAR NQKR LIFE VANILLA CEREAL NQKR CAP'N CRUNCH PEANUTBU NQKR LIFE VANILLA CEREAL NQKR INST OATMEAL FRUIT MX NPASTA RONI SHELLS/CHEDDR NQUAKER OAT SQUARES CL PK NQKR LIFE REG CEREAL NQUAKER POPPED RANCH Dmgs by Reason Code - Last 6 Weeks Crushed Horizontal Crushed Vertical Dented (cans/cases) Torn (bag or case) Leakage 19

20 Data Collection Overview PepsiCo Manufacturing PepsiCo DC PepsiCo o o o Wegmans o o Initiate data collection of inbound (PepsiCo) DC damage Implement consistent platform audit & compliance data collection at DCs Alignment to review and respond to new Wegmans scorecarding Partner with FHI to collect inbound (Wegmans) DC damage Share inbound damage scorecards with vendor partners Commitment to Correlate Data throughout Supply Chain PepsiCo DC -> Wegmans DC (inbound) -> Reclaim 5 Wegmans DC 6 7 Retail Store 20

21 Poll Results 21 21

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

23 CALL TO ACTION 1 2 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 3 Measure results continuously 4 Commit and sustain it s an ongoing process, not an event 23

24 Questions 24