P.O. BOX 30300 AMARILLO, TEXAS 79120 806/372-3851 1-800-234-3661 SWELL, CREDIT & RECLAMATION POLICY Effective March 16, 2008
SWELL/CREDIT/RECLAMATION POLICY This guide is your reference to the official Affiliated Foods Inc. (AFI) Swell Allowance, Credit and Reclamation Policy. Also included are definitions, examples and frequently asked questions. Your feedback as a grocery cooperative member is always welcome as we seek to serve you with open communication and fair representation, balancing the needs of the individual retailer/owner with the membership at large. The following is a general overview with specifics to follow: A weekly Swell Allowance is given to every member of AFI based on their purchases. This allowance is for Grocery, Store Supplies, HBC, and McCormick product in lieu of credits being written or called in. Grocery.70% of purchases Store Supplies.82% of purchases HBC.46% of purchases McCormick.31% of purchases For the above items, no action is needed in regard to requesting credit. Baby Formula, however, must be checked in and credit may be written as specified below. At the time of delivery, the truck driver will have a preprinted credit memorandum with which to record formula, tobacco and perishable items damaged, shipped wrong, short or long, or of poor quality. Tobacco, Baby Formula and Meat must be checked in at that time. If any corrections are requested, the Driver will fill out the credit/charge form (see page 4 for details). The AFI original is returned with the driver to the AFI Credit Department and the customer copy is given to the store. Copies or alterations of the memo will not be accepted by the credit department for processing. The credit memorandum is to be properly filled out, verified and signed by both a store representative and the driver. (see page 3 for example) This serves as proof of delivery and acknowledges the credit as written, providing adequate checks and balances. The credit memo records various reasons and accountability for a credit request. There are specific guidelines based on the type of merchandise involved in the credit process. These product categories are covered in detail on the following pages. In addition to the above swell allowance, every member of AFI receives a Swell Allowance of.11% of your purchases, paid annually after fiscal year-end (October). The purpose of this allowance is to compensate you for damaged product discovered after the time of delivery. This damage includes all departments with the exception of produce, milk and milk by-products, cross dock and drop ship merchandise. Also in addition to the annual swell allowance, stores may participate in the AFI Reclamation/Salvage program. Again, this is for damages discovered after the time of delivery. The Reclamation Policy is contained in these pages. 1
What happens when my delivery arrives and there are shortages, damages or errors in the product delivered? If it is Grocery, Supplies, HBC or McCormick, then no action is needed. If it is Baby Formula, Tobacco or Perishable product, then first determine the problem. In which category does it fit? CREDIT CODE DEFINITIONS: OW = Ordered Wrong items are those sent to the AFI order desk by mistake and can represent a wrong item number or a wrong quantity. Stores with internet access can check/verify orders before submitting an order to minimize this occurrence. A restocking fee of $.50 per case or shipping unit ($.10 per single item) is charged for returns. SS = Shipped Short items are those charged on the invoice, but not received in full. You may have received 1 instead of 2, but you were charged for two. SW = Shipped Wrong items are those that were not ordered, but were included on the delivery. Often, the wrong item was selected; therefore you received something other than the item you ordered. Use this code if you are returning the item shipped in error and want credit on the item you did not receive. RS = Sub not Accepted items are substitutes which are shipped and billed, but a store does not wish to keep. DA = Damaged items are those clearly damaged before they arrived at your dock. In order to receive full credit for damages, these must be detected at the time of delivery. Because this is not often practical, you receive both an annual Swell Allowance and the opportunity to participate in the reclamation/salvage program. QT = Unacceptable Quality items are generally produce and include merchandise of poor quality which is not suitable for re-sale at your store. (See page 6 for more detail.) OD = Out of Date items are those with a specific expiration date stamp indicating there is little or no remaining shelf life. CHARGE CODE DEFINITIONS: EI = Extra Items are those included with your delivery but not invoiced, that you wish to keep. SO = Shipped Over items are included with your delivery and represent a quantity greater than what is charged on your invoice. Should you wish to keep these, you will be charged. 2
SAMPLE DRIVER S CREDIT PROCEDURES FOR CREDIT WRITE-UP 3
After the determination has been made as to the type of credit requested, next determine how the credit is written up. (See product categories for more detail) OW = Ordered Wrong items are to be listed with the invoice number and item number, as are QT (quality), OD (out of date) items, and RS (sub not accepted). SS = Shortages reported at the time of delivery, reported as above. SW = Shipped Wrong items must be listed first with the missing item charged on the invoice, then the incorrect item described in the SHIPPED WRONG column (see below). This tracks the item being returned so that the warehouse inventory can be adjusted and accounted for. DA = Damages reported at the time of delivery, to be placed in boxes no gray totes. QT and OD = Unacceptable Quality and Out of Date items are listed only for the invoice being delivered unless a return authorization has been issued. (see departmental policies for more detail) EI and SO = Extra Items and Shipped Over are those items not listed on your invoice. If you choose to keep them they will be written and charged on the driver s credit as shown. Items you do not wish to keep must be written at the bottom of the driver s credit under Product Returned to the Warehouse with No Credit/Charges Due. When there are too many items to list on the driver s credit, copy the invoice and attach it to the driver s credit with a note on the driver s credit such as, See attached and indicate the reason code next to the item on the invoice. If this occurs on a regular basis, this may indicate a customer service problem on our part. Our personnel will follow up with you in order to rectify this issue. PRODUCT CATEGORIES GROCERY, SUPPLIES, HBC & GM AND MCCORMICK: Merchandise, including seasonal product or special orders cannot be returned. No credit memorandums will be written at the time of delivery except for baby formula. Any exceptions to dry grocery product must be pre-approved by your AFI Warehouse and have a credit authorization for merchandise returned form issued for acceptance of returned merchandise. These exceptions may include credit for shorted Pallet Modules and Shippers, miss-shipped Proprietary Label Items, and/or Unusually Excessive Quantities. BABY FORMULA: 1. All Baby Formula orders will be counted and item-checked for accuracy at the time of delivery by the AFI driver and responsible store employee. All adjustments must be made at time of delivery. ********************* 4
CIGARETTE AND TOBACCO PRODUCTS: Credit memorandums will be written at the time of delivery for items shipped wrong or for shortage on shipments. Items shipped long can be charged to the store or returned to the warehouse. Returned merchandise must be in original unopened cases and in saleable condition. Any merchandise priced for retail or marked return for credit, out of date, etc., will be refused credit. All cigarette and tobacco orders will be counted and item-checked for accuracy at the time of delivery by the AFI driver and responsible store employee. All adjustments must be made at the time of delivery. 2. The return charge is $.50 per unit for tobacco and $.10 per carton (or single item) for cigarette products ordered wrong. 3. Once the AFI truck leaves the retail store, credit cannot be issued on cigarette or tobacco products. Damages discovered after the truck has left will be covered under the annual swell allowance. 4. Unsalable Cigarettes: An AFI return authorization for unsalable cigarettes form will be written by the tobacco company rep if applicable and signed by store personnel before returning product to the warehouse. A STALE sticker is to be placed on the carton. When the driver picks up the unsalable cigarettes, credit must be written on a driver's credit with the designation UNSALABLE, signed by store personnel and the driver, with the original vendor authorization form attached. ********************* PERISHABLE DEPARTMENTS: These procedures and policies apply to all Perishable Departments. Seasonal merchandise or special orders cannot be returned. Returned merchandise must be in original unopened cases and in saleable condition. Any merchandise priced for retail or marked return for credit, out of date, etc., will be refused credit. Driver s credit will be written at the time of delivery for items shipped wrong or for shortages on shipment. Items shipped long can be charged to the store or returned to the warehouse if sufficient refrigeration is available to return the products in good condition. Note: Must be returned on same truck, not the next truck! All perishable products are guaranteed to be in quality condition at the time of delivery. There is a return charge of $.50 per case or shipping unit for merchandise ordered wrong. Damaged merchandise discovered at the time of delivery and returned on the AFI truck will be credited in full. Damaged product found after the truck has left will be covered under the annual swell allowance. ********************* 5
MEAT DEPARTMENT: All of the general policies and procedures for the Perishable Departments apply and include the following additions and/or exemptions: 1. Products must be inspected for acceptance, case counted and item-checked against the invoice by the AFI driver and a responsible store employee. All discrepancies must be accounted for by credit or charge at the time of delivery. Credit cannot be issued after the truck departs the store. 2. Boxed beef, pork, and fresh fryers cannot be returned for any reason without prior approval from the Meat Department. A pick-up slip is required. 3. Code dated meat items received on your truck with less than 14 days shelf life may only be returned on the next perishable delivery truck. ********************* PRODUCE, FLORAL, MILK, DAIRY AND FROZEN FOODS: All of the general policies and procedures for the Perishable Departments apply and include the following additions and/or exemptions. 1. If inferior or unacceptable quality produce is found after the AFI truck departs, the Produce Department must be called on day of delivery for a pickup authorization. Credit will not be issued for product without authorization. Saturday deliveries must be called in Monday. Produce must be stored in refrigerated areas and returned on the next perishable truck for credit eligibility. 2. Ice cream products that are ordered wrong or mis-shipped cannot be returned. 3. No swell allowance is paid on produce purchases, milk or milk by-products. 4. Damage detected at the time of delivery will be allowed full credit by the driver. Damage detected after the delivery will be covered by the swell allowance and/or the reclamation program. AFI RECLAMATION POLICY 1. Store will be given credit in the amount of 50% of our Zone 2 retail price. All credit will be issued on a weekly basis. 2. Place all damaged or out-dated merchandise in lidded banana or milk boxes only no gray totes. Return on each AFI truck with AFI store number marked clearly. Please line boxes with cardboard or something sturdy. No butcher paper or newspaper. Proper credit cannot be issued if this is not done. 3. We must have entire UPC code to issue you credit. If UPC is not clear, write the entire UPC code on the product or a piece of paper and tape it to the product. Do not meat wrap or shrink wrap items to be returned. 6
4. The returned product must be currently in the AFI Order Guide and from a participating reclamation vendor. Refrigerated Items. We do scan: juices Minute Maid, Tropicana, SF, Welchs, Dole, Bright & Early Items not included: Tampico, Plains Yogurt We do scan: SF We do not scan: Dannon, Weight Watchers, Yoplait Coffee Creamers We do scan: Carnation Coffeemate, International Delight 5. Items returned that are not damaged will become the property of AFI and no credit issued. In other words, please make sure you are returning damages only, not saleable product. 6. Items requiring special handling. We cannot issue you credit if these guidelines are not followed: A. Do not send broken glass. Send only the lid and the UPC if glass is broken. B. Glass or plastic containers that are leaking. Please empty before placing in banana box. C. Product that will spill or has a tendency to become infested (sugar, dog food, etc.) must be taped or placed in a plastic bag and sealed. If product is infested, contact the AFI buying department or customer service department for disposition. D. Chilled orange juice and yogurt. Send only the empty container. 7. THE FOLLOWING PRODUCTS ARE EXCLUDED FROM THIS PROGRAM. If they are returned to the Damage Center, you will not receive credit. A. No frozen foods. All perishable product. B. Milk and eggs. C. All items in meat and produce books. D. All Kraft products E. All General Mills products. F. All tobacco products. G. Flour and cornmeal. H. General Merchandise I. Shippers. J. Food Service Merchandise. K. Tri-State Bakery Merchandise. L. Razor-cut Merchandise. M. Empty containers of pilfered product or used by store. N. Items with UPC s that have been marked out with marks-a-lot. O. Banana boxes with open razor blades. P. No seasonal candy. Q. There will be no credit issued for any merchandise in a box that contains flour, leaking or open merchandise, weevils or maggots, or mice infested merchandise. IF YOU HAVE ANY QUESTIONS REGARDING THIS POLICY PLEASE CONTACT THE DIRECTOR OF PURCHASING AT 806-345-7743 7
FREQUENTLY ASKED QUESTIONS How do I get credit for something not purchased from AFI? This is not an option for stores, either through the Reclamation Program or through a Driver s Credit. Our systems will not process a credit on an invalid item or from an invalid vendor. Why can t I return a dry grocery item if I ordered it by mistake or it was shipped wrong? It is more cost effective for you to receive a swell allowance on the item and mark it down for disposal at the store level than to send it back to the AFI warehouse and restock the item with the uncertainty that it will arrive in a resalable condition. Both the stores and warehouse save on labor and auditing costs, plus your credit is received weekly, keeping your profitability unaffected.. How long does it take for my perishable credit to show up on my statement? It takes an average of 7 working days, depending on the items needing credit. The credit memos are used to maintain an accurate inventory count in the warehouse, therefore reason codes, returned product and unusual damages can add research time before the credit is issued. Why can t I call in perishable damages or return damages on the next truck? It is the policy of AFI, as many companies, to give customers an allowance to cover the cost of damages. (see swell allowance) In addition, we give customers the option of participating in the reclamation program in order to receive 50% of Zone 2 retail pricing. Why can t Ice Cream be returned? Ice cream is not in a re-saleable condition if it is returned on an AFI truck. Often, there is not sufficient refrigeration available to return the product in good condition. This policy benefits all members since the product would be thrown away. What if all of my credit requests will not fit on one credit memorandum? You can make a copy of the invoice (not the credit memo) and mark each item in error with the reason code clearly indicated. This must be attached to the signed driver s credit with a note indicating see attached. Again, this should be a rare occurrence and your driver can always notify the dispatch office immediately. High volume order discrepancies are audited for improved customer service and shipping accuracy. Why can t I send Produce Ordered Wrong back on my next truck? The product is not in a re-saleable condition, therefore cannot be returned to inventory for resale to other stores. When I keep an extra meat or sale item, why am I charged a different price than the invoice price? An EI (extra item) indicates the item was not ordered, but you wish to keep it. Your cost is determined on the day the credit is processed, not the invoice date. If the item was SO (shipped over), indicating that you received a quantity greater than what was ordered, you will be charged the invoice cost. (see code definitions) Why can t I return damaged product in a gray tote? The condition of damaged product makes it difficult to clean and maintain totes for re-use in the shipping of GM product. A banana box or sturdy covered box is required because it is disposable. 8
CONTACTS: Dial toll-free and ask for the dept below (800) 234-3661 (or dial direct - see below) CUSTOMER SERVICE DEPARTMENT (806) 345-7888 Or (806) 345-7797 Hours: Mon. Fri. 7:00 AM 4:00 PM (CST) PRODUCE.ext. 7791 MEAT.ext. 2248 CREDITS...ext. 3317 DISPATCH/TRANSPORTATION...ext. 7815 Or 1-800-753-0157 9