“Winning the Expired Products Battle”
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Transcript of “Winning the Expired Products Battle”
“Winning the Expired Products Battle”
Ensuring Adequate Remaining Shelf Life to Maximize Sell Through and Avoid Product Expiry
– the Keys to Success
Presented by GENCO ATCJuly 20,2011
Topics for Today’s Discussion
• Size of the Issue• Complexity• Recommendations • Panel Discussion
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The Issue
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The Issue
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“Outdated items at XXXXXXXX upsets customers”
Chicago Tribune
“Expired Food—Is It on Your Grocer’s Shelves?”
Shelf Life Advice
“On Your Side: Expired food for sale”
ABC Channel 7 News“Expired groceries sold at Hampton Roads grocery stores”
ABC Channel 13 News
The Issue
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The Size of the Issue
• 2008 FMI/GMA Unsaleables Report – 20% of Total Unsaleables
• 2010 Discussions with Retailers – 35% of Total Unsaleables
• $3 - $5 Billion
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The Complexity of the Issue
• 21 Factors Identified that Affect Delivery of Sufficient Shelf Life at Shipment
• Collaboration is a Key Element for Success
• Ultimate Goal is to Delight the Consumer
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The Complexity of the IssueManufacturer Research & Development Team establishing the product shelf life
Receiving and rotation philosophy/process at retailer/wholesalerDC
Production planning for manufacturing Inventory level at retail store
Demand planning and forecasting for manufacturing Rotation process at retail store
Lead time, availability and shelf life for raw materials and ingredients used in manufacturing
Product case pack and inner pack quantities
Manufacturer efficient inventory management to meet requirements to achieve customer service standards and requirements related to order fill rate
Consumer penchant for purchasing the freshest product on the shelf
Manufacturing capacity constraints Promotional activity and the resulting inventory “push and pull”
Climatic factors that impact product and package quality degradation
Category management / SKU rationalization philosophy
Total shelf life remaining at the time of delivery to retailer/wholesaler by manufacturer
Supply Chain complexity
Retailer/wholesaler ordering patterns Diversion
Inventory turns rate by category/SKU/store segment/class-of-trade/geography, etc.
Pantry life
Inventory level at DC (managed through buying and distribution strategy)
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The Complexity of the Issue
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The Manufacturer’s View
SalesDemand Planning / Distribution
R&D and Quality
Plants
Want maximum days
Want minimum days
Want customer requirements
Want maximum days10
The Retailer/Wholesaler’s View
Retail StoresDistributionCenters
Manufacturer
Consumer
Want maximum days
Want minimum guaranteed days
Want maximum days
Want maximum days11
Recommendations for Joint Adoption
• Understand the Challenges• Collaborate with Trading Partners• Rationalized Stock Assortment• Speak a Common Language• Embrace and Commit to Continuous Improvement• Top Management Sponsorship and Commitment
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Recommendations for Joint Adoption
• Speak a Common Language
MCRSL > [A x (B+C)] + D MCRSL – Minimum Customer Remaining Shelf Life (days)A – Safety Factor (whole number based on category experience)B – Average Retail Sales Velocity (days)C – Warehouse Inventory (days of supply)D – Consumer Pantry Life (days)
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Recommendations for Manufacturer Adoption
• Create a “Customer Remaining Shelf Life” Internal Team to Manage the Process
• Audit Performance• Continually Improve the Process and Adjust
Standards• Incorporate Sales Considerations into the Process
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Recommendations for Retailer/Wholesaler Adoption
• Work with Manufacturers to Establish Achievable Standards and Continually Improve the Process and Adjust Standards
• Request Open Lot Codes• Manage Inventory to Consumption• Incorporate ASN Technology for Inbound Shipments• Incorporate the Ability to Capture Expiration Dates
into the WMS• Monitor Operations Processes for Improvement
Opportunities
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Panel Discussion
• Oscar Fussenegger, Corporate Reclamation Manager, The Kroger Company
• Don LaChance, Senior Director, Inbound Quality Logistics & Reclamation, C&S Wholesale Grocers
• Gary Piwko, Director, Remarketing and Returns, The Kellogg Company
• Jace Swartzendruber, Unsaleables Manager, Supply Chain, ConAgra Foods
• George Thrower, Manager of Unsaleables, Harris Teeter
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