- Breakout Session Closeout Sales & Donations
Joint Industry Unsaleables Management Conference
July 2011
Agenda
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Introductory Comments
Manufacturer Process
Retailer/Wholesaler Process
Secondary Market Process
Hunger Relief
Concluding Remarks
Q&A
Jim Spaight
Land O’Lakes
Land O’Lakes
Closeout Sales and Donations
• Land O’Lakes from farm to table
– Farmer owned co-op
– Stewards in the communities we live and work
• Types of products for closeout sale/donation
– Retail
– Foodservice
– Industrial
Land O’Lakes
Closeout Sales and Donations
• Closeout Sale, Donation process
– First run donations
– What is wrong with the product
– Where is it located
– What is the value (our cost, in closeout market)
Jeff Thune
Retailer/Wholesaler Process
Retailer/Wholesaler Process
• Donations
– Retail Perishable Programs
– Cash Donations
– Resource Commitments
• Building design, purchasing; etc.
• Equipment and materials
• Committee involvement
– Volunteer efforts
Retailer/Wholesaler Process
• Donations and Close-out Sales
– Damage Reclamation Centers
• Vendor option
• Swell allowances
– Distribution Centers
• Remaining shelf life
• Manufacturer direction
– Private Brands
• Out-of-bounds
• Out-of-market
• Rebranding
Jeff Thune
2ndMarket Solutions
Closeout Sales
• Manufacturer
– Obsolete Inventory
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Aged
Excess
Damaged
Quality
Discontinued
Packaging/Formula Change
Seasonal
Closeout Sales
• Retailer
– Obsolete Inventory
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Aged
Excess
Damaged
Discontinued
Seasonal
DRC product
Swell product
Closeout Sales
• Closeout Sale
• Approved Closeout Customer
– Application process
 Capabilities
 Services
– Restrictions or guidelines
 No returns
 Remain in secondary market
 Private Brands
 Regionality
Closeout Sales
• Considerations
– Days of remaining shelf life
– Quantities
– Item(s)
– Product categories
– Brand integrity
Closeout Sales
• Supply Chain Solution (Resource Recovery)
• Partnership
• Collaborative effort working together
• Centralized process
• Reporting capability
• Recall tracking
• Maximize return on unsaleables
• Reduce unsaleables
Rod Lanier
Convoy of Hope
Kurt Welz
Feeding America
Who is Feeding America?
Feeding America is:
• The nation’s largest hunger relief organization
• Over 200 food banks and food-rescue organizations, supporting more than
60,000 local charitable agencies
• Distributing more than 3 billion pounds of food and grocery products each
year
• Feeding America’s Network serves 37 million hungry Americans every year
• A Vision to Create a Hunger-Free America
Nearly 1 in 6 people within the United States do not know where
their next meal will come from- over 50 million Americans.
Donation Trending
National Manufacturer Food Donations are Declining
Changing Dynamics in Supply Chain
• Past opportunities were based on traditional food waste model
• Greater Efficiencies- lean process, waste reduction, cost control
• Economic/ Consumer Demand- less volume and inventory movement
• Increased Focus on Sustainability and alternative dispositions
Manufacturer Donations opportunities are highly variable on a month over
month basis, with less opportunities due to current trending
Companies have dramatically different approaches to donating product
driven by differing business objectives and capacities
Donation Opportunities
Dry, Frozen, Refrigerated
Short-coded
Outdated (w/ approv. ext.)
Discontinued
Mislabeled
Unlabeled / Brites
Test product
Promotional Items
Private label / Licensed
Packaging changes
Damages
Line start up waste
Reformulations
Seasonal Items
Overruns
Customer returns
Food service sizes
Bulk Product
Low weights / Short fills
Excess Ingredients
Boxes, Containers
Shelving & Equipment
Donation Identification
Partnering in the Disposition
Process
Quantify
Reduce
Donate
Identify and
Quantify the
Waste
• Where is food waste
occurring?
• Why is there waste?
Explore Ways to
Reduce the Waste
• How can we reduce the
amount of waste?
• How much waste will
• How much waste is there? remain?
• What kind of waste is it?
• Who owns the waste?
Source: A. T. Kearney analysis
Recover and
Donate the
Remainder
• Is the waste edible? Can
it be donated “as is”?
• If not, are there steps
that can be taken to
recover the waste?
• What is the cost of these
steps?
Donation Management
Define Corporate Policy
- Product (Off-spec, Code Dating, Damages, Returns)
- Distribution (Warehouses, Stores, 3PLs)
- 3PLs (Licensed, Co-pack, Shipping, Unsaleables)
- Transportation (Freight Damages, Refusals)
Identify Manufacturer Process Decision Points
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Off-Spec
Bulk / Ingredient
Inactive / Excess
Create Corporate Culture
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Clear Visibility to Opportunities
Timely Decision Making on Disposition
Product Donation Action Teams
Donation Benefits
• Centralized, Streamlined Process
• Local Goodwill & Community Support
• Brand Integrity, Security
• Savings- Storage, Transportation, Trash
• Recall Tracking, Reporting Capability
• Good Samaritan Act- Liability Protection
• Potential Tax Benefits
• Supports Sustainability Initiatives
Closeout Sales and Donations
• Closeout Sale and Donations
– Product Condition
– Financial Accountability
– Corporate Citizenship
– Maximize Closeout Sales and Donations
• Unsaleables Conference opportunity
Closeout Sales and Donations
Questions?