Gene Bodenheimer USI

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Kelloggs Closed-Loop Returns Management System

• Gene Bodenheimer USI
• Gary Piwko Kellogg USA

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Returns Management Objective
Reduce Unsaleables
Increase Profitability -
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Profitability Enhancing Activities

• Increase New Product Introduction Effectiveness
• Ship life / shelf life
• On shelf presence
• Consumer likeability
• Code dating options
• Business channel intricacies
• SKU Optimization
• Damage reduction
• Design / Process Improvements
• Measurement
• Accountability

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Profitability Enhancing Activities

• Strengthen customer relationship
• - Customer understanding
• - Additional sales
• Increase supply chain efficiencies
• - Package design and quality
• - Product handling
• - Shipping practices
• Teach organization about customers and business
• - Supply Chain and Functional Area interface
  with customers

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Kellogg Unsaleables Management System

• Measurements and Accountability
• USI audits
• Kellogg plant and distribution center
  accountability

Kellogg Supply Chain Responsibility
Development / Raw Materials
Retail
Consumer
Customer DC
Manufacturing
Kellogg DC
500,000 packages
60,000 packages
250,000 packages
1,300,000 cases
Reclamation
30,000 packages
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Performance Measurements and Accountability
Plant Comparisons
Defect by Type
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USI Auditing Outbound Product to Customer

• Collect Data
• Report Results
• Key Performance Measurement

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Kellogg Hidden Damage Rate
Measured at Customer Pick Slot - Expressed in
Percent
Process Improvement
Employee Involvement
.81
USI Audits

• Measurements
• Accountability

• Improved Case Strength
• Discontinuation of the KLOP Program
• DC Measurement Program
• Mod Process Improvements

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Rejectable Manufacturing Damage
Cereal
26
21
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Rejectable Manufacturing Damage
Pop-Tarts
50
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Distribution Damage
42
2004 Imp. Versus 2003
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Unsaleables Justify Capital Appropriations

• Capital Appropriations
• Casepacker improvements
• New cartoning equipment
• Additional adhesive on cartons and cases

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Focus and Accountability Improves Profitability

• Accountability Drives
• Interest
• Knowledge
• Buy-In