1. Our goal: To provide reverse supply chain news and information, and intelligence based on industry
trends and downstream observations to help you make decisions to maximize value across Rite Aid.
RITE AID SUPPLY CHAIN QUARTERLY NEWSLETTER FOCUSED ON REVERSE
LOGISTICS INTELLIGENCE AND BEST PRACTICES
Reverse Logistics Herald
FY 2016
QTR 1
Returns Auditing: Achieving Sustainability
By Russ Ripsom, Jafar Musheer, Brenda Munday, Kirsten Orner, Returns Auditors
By Jessica Bryner, Mgr, Inventory Control
Enhanced Recall
Disposition (DA)
Form Update
The Impact of Unsaleables
In the last edition of the Herald, we reported
on a new recall disposition, or DA form, used
to determine what happens to merchandise
for inventory if the product will no longer
be carried. After consulting with Category
Managers and Associate Category Managers,
feedback was gathered to make additional
enhancements. During the week of Feb. 23,
two training classes were held for the form’s
primary users, to demonstrate the form’s
new functionality, such as drop-down boxes
and conditional formatting.
Use of the new recall form began on March
2. Previous forms that have already been
sent out to vendors for signatures will be ac-
cepted until April 1. After this time, only the
new form will be accepted unless otherwise
discussed with Jessica Bryner. Continuous
support will be provided to the Category
Management team while they adopt the new
form.
Front-End Returns Trends
Metric Focus:
Returns volume trends can tell a lot
about a company’s overall health.
Damaged, outdated and recall
product returns produce cost, such as
handling, and also represent missed
opportunities to capture primary
retail value – even when Rite Aid is
reimbursed for the cost of the product
itself.
Rite Aid’s returns were 3% higher in Q4
than in the prior year, representing a
YOY quarterly increase for the second
straight quarter. This was primarily
driven by increased seasonal recall
activity. Despite the increase, riding a
very strong first half, Rite Aid finished
FY 2015 with a 12% reduction in total
returns from the prior year.
Total value of product returns
$80,000
Q1
$71,724
$62,664
Q2
$59,575
$51,395 $71,755
Q3
$68,232
Q4
$55,002
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
FY 2014
$10,000
FY 2015
(THOUSANDS)
$56,740
In today’s heightened regulatory environment, the
execution and control of a chain-wide Environmental
Hazardous Waste Management Program has become
a priority at Rite Aid Corporation. This program has
redefined how end-of-product life cycle is managed
and has placed an increased emphasis on the
detection and handling of unsaleable waste products.
To achieve a waste-free, sustainable supply chain,
our Reverse Logistics Auditing team works to identify
and report potential waste products from Front End
Store Damaged and Outdated (D&O) returns. These
daily audits are performed at the three Rite Aid Inmar
returns facilities.
The audits’ objective is to identify and categorize
unsaleable waste products. If a potential waste item
is identified during an audit, it must be
verified as a hazardous waste in the
WERCs safety data management system.
The auditor then records the transfer
box and store number, product type
and condition, comments and calculated
violation totals in a reporting application
developed by the Returns team.
This reporting application has increased
accuracy and communication efficiency
and has driven cost savings by reducing
data entry time. The information,
including summary statistics and key
performance metrics, is distributed
for further analysis to the Rite Aid
Supply Chain Senior Leadership team,
Risk Management, Legal Counsel and
Environmental Health & Safety.
Hazardous Waste Returns auditing
has proven vital to the Environmental
Hazardous Waste Management Program,
which continues to be a core competency
at Rite Aid, and demonstrates an industry-
leading strategy of environmental
stewardship and Corporate Social
Responsibility.
Left to right: Returns Auditors Russ Ripsom, Jafar Musheer,
Brenda Munday, Kirsten Orner.

2. When you think of reverse logistics and sus-
tainability, the first image that comes to mind
is probably pallets piled high with returned,
unsaleable product cluttering up the ware-
house, and the mountain of trash they’ll make
in a landfill. Fair enough, but does the board-
room come to mind? It should.
Sustainability and reverse logistics are directly
connected to the bottom line – but not just
for cost-reduction efforts, as is too often the
case. That’s far too narrow a view. Three-
fourths of public company directors believe
that sustainability management has a signif-
icant impact on business performance and
innovation, with two-thirds indicating their
belief it should come under the board’s pur-
view, according to a 2013 Deloitte study.
However, less than 8 percent of respondents
in that study said they believe companies are
managing sustainability resources effectively.
Resource and energy management, oper-
ational efficiency and cost reduction are
all high-level corporate objectives, not just
mid-level efficiency enhancements. Supply
chain costs associated with Reverse Logistics
are as much as 10% of the cost of goods and
product returns approach $300 billion. That
warrants boardroom attention.
Cost reduction/revenue optimization
Rigorous data collection at every point in the
supply chain (forward and reverse) reveals
opportunities to optimize product yield, and
is especially key to reducing returns.
The insight from such data can present im-
provement opportunities in packaging and
shipping, inventory management, replenish-
ment planning, merchandising and rotation
practices and product assortment.
Risk mitigation
Regulatory agencies constantly expand
scope, states are more involved, and even
county governments are writing their own
ordinances regulating the handling of
hazardous materials. Full visibility of practices
throughout your supply chain, coupled with
full regulatory knowledge, is the one of best
protections you can have against massive
fines.
Competitive differentiation
One major differentiation opportunity is col-
laborative, transparent trading-partner rela-
tionships. It’s crucial to view your trading part-
ners as part of one supply-chain continuum.
Data insight is available everywhere in reverse
logistics and sustainability, if you look for it.
Returns, supply chain/product performance,
causal data, competitor and secondary mar-
kets, benchmarking, inventory and OSA, cou-
pons/promotions, sales and shopper data are
all key bottom-line influencers that warrant
boardroom awareness.
The supply chain environment is dynamic and
challenging these days. Capturing the right
data, applying good analytics and executing
on insight can take you from “just keeping
up” to high performance. Good insight can
tie directly to increased sales, reduced costs,
better shopper engagement, reduced returns
and better prospects for new-product suc-
cess. Those successes are a joy to report in
the boardroom.
Best Practices: Thought Leadership
Reverse Logistics and Sustainability
are Boardroom Issues, Not Just
Back-Room Issues
Over the last few months, you may have
heard that Rite Aid’s Supply Chain has
been engaged in launching kaizen process
improvement programs at DCs and Corpo-
rate. But what exactly is kaizen? The word
kaizen is Japanese for “improvement” or
“change for the best.” The concepts have
been around since the invention of the
wheel, but the philosophy was formalized
by Toyota production. In short, kaizen is a
system involving participation focused on
making small improvements on a regular
basis.
A kaizen event, or project, has a defined
goal and usually takes focus anywhere
from a few hours up to a week depending
on the scope of the problem and benefit
of the improvement. The team receives
an overview of Lean Six Sigma concepts
and tools, and applies them immediately
toward solving the problem. Much of the
activity centers around identifying process
waste via direct observation.
The process forces action. If there are con-
flicting or uncertain improvement ideas,
the team is encouraged to “trystorm,” or
test the ideas in practice.
A team is assembled in advance, including
people who do the work on a daily basis,
as well as outsiders to add perspective.
This is a great development opportunity
for high-potential individuals. Diversity of
background and thought are important to
a balanced, honest identification of prob-
lems and solutions. Most importantly,
while a trained facilitator guides the team
through the process, he or she does not
solve the problem for the team. The team
comes up with ideas and implements
them. This approach greatly increases
associate engagement, ownership of the
work, and the likelihood that changes will
be sustained.
Continuous Improvement
An Introduction
to Kaizen
Your Logistics Partner
Inmar is a technology company that operates intelligent commerce networks. Founded in 1980,
Inmar is headquartered in Winston-Salem, NC, with locations throughout the United States,
Mexico and Canada.
Mike Barbato, Consultant, Client Solutions & Analytics, represents Inmar full-time at Rite Aid,
interfacing with Rite Aid’s teams to optimize the reverse supply chain and leverage Inmar intelli-
gence to enhance Rite Aid’s business.
FOR MORE INFORMATION CONTACT: Michael.J.Barbato@riteaid.com