1. Direct Diversion Processing – Inventory Management Monday, November 2, 2015 3:30 pm – 5:00 pm Holiday Inn Hotel and Convention Center Stevens Point, WI Presentation by: Laura Sime, Department of Public Instruction Lynne Slack, Department of Public Instruction Peggy Eller, Hudson School District

2. Direct Diversion Processing – Inventory Management  Process: 1. Participating School Food Authorities (SFAs) enter bulk pound commitments to designated processors on annual order survey. 2. Final, revised bulk pound commitments are available for SFAs to view after mid-May. 3. After July, SFAs should verify all final bulk pound commitments have been deposited into their account by each processor. 4. Throughout school year, SFAs must monitor all direct diversion monthly activity.

3. Direct Diversion Processing – Inventory Management 1.Participating SFAs enter USDA Foods bulk pound commitments to designated processors on annual survey in the Wisconsin USDA Foods Ordering System.

4. Direct Diversion Processing – Inventory Management

5. 2.Final USDA Foods bulk pound commitments, after adjustments, are available approximately mid-May.

6. Direct Diversion Processing – Inventory Management ADJUSTED POUNDS

7. Direct Diversion Processing – Inventory Management 3.Participating SFAs compare all final bulk pound commitments to the processor’s Inventory Management System:  To ensure that the final bulk pound commitments have been deposited.  To verify the accuracy of the deposits entered.

8. Direct Diversion Processing – Inventory Management 4.Throughout the school year, SFAs must monitor all direct diversion monthly activity.

9. Direct Diversion Processing – Inventory Management  Purpose of monitoring: To ensure that your SFA receives the value of USDA Foods for each case of finished end product received.

10. Direct Diversion Processing – Inventory Management  The method by which your SFA will receive credit for the value of USDA Foods ordered will vary according to which value pass- through method is being utilized.  Value Pass-Through Methods available: –Fee-for-Service—Processor –Fee-for-Service—Distributor –Rebates/Refunds –Net Off Invoice (NOI)

11. Direct Diversion Processing – Inventory Management  Basic areas for monthly monitoring: 1.Verify number of cases ordered against what was received. 2.Verify fee invoiced to ensure accuracy. 3.Verify USDA pounds per case and that correct draw-down occurred.

12. Direct Diversion Processing – Inventory Management 1. Verify number of cases ordered against what was received.  Using the applicable invoice (processor/distributor),verify that the number of cases being invoiced for matches the actual number of cases received.  Using the processor’s inventory management system, verify that the number of cases received on invoice(s) matches the number of cases shipped listed in the system.

13. Direct Diversion Processing – Inventory Management 2.Verify fee invoiced to ensure accuracy.  Verify that the price per case on the invoice(s) (processor/distributor) matches the procured price obtained by your SFA.

14. Verify Fee Invoiced to Ensure Accuracy Fee-for Service-Distributor: Additional Step-  Fee-for Service-Distributor procured price typically included distributor’s delivery fee.  Ensure that invoice doesn’t include a separate delivery fee.

15. Verify Fee Invoiced to Ensure Accuracy Rebates/Refunds: Additional Steps-  File rebate with processor.  Ensure accuracy of rebate amount received.

16. Verify Fee Invoiced to Ensure Accuracy NOI: Additional Step-  NOI has two line items on distributor’s invoice. -The commercial bid price (including the distributor’s delivery fee). -Credit for the value of USDA Foods per case.

17. Direct Diversion Processing – Inventory Management 3. Verify USDA pounds per case and that correct draw-down occurred.  Using the processor’s inventory management system, verify that the amount of pound drawn down per case in the system matches what is listed on the processor’s Summary End Product Data Schedule (SEPDS) for each product.  Using the processor’s inventory management system, verify that for the number of cases received/invoiced, the pounds were correctly drawn-down in the system.

18. Direct Diversion Processing – Inventory Management  Throughout the school year, participating SFAs should continue to monitor monthly activity for each designated processor.

19. Additional Monitoring – Sales Verification Sales Verification:  With NOI, the distributor passes through the value of USDA Foods to the SFAs.  With NOI, USDA requires processors to verify that the sales and resulting USDA Foods values were passed through only to eligible SFAs.

20. Additional Monitoring – Sales Verification  Processors will contact SFAs to conduct sales verification for all NOI processing.  Processors can conduct sales verification by the following methods: -written communication -verbal communication -email and/or web-based communication

21. Additional Monitoring – Sales Verification  State distributing agencies must also conduct sales verification on a percentage of the sales verification conducted by processors.  SFAs may be contacted by DPI via email to confirm the same sales already confirmed by the processors.

22. Additional Monitoring– Sales Verification  As required by USDA, SFAs must participate in both the processor and state sales verification process for all NOI processing.

23. Direct Diversion Processing – Inventory Management Dino Ante, 608-266-3615 antonio.ante@dpi.wi.gov Laura Sime, 608-267-9119 laura.sime@dpi.wi.gov Lynne Slack, 608-266-2596 lynne.slack@dpi.wi.gov