Small Changes Could Help Retailers Save Big on Unsaleables

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Small Changes Could Help Retailers Save Big on Unsaleables

By Jenny McTaggart - 09/26/2017

Retailers, wholesalers and manufacturers now have a blueprint for how to tackle the nearly $15 billion annual cost of unsaleable goods, or products that cannot be sold due to their condition, thanks to an industry report being released today at the Council of Supply Chain Management Professionals (CSCMP) annual conference in Atlanta.

The report, completed by Atlanta-based CHEP for the Trading Partner Alliance (TPA), an industry affairs leadership group formed by Food Marketing Institute (FMI) and the Grocery Manufacturers Association (GMA), ranks solutions with a track record of success and provides implementation guidance.

“As a collaborative industry team, we can successfully limit the impact of unsaleable goods on both retailers and manufacturers – just a 1 percent reduction through process improvements would be a collective gain of more than $100 million annually,” said Todd Hoff, VP of marketing and customer solutions at CHEP.

In the report, strategies for retailer/wholesaler success fall under three best-practice “families”: Receiving and Warehousing, Sharing UPC and POS-Level Data, and Rotation and Display. The best practices range from the simple yet essential step of removing damaged product at receipt, to the more involved step of using POS data, not previous orders, to determine promotional quantities.

There are also two collaborative areas – Planning and Reviewing with Trading Partners, and Shelf Management – as well as separate best-practice sections for manufacturers.

The recommendations are based on an extensive, year-long analysis predicated on dozens of interviews with industry experts conducted by CHEP for the TPA Joint Industry Unsaleables Leadership Team. In total, the study captured and analyzed 48 unsaleable-goods reduction strategies and placed them into seven categories based on frequency of use and impact.

Recommendations in the report fall into four categories: increase, continue, monitor or ignore.

“Reducing unsaleable goods is a priority for retailers, manufacturers and their suppliers,” said Daniel Triot, senior director of TPA. “This report effectively documents the causes of unsaleable goods and provides trading partners with clear instruction for reducing them and the impact they have on efficiency, sustainability and profitability.”

In addition to the report, TPA also published an “Unsaleables 101” paper for new employees or others interested in learning more. Both documents will be part of the TPA online Unsaleables Reduction educational platform, which is expected to launch by the end of 2017.