New Unsaleable Goods Reduction Report Offers Actions Toward Addressing $15 Billion Challenge for Consumer Goods Sector

IFMI-GMA online Unsaleables Reduction educational platform to launch by end of 2017

A new report provides the consumer goods sector with proven, tangible solutions to reduce the nearly $15 billion annual cost of unsaleable goods or products that cannot be sold due to their condition.

The Collaborative Strategies to Reduce Unsaleables report was released this week at the Council of Supply Chain Management Professionals (CSCMP) annual conference. The report ranks solutions with a track record of success and provides implementation recommendations. The report was completed by CHEP for the Trading Partner Alliance (TPA), an industry affairs leadership group formed by the Food Marketing Institute (FMI) and the Grocery Manufacturers Association (GMA). A supporting report outlining the unsaleable goods challenge, Unsaleables 101, can be accessed here.

“Reducing unsaleable goods is a priority for retailers, manufacturers, and their suppliers,” said Daniel Triot, Senior Director at 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.”

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 (JIULT). The study captured and analyzed 48 unsaleable goods reduction strategies and placed them into seven categories based on the frequency of use and impact:

  1.      Planning and Review
  2.      Collaborative Shelf Life Management
  3.      Testing Package and Unit Load Performance
  4.      Package Labeling
  5.      Receiving and Warehousing
  6.      Sharing UPC and POS Level Data
  7.      Product Rotation and Display

Recommendations in the report fall into four categories – increase, continue, monitor or ignore – and each is identified as the responsibility of retailers or manufacturers, or as a collaborative opportunity.

“We are honored to be selected by the TPA for this project, and to be a member of the JIULT,” said Todd Hoff, Vice President of Marketing and Customer Solutions at CHEP. “As a collaborative industry team, we can successfully limit the impact of unsaleable goods on both retailers and manufacturers – just a 1% reduction through process improvements would be a collective gain of more than $100 million annually.”

Speaking to Reusable Packaging News, Hoff stressed that the purpose of the study, firstly, was to point out that unsaleables are not just owned by a single function, but are shared by many different functions. The initial task was to introduce an Unsaleables 101 with a standardized terminology that would promote a common understanding. Secondly, and most exciting, he noted, was how to best go about working together. “This is why Daniel’s association, as a collaborative effort between manufacturers and retailers, is the perfect fit,” he stated. “The report is all about best practices for working together to find the best value.”

Rather than just sharing the pain of unsaleables among trading partners through cost negotiation and mechanisms such as trade allowances that have become common practice, Hoff emphasized that the emphasis of this report is on how supply chain participants can collaborate to reduce overall unsaleables.

Triot noted that many different functions are involved in the production and distribution of goods, and they may not necessarily share important information about unsaleables. “The key to having a successful collaboration is to look at an end to end value chain.”

“We see this is a living document and the beginning of an education process for the industry that will continue to be revised and refined as other people contribute to it,” Hoff added.

A TPA online Unsaleables Reduction educational platform is expected to launch by the end of 2017. The educational platform will contain detailed information and tools to help trading partners review their supply chains and identify and implement effective unsaleables reduction strategies and solutions.