Benchmark Report: Unsaleables 'Best Practices' Paying Off
SAN FRANCISCO - Nearly 30 percent of participating manufacturers, wholesalers and retailers reported decreases in the cost of unsaleable consumer packaged goods, according to the 2003 Unsaleables Benchmark Report released on Friday at the Joint Industry Unsaleables Management Conference, sponsored by the Grocery Manufacturers of America and the Food Marketing Institute.
While total costs to the industry rose slightly, from $2.5 billion in 2001 to $2.6 billion last year, 49 percent of manufacturers and 56 percent of distributors (defined in the report as wholesalers and retailers combined) report no change or decreases in the cost of unsaleable warehouse-delivered goods.
Forty percent of manufacturers who reported decreases credited packaging and distribution/logistics improvements for the reductions, while 30 percent cited policy changes, including greater compliance with company practices, more use of third-party auditors and additional staff devoted to unsaleables management as reasons for improvement. About half of the distributors who reported unsaleables cost reduction cited increased focus and targeted unsaleables initiatives as reasons for their success.
Physical damage accounted for 58 percent of unsaleables at reclamation centers, while the balance is largely due to expired goods (22 percent), unsold discontinued items (13 percent), leftover seasonal goods (6 percent).
The drug channel again reported the highest rate of unsaleables, 2.57 percent (up from 2.35 percent the previous year), while club stores reported the lowest rate (0.38 percent). Health and beauty care products have the highest rate of unsaleables by retail department (1.93 percent), due in part to high level of assortment and heavy product introductions, while frozen products have the lowest rate (0.64 percent).
While total costs to the industry rose slightly, from $2.5 billion in 2001 to $2.6 billion last year, 49 percent of manufacturers and 56 percent of distributors (defined in the report as wholesalers and retailers combined) report no change or decreases in the cost of unsaleable warehouse-delivered goods.
Forty percent of manufacturers who reported decreases credited packaging and distribution/logistics improvements for the reductions, while 30 percent cited policy changes, including greater compliance with company practices, more use of third-party auditors and additional staff devoted to unsaleables management as reasons for improvement. About half of the distributors who reported unsaleables cost reduction cited increased focus and targeted unsaleables initiatives as reasons for their success.
Physical damage accounted for 58 percent of unsaleables at reclamation centers, while the balance is largely due to expired goods (22 percent), unsold discontinued items (13 percent), leftover seasonal goods (6 percent).
The drug channel again reported the highest rate of unsaleables, 2.57 percent (up from 2.35 percent the previous year), while club stores reported the lowest rate (0.38 percent). Health and beauty care products have the highest rate of unsaleables by retail department (1.93 percent), due in part to high level of assortment and heavy product introductions, while frozen products have the lowest rate (0.64 percent).