Unused food

Supply Chain Mess: Unusable Goods Cost $15 Billion Annually

Just a 1% reduction in unsaleable goods through process improvements would represent a collective industry gain of more than $100 million annually.

Each year the cost of unsaleable goods, or products that cannot be sold due to their condition is $15 billion, according to a new report, Collaborative Strategies to Reduce Unsaleables, which was announced at the CSCMP EDGE 2017 conference in Atlanta.

“Reducing unsaleable goods is a priority for retailers, manufacturers and their suppliers,” says Daniel Triot, senior director at the Trading Partner Alliance (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 report ranks solutions with a track record of success and provides implementation guidance. The report was completed by CHEP for the 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 is called Unsaleables 101.

The recommendations are based on an extensive, year-long analysis predicated on dozens of interviews with industry experts conducted and captured and analyzed 48 unsaleable goods reduction strategies and placed them into seven categories based on 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.

“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,” says Todd Hoff, vice president of marketing and customer solutions at CHEP.

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.

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