"Damage Control"
The following is an excerpt from a recent interview with Mark Doughton, President of Carolina Logistics Services, conducted by Food Logistics magazine.
These days, when every dollar counts, one of the areas receiving the most scrutiny in the food industry is unsaleables. Manufacturers and distributors alike recognize this is an area full of opportunity for reducing costs. To do so, however, takes a concerted, collaborative effort among all partners in the supply chain.
According to the 2003 Unsaleables Benchmark Report, issued by Grocery Manufactures of America (GMA), interest in the unsaleables issue appears to be up, as participation in this year's report was up sharply. The good news is that 30 percent of the grocery retail, wholesale and manufacturer participants in this year's report experienced a decline in unsaleables costs.
Mark Doughton, President of Carolina Logistics Services, Winston-Salem, NC, has an optimistic take on the GMA report. "It's important to note that the rise in unsaleables is slight," he says. "There are more participants in the study than ever before and the amount of information provided is greater than ever. There's a great awareness of the issue and this awareness continues to increase. All of our customers are concerned about the amount of money tied up in returns," he says. "There's not a major retailer out there that doesn't have a point person dedicated solely to unsaleables."
Beyond the poor economy, many problems that have always caused unsaleables in the industry are still out there. Packaging is one. "This is always a challenge," says Doughton. "If the quality isn't there, products will get damaged." Using the wrong packaging or loading containers improperly can also be a factor. There are also the "non-physical" causes for unsaleables, another area on which companies are focusing.
Technology plays a big role in collecting much of the information needed to determine the causes of returns. Carolina Logistics uses proprietary software to collect data on returns. "We then provide tracking reports and use them in executive review sessions with our customers to help compare the progress of different stores," says Doughton.
The information also helps Carolina and its clients look closely at the various vendors, items and stores that are at issue so that they can "really drill down and figure out the root cause of the returns. Anywhere we can capture causal data, we do it." stated Doughton.
Most of the members of the grocery supply chain remain optimistic about unsaleables. "Compared to some other industries, grocery has a fairly low unsaleables rate, " says Doughton. As an industry, we're probably the best at focusing on the issue of unsaleables."
by Amanda Loudin, writer for Food Logistics