Loss Prevention: Unsaleables Causes and Solutions, Part 3
As we close this series on loss prevention and unsaleable products, we explore possible solutions owners, managers, and associates alike can begin implementing to bring about vast improvement. In part one, we presented a high level overview of the challenges related to the loss prevention of unsaleables. In part two, we zeroed in on how stock rotation, product dating, and product discrepancies can potentially exacerbate shrink and create consumer confusion.
In this final piece, we unpack possible solutions for improving communication between sales and procurement organizations as well as between manufactures and retailers. Increasing and improving communication at all levels is ultimately the best first step towards having fewer expired unsaleable products on supermarket shelves.
So as we dive into part three, lets take a look at the next actionable steps needed in order to move towards real, viable solutions to minimizing the occurrence of unsaleables.
Coordinated Planning: Improving Communication between Sales & Procurement Organizations
Clearly, there are varying levels of discrepancy in labeling practices between manufacturers and retailers, which is incredibly confusing for consumers. If sales and procurement organizations improve their joint planning processes regarding product launches, product discontinuations, and executing sales promotions, the quantity of unsaleables could be reduced significantly.
Product Launches: Poor Communication between Manufacturers & Retailers
Fifty percent of consumers report that they usually discover new food products by encountering them on a store shelf, rather than seeing it in an advertisement. This underscores the importance of in-store product placement for manufacturers. However, manufacturers and retailers don’t often collaborate closely on product launches, and the manufacturer may not even have a benchmark number of unsaleables to determine the new product’s viability. For 25 percent of new product launches, the internal departments of the manufacturing company (i.e., sales, logistics, marketing, finance) are not in alignment.
When the introduction of a new product is not planned properly, and sales and procurement are not working together to ensure the right quantity of stock for retailers, the volume of unsaleables increases significantly. On the other hand, the insufficient stock is also a problem with 5 percent of new product launches failing due to inventory shortage.
● Using data from retailers to track new products throughout the entire supply chain
● Collaborating between retailers and manufacturers regarding shipments, quantities, timing, and pricing
● Collaborating between manufacturers and retailers to review previous launches of similar products to better estimate demand and time new shipments.
Working Together to Reduce Unsaleables
Unsaleable products lead to significant reverse logistics expenses for both retailers and manufacturers. To reduce the quantity of unsaleables, both sales and procurement organizations need to work together more effectively to coordinate shipments, pricing, and labeling. Two of the biggest problems are inconsistencies in “sell by” and “best by” labeling, and poor coordination during new product launches and product discontinuations. Better collaboration and communication between sales and procurement can ultimately help ensure that fewer products go unsold.