"Executives are becoming more involved in addressing the challenges and opportunities to reduce the volume and cost of unsaleables as trading partners continue to focus aggressively on supply chain improvements," adds Pat Walsh, vice president, industry collaboration, education, and research at FMI.
Here are a few examples of how food manufacturers have eliminated unsaleables after taking a closer look at their supply chain to determine where, why, and how problems were occurring so the problems creating unsaleables could be eliminated.
• A manufacturer client of Inmar Supply Chain Services purchased a premium pet food line that had only been sold in veterinary and pet specialty outlets. When the manufacturer expanded the line to traditional retail outlets, it began receiving complaints about the packaging performance at the retail shelf.
Inmar audited the company's retail outlets and discovered the pet food bag designs were insufficient to withstand normal handling by both retail store stockers and consumers. Inmar discovered that the reason the bags were not holding up was due to insufficient bonding on the top of the folded flaps of the pet food bags.
Upon further study, Inmar discovered that the reason this problem did not manifest itself until the product began selling in retail outlets was due to the difference in the way the product was displayed at different outlets, which led to particular consumer handling habits. For example, pet specialty outlets displayed the bags on pallets on the retail store floor or on shelving, while veterinary outlets displayed the bags in small quantities.
Retail outlets, however, displayed the pet food bags in gondola-type shelving and consumers typically selected the product by pulling the top flaps of the bag. So consumers were handling the product differently from the way they handled them at pet specialty outlets. As consumers pulled the top flaps of the bag from retail displays, these consumer habits led to problems with flaps unraveling. The problem was resolved by adding additional bonding to the packaging to withstand the new way the bags were being handled by retail consumers.
So, once again, a deep understanding of the supply chain can inform how products are affected along the chain. This knowledge can help identify problems to eliminate unsaleables.
• When a major beverage company began to experience problems with palletized loads of juice collapsing in transit, it turned to CHEP's Innovation Center in Orlando, FL, for analysis. The problem was causing significant product damage, with an annual cost impact of more than $5 million, reports Derek Hannum, director of marketing for CHEP.
The product was manufactured and then palletized on four separate production lines in the same facility and then mingled for transport to the customer. So it was difficult to identify the factors contributing to the load failure during transit.
The manufacturer sent two truckloads of product to the Innovation Center, where CHEP's Six Sigma and engineering teams were able to isolate the product by production line. Unit loads were sent through a battery of tests that simulate over-the-road transport. It was determined that the shrink wrap process was inadequate on one of the four lines, which caused the unit load collapse. The manufacturer replaced the shrink wrap equipment on that line, resolving the problem and eliminating unsaleables, Hannum reports. CHEP provides these services at its Innovation Center free of charge to its customers.
• ORBIS reports a large U.S. peanut supplier was experiencing product damage and storage inefficiencies in its operations. The company had been using super sacks--large woven flexible intermediate bulk bags--on wood pallets for storage and handling.
Upon further inspection, ORBIS discovered that the sacks were being damaged by pallet nails and loose deck boards, reports Bob Klimko, director of marketing for the Oconomowoc, WI-based company. Furthermore, sacks were obstructing forklift tines during handling because of the pallets' open slats. Broken pallet stringers inhibited plant workers to stack multiple pallet loads securely.
The solution for the company was choosing 40" x 48" plastic reusable pallets from ORBIS. The solid top deck prevented super sack damage and the durable bottom enabled secure stacking of multiple loads, resulting in reduced product damage.