- Behavioral factors: The leading causes of unsaleables today are driven by the behavioral side related to inventory management, including sales, marketing, merchandising, promotions and replenishment. This results in discontinueds, withdrawals, seasonals and out-of-date product returns.
Information is the key to reducing unsaleables. Information has to start with a program that executes the physical returns management program well by keeping damages separate from other types of returns, collecting reason code data and then analyzing with business intelligence tools that not only views the data collected but integrates it with other information sources such as sales data and supply chain studies.
"To achieve ultimate success in reducing unsaleables volume requires a holistic view of the supply chain," says Doughton of CLS. "The key to the successful holistic view is information that is accurate, insightful, integrated and actionable."
- New products create new challenges: The steady steam of new products with new packaging and distribution methods are a factor in continued unsaleables. The drivers are limited shelf space and number of facings, and the resulting decisions about stock to carry. Product discontinuations on both the part of the distributors and the manufacturers are a big trigger for unsaleables.
"Damage and unsaleables are used interchangeably," says Conoscenti of DRS, "but they are not exactly synonymous. We deal with the whole realm of what we call ‘returned goods' at the broadest level, and unsaleables are a part of that. There is such a large percentage of ‘discontinueds' driving unsaleables, but they are not damaged."
- Less packaging, more data coding: There are many initiatives today to reduce packaging by making it lighter, less bulky and more environmentally-friendly. Manufacturer need to estimate the ripple effect. Many times, an increase in damage rates that occurs because of the reduced packaging may be close to what their savings are on the actual packaging dollars.
"As you reduce packaging, you have the potential of driving up damages cost if it's not done intelligently," says Rombach of Genco. "You need to consider the whole supply chain. What effect will reducing packaging have on damages? You've got to balance the two."
Meanwhile, date coding is creating problems because of the increase in this practice in recent years. The problem relates to food and over-the-counter (OTC) products that have date codes, the increased prevalence of open code dating and the uncertainty around what type of open code dating is being used.
Such wording as "use by, best by, best if used by, bought on" dating creates some confusion with the consumer. It also calls for an increased level of rotation at retail.
Such practices "demand a higher level control within the operations in the supply chain. If you ship products coded with the date, the next touch point in the supply chain needs to record that date, what the expiration date is on that product and make sure that it is being shipped out in a timely manner. Based on my experience, those types of controls are not always being met," says Rombach.
- Loose loads on pallets: A recent study of unit loads conducted by Carolina Supply Chain Services revealed that more than 14 percent of unit loads were not wrapped to the pallets, contributing to poor load stabilization and damages to shipping units. The study concluded that attaching the unit load to the pallet could reduce shifting and protrusions of the unit load and minimize the negative effect of load overhang and underhang.
A stretch hood is a plastic film that protects and secures palletized loads. Traditionally, stretch hoods have been monolayer film structures, but today are co-extruded multilayer structures that provide improved properties through advanced plastic resin technology.
"Stretch hoods can help reduce the causes of unsaleables because they attach the load to the pallet, improving overall package integrity compared to packaging technology that does not attach to the pallet," says John Garnett, application development leader for stretch hoods, The Dow Chemical Co., Midland, MI.