Cracking Down On Unsealables

Latest Insights On Unsaleables: GMA/FMI Benchmark Survey

Trading partners welcome new insights on how unsaleables can be reduced throughout the supply chain. They can find the latest information in the 12th annual Joint Industry Unsaleables Benchmark Survey, sponsored by the Grocery Manufacturers Association (GMA) and Food Marketing Institute (FMI) through the Joint Industry Unsaleables Steering Committee.

The survey provides: aggregated company data that represents statistical industry benchmarks for manufacturers, wholesalers and retailers in the consumer goods supply chain; summaries of qualitative input by supply chain participants on issues pertinent to unsaleables; and case studies of best practitioner companies nominated during the survey for their outstanding unsaleables management.

Taking part in the survey were 51 manufacturers, 20 distributors (wholesalers and retailers) and five companies that provide services in the unsaleables or reverse distribution supply chain. Data was drawn from the year 2005 (or their most recent fiscal year) as well as 2004.

Participants included their data for warehouse-delivered products and did not take into account direct store delivery (DSD) products, bakery, deli, fresh meat or produce items.

Survey Results:

• Unsaleables payments declined to 1.05 percent of gross sales for the average CPG manufacturer in 2005. The total industry manufacturer benchmark rate (the weighted average of all manufacturer reported data for customer payments) declined to .81 percent.
• The total industry cost of unsaleables is estimated to be $2.05 billion with 72 percent of manufacturers reporting lower or equal payments compared to last year.
• Unsaleables costs increased from 1.13 percent to 1.17 percent of sales between 2004 and 2005 for the average distributor while the industry-weighted average was 0.97 percent.
• Ten distributors reported "gap" between unsaleables receipts from manufacturers and their actual costs of unsaleables, a decrease from 6.8 percent to 5.9 percent of costs between 2004 and 2005.

Fifty-six percent of distributors reported higher costs versus last year. Manufacturers with ARP (adjustable rate policies) or swell allowances report lower average unsaleables payment rates and a larger rate decrease in 2005 vs. manufacturers without them.

Distributors that alert stores to send ARP and swell-covered products to reclamation report lower average unsaleables costs as opposed to those stores that keep them. Surveyed distributors agree that the number of categories covered by ARP policies has increased in the last few years.

Bottom line: Participants report an increased focus on managing discontinued products, new item failures and expired products. —J.K.