One of the unsung heroes in food distribution is the person responsible for unsaleables, returns, spoils, reclamation — whatever you call it. That person could sit inside a manufacturing company, a wholesaler, a retailer or a sales agency. And although this could be a multimillion dollar expense, the hapless unsaleables manager usually has other responsibilities as well.
On top of this pile of stress, heap lack of appreciation. No, make that resistance and sabotage. Yes sabotage — from inside the unsaleables manager’s company and from trading partners, regardless of where this person sits.
For example, the unsaleables manager may have clear data showing which items are sitting on store shelves so long that they become expired. Yet his or her own sales force continues to negotiate planograms which fail to take that into consideration. As a result, the unsaleables manager can look like Don Quixote, fully armed and irrelevant in the total picture.
I have known, worked for and consulted with unsaleables managers since 1988, long before that title existed. The dynamics of this part of the food distribution business have certainly changed dramatically since then. But one thing has remained constant: the challenge faced by unsaleables managers in gaining worthwhile recognition for the value of their function.
In fact, in “The Root Causes of Unsaleables: A Join Industry Study” (published by FMI and GMA in 1999), the number one cause of unsaleables in the industry was defined as “Senior management indifference.”
The unsaleables manager sits in the middle of the crossfire and has the most potential power to improve relations and lower total supply chain costs. But in order to have such an effect, the role of the unsaleables manager must be elevated in most (certainly not all) companies. For example, that key person should be able to:
- Hold new product developers accountable for failed innovations. For example, this could include a budget for in-store markdown programs to sell discontinued SKUs from recent launches.
- Require the sales organization to cost justify risky points of distribution. For example, the cost of returns from a retailer’s smallest volume stores might be shown to be greater than any profit generated by the original sale of those items to those stores. If the sales organization is receptive to such an analysis, they may think twice about needing planogram placement for all items in all stores.
- Nix package or shipping case changes, which could increase product damage. Packaging engineers who are trying to save the company on supply costs might redesign a shipping container, for example, without regard to the potential impact on damages in the customer supply chain. If the unsaleables manager is included in early design discussions, the opportunity to add this to the forecast could prove beneficial.
These and other influences can occur only when unsaleables are considered a strategic imperative.
Since unsaleables and this stigma still exist, I penned a guidebook for unsaleables managers. “The Hybrid Program Principles” outlines a new strategic approach for unsaleables and includes key steps for implementing the strategy, based on what I’ve seen successful companies do over the past two decades.