Benchmark data reveal key factors to significantly reducing unsaleables
So you’ve gathered a lot of data on unsaleable product – what are you going to do about it?
Having the answer to that question is the key to reducing unsaleable product returns, says Rob Small, Senior Director, Inmar Supply Chain Network. Small, who presented findings on trends data from Inmar’s benchmark database at the recent Inmar Analytics Forum, explored recent unsaleable trends that show the difference made possible by the combination of data visibility and actionable assessment of that data.
The trends revealed in the data were eye-opening for many of the session participants. Results show surprising differences in unsaleable product rates among companies who have taken on collecting actionable data to gain full visibility into their products’ journey from factory to consumer. Inmar’s benchmark database is the only one in the industry that combines both returns data (on more than 450 million returns units) with data on tens of millions of consumer units, hundreds of consumer surveys and thousands of studies done on retail distribution centers and retail stores.
One of the more eye-opening results from the benchmark data shows large improvements among companies who have engaged in unsaleable data collection to drive improvement in the two leading contributors to overall unsaleables: Damage rates and expired product rates.
The right attention makes all the difference – data on Retail Shelf Trends between 2008 and 2014 show companies who have collected and acted on detailed data assessment of unsaleable product issues have seen 40 percent reduction in product damage rates, and 70 percent reduction in rates of product expiration in that six-year period.
The key to getting these kinds of results from data collection is the action taken, says Small.
“Collecting and analyzing data is not enough by itself – too often the process stops in analysis,” Small said. “Companies go to a lot of effort to collect data on unsaleables, get reports and look at what’s happening, but you can’t stop there. That’s only half the story. Where it really makes a difference is strategizing and implementing a program to take action on that data.”
Sustaining those kind of results requires another important step. Continued improvement and keeping unsaleable rates down also relies on continued data collection and monitoring to measure progress. Success won’t be found in a just be a “once-and-done” project.
From a product expiration improvement standpoint, several factors come into play. Inmar’s shopper research underscores the importance of addressing product freshness and expiration:Among some of the most profitable shopper segments, availability of “high quality, fresh products” is the #1 factor driving choice of a retailer.82% of shoppers always check freshness / expiration dates when they shop.
One key element companies should give attention to is remaining shelf life when product reaches retailers. Supply chain efficiency and retail product rotation are common suspects in freshness/expiration issues, but it’s not always the where the answer lies.
There are a number of factors that can contribute to how much shelf life remains when a product gets to the store. One example is production and inventory projections that can be adjusted so that product doesn’t get backed-up in distribution centers, aging unnecessarily while it waits to go out. Using a first-in-first-out triage process isn’t as effective if product volumes into distribution centers are larger than can be moved into retail expediently, causing product to age unnecessarily in distribution centers.
On the retail side of freshness, product rotation, where Inmar benchmark data revealed another surprise: Among companies who have a product rotation program in place with retailers, almost 75 percent of product was being properly rotated in stores.
“A lot of participants in the Forum session didn’t expect to see that high a number, but the result was clear, and” says Small. “Where product is rotated properly, we see decreases in expiration across all major product categories. There’s a huge opportunity for manufacturers to collaborate with their retailers to implement product rotation programs – there’s huge benefit available to both, and you’d be surprised at how many don’t have formal programs in place.”
Then there’s product damage, which almost always starts with the question, “WHY is this happening?” Data-driven action for assessing product damage is all about digging into the details, following product from factory to shelf to identify the causative factors of issues.
“Root-cause analysis is all about finding the ‘why’ of what’s happening, determining if the problem is in handling, shipping, transport/loading/unloading, package design or production or a lot of other possibilities, but ultimately, a great many customers have benefitted from the kind of data they get from a root-cause analysis,” says Small.For more information, call today at (866) 440-6917 or email firstname.lastname@example.org.