CPG Manufacturer Initiatives Trim the Cost of Unsaleables, More Progress Possible

July 20, 2005, Vancouver, British Columbia – For the second consecutive year, the cost of unsaleable products has gone down for CPG manufacturers, according to the 2005 Unsaleables Benchmark Report released today at the Joint Unsaleables Management Conference.

The report, issued by the Joint Industry Unsaleables Committee, found that the cost of unsaleables, including damaged, expired, out-of-date and seasonal merchandise, was reduced by $50 million between 2003 and 2004. Total industry cost of unsaleables is projected to be $2.52 billion in 2004.

However, only 56 percent of respondents in this year’s survey reported lower rates of unsaleable costs versus the previous year, virtually identical to last year’s 55 percent year-to-year rate decline.

The 2005 Unsaleables Benchmark Report found that manufacturers and retailers are employing a variety of tactics to cut the cost of unsaleables. Highlighting some of the successful practices, the report found that they working together to improve product packaging and shipping based on retailer feedback. Companies also are manufacturing directly to pallet to reduce handling and damage, and instituting programs to help relieve retailers of excess product due to product failures and seasonal items.

“While we continue to make progress, more can be done to reduce unsaleables. As this year’s report has shown, reducing the cost of unsaleables is not simple, guaranteed or enduring without a focused commitment to improvement and collaboration between trading partners,” said Karin Croft, GMA senior director of industry affairs.

“We applaud the progress retailers and manufacturers have made in reducing unsaleables,” stated Patrick Walsh, senior director, industry relations, FMI. “The dramatic reduction in losses that results from cooperative efforts to reduce shrinkage and waste benefits our industry and consumers.”

The 2005 Unsaleables Benchmark Report was sponsored by the Joint Industry Unsaleables Committee, which comprises members of the Grocery Manufacturers Association and the Food Marketing Institute. It was prepared by Raftery Resource Network, an independent consultant with subject matter experience.