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Unsaleable product costs reach $4.2 billion in '98 (sidebar)

Not all package problems

Along with the issue of misunderstood “pull dates,” the study found that marketing decisions can often cause perfectly good products to wind up at reclamation centers. This condition can be caused by discontinuation of products by manufacturers or distributors, but in-store decisions about products are involved as well.

In these instances, communications between all supply chain parties need to be improved. One manufacturer pulls all discontinued product from its own distribution center so that it can’t be shipped to distributors, even though it might have been previously ordered. One distributor tags items at the shelf so that store personnel cannot reorder them. Many participants say they use software programs that help them pull full cases of discontinued products from the warehouses.

Finally, at the store level, “shelf sweeps” and category resets were suspected to cause some good products that were not discontinued merchandise to be sent to reclamation centers. In fact, one distributor suggested that stores may have an incentive to ship overstock from resets or promotions to reclamation centers if they receive full credit from the product manufacturers.

See the main story that goes with this sidebar: Unsaleable product costs reach $4.2 billion in ’98

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