DC Velocity - May 2017

newsworthy

FOOD INDUSTRY MANUFACTURers and retailers can generate large cost savings by collaborating to reduce the volume of “unsalable” items, such as damaged or expired goods, in their supply chains, according to experts attending a consumer packaged-goods (CPG) conference earlier this month.

The effort can generate quick returns by addressing the $15 billion of goods the industry tosses out every year, according to Daniel Triot, senior director for the Trading Partner Alliance (TPA), a joint industry affairs-industry relations leadership group formed by the trade groups the Grocery Manufacturers Association (GMA) and the Food Marketing Institute (FMI). But the effort will take close collaboration between partners such as manufacturers and retailers, Triot said at the TPA Supply Chain Conference in San Diego.

The three most efficient strategies for reaching that goal are enhanced shelf-life management, effective management of discontinued items, and sharing of universal product code (UPC)-level data, according to a joint study by the TPA and its research partner, pallet vendor and supply chain solutions provider CHEP.

The two groups recently conducted
an industry survey ranking the effec-
tiveness of 48 strategies for reducing
unsalables through more effective sup-
ply chain management. The research
“uncovered clear patterns for reducing
unsalable goods,” Ben Eugrin, CHEP’s
director of supply chain solutions, said
in a statement. “We now know how
retailers, manufacturers, and suppli-
ers, working togeth-
er, can generate sig-
nificant cost savings
that positively impact
their bottom line.”
The partners plan
to launch an educa-
tional platform this
fall, sharing detailed
information and
tools to help manu-
facturers and retail-
ers review their sup-
ply chains and implement effective
unsalables-reduction strategies. The
platform will crowd-source evolv-
ing unsalables-reduction strategies,
the partners said. Strategies already
in development include reducing the
high disposal costs of hazardous mate-
rials such as batteries and hairspray
cans, and generating a return on food
waste by recycling expired products
for livestock feed, Eugrin said.

“The key principle is that we need to improve collaboration between trading partners,” Eugrin said in an interview. “That can be helpful because not all companies have someone in charge of unsalables. There can be a difference in perspective between manufacturers and retailers, and retailers and CPG companies might have different interests, so how can we connect them?”

—Ben Ames

Food retailers name three
ways to cut “unsalable”
goods out of supply chain UPS Inc. and FedEx Corp. are
offering a new type of pricing
for deliveries within a 50-mile
radius, according to a person
familiar with the companies’
strategy. The move is designed
to divert local “last mile” busi-
ness-to-consumer traffic that
would normally be handled by
the U.S. Postal Service (USPS).

Short-haul shipments delivered by the two giants would fall under a new “zone 1” rating, according to the person. UPS and FedEx would price those deliveries cheaply, largely because they wouldn’t involve the use of over-the-road line-haul services that add to the carriers’ costs. The pricing has been made available to a select group of large customers that have requested it, according to the person.

For rating purposes, the United States is divided into eight geographic parcel zones. Zone 8 represents the longest lengths of haul, and generally the highest pricing. UPS and FedEx both offer zone 2 rates, but those apply to deliveries made over longer distances that require a line-haul component.

Historically, Atlanta-based UPS and Memphis, Tenn.-based FedEx have either turned away requests for local origin-destina-tion deliveries, slapped on a surcharge, or imposed higher zone 2 rates. That’s because their elaborate package-sortation networks are not structured to support the inbound