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SN has awarded Mead Johnson's efforts to reduce unsaleables with the Supplier Leadership Award for Unsaleables Reduction.
Improving Shelf Life
While the company is looking at all of its products, it is targeting between five and 10 that were the best candidates, based on product-returns data, for improved shelf life. In particular, Mead is focusing on its main product lines — both liquids and powders — including Enfamil and Enfamil Premium Infant, its flagship brand that is responsible for the majority of its sales.
Mead is also collaborating with its retailers to help them “understand why shelf lives are set as they are so we have the highest quality product,” Martin said. Retailers are required to follow strict guidelines on the removal of expired products from shelves and returning them to Mead, which destroys all returns so that they don’t fall into the wrong hands. Infant formula is one of the consumer products most coveted by organized retail crime rings.
Mead is still waiting for more returns data to understand the effect of its product changes or tests on the unsaleables rate, though for some products it has already increased shelf life, said Martin. In one case, a product’s shelf life was extended from 12 to 15 months (he did not name the product). “We’re intuitively confident that we will reduce returns,” he said.
Martin pointed out that a product’s lifespan begins with its date of manufacture, not the date it is stocked on a store shelf, which depends on inventory and transportation time as it makes its way through the supply chain. The average time between manufacturing and shelf-stocking for Mead products is two to three months.
Mead is also taking a closer look at where its products are distributed and reassessing whether they should be sold in certain outlets where returns tend to be high, or whether allotments there should at least be curtailed. “If we can use data to find pockets where there is no need to distribute, that’s a win-win for us and for retailers,” Martin said.
Demographics — particularly the presence of mothers with young children — help guide Mead on distribution decisions. The company also looks at whether purchases of infant formula are routinely made at a particular channel of trade. “If not, there may be too many products in a store and some will sit there and not move,” he said. Mead fashions a different strategy for the different retail channels it supplies, including grocery, drug, mass and club.
With all of its emphasis on expiration dates as a hedge against unsaleables, Mead has also taken some steps recently to improve packaging. For example, the company increased the strength of the cardboard in its cases to help products survive the distribution chain unscathed. “We’ll visit retail distribution centers to see where the damage points are — in handling or whether products need better packaging,” Martin said.
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