A recommendation for a reduced benchmark of 10.5 items per $10,000 sales was unanimously approved by the ECR Steering Committee. This represents a total reduction of 65% since the introduction of the unsaleables recommendation in November 1998. The new benchmark will take affect April 1, 2000.

The new benchmark is based on an assessment of store level damage incidence conducted by Tandem, A Towers Perrin Company. Tandem analyzed actual damage rates at over 620 stores throughout Canada and incorporated "best practice" processes to develop the new level. Complete details are available from CCGD and FCPMC.

MANAGEMENT PRACTICES IN PLACE

The Unsaleables Committee has now completed the development of management systems to guide the ongoing application of the unsaleables recommendation.

In particular, systems have been developed to review and recommend changes if necessary to the handling rate and benchmark levels. Defined timelines have been developed for the audit processes.

Grocery distributors recently gave reclamation service providers the green light to release information concerning damaged products to manufacturers. These reports will allow manufacturers to better understand how, where and why damages are occurring. Manufacturers are encouraged to contact reclamation providers to discuss their needs. Costs are dependent on the frequency and content of the reports.

As part of its ongoing analysis, the Unsaleables Committee identified those products and packaging types that had the highest level of damage incidence. Distributor members then contacted those companies whose products were affected to initiate discussions on how to reduce damage incidence.

Based on these discussions, initiatives are being undertaken, including the trace audit study described below, to examine root causes. Certain companies also indicated that the inherent packaging weaknesses in their products were an accepted cost of doing business.

The Committee will develop criteria by February 2000 to remove these products from the Protocol. The ECR Steering Committee recommended that products, which were excluded from the benchmark, should be charged 100% of the handling rate and cost of products.

Upon exclusion of these products the benchmark level would be re-examined.

The ECR Unsaleables Update is published periodically to keep manufacturers, brokers and distributors up to date on the issues discussed by the ECR Unsaleables Committee, as well as provide progress reports on the ECR Unsaleables Recommendation.

ROOT CAUSE STUDIES PROGRESSING

Two studies are in the works to better understand root causes associated with damages.

The first study is a "trace audit" that will provide information on how damages occur to canned products. The results of this study are expected by the end of the year.

The second study will address damaged products by analyzing store level systems. This survey will identify "industry best practices" and will provide valuable information to help retailers and distributors reduce the incidence of damage. The results of this study will be available at the October 21 Unsaleables Seminar.

The ECR Steering Committee approved the extension of the refrigerated/frozen moratorium to February 28, 2000.

Recommendations will be tabled at the next and final Unsaleables Committee meeting in February to determine how and when the Protocol would be broadened to include these products.

A new Top-to-Top Forum, led by the Chairs of CCGD and FCPMC, will guide the ECR initiative in the new millennium. At a recent meeting, the ECR Steering Committee agreed to sunset its activities. This decision was based on a review of the 1999 objectives and future issues that must be addressed by the industry.

The Forum’s mandate will include addressing common advocacy, spokesperson and supply chain issues.

The ECR Steering Committee approved a new role for the Unsaleables Committee. The current Committee will be sunsetted pending outstanding issues, which will be resolved at the final Committee meeting scheduled for February 2000.

A new smaller Committee would be established consisting of the current Co-Chairs, and staff from FCPMC and CCGD. The Committee would provide a forum to discuss any issues concerning the Recommendation, as well as manage the ongoing system reviews including handling rates, benchmarks and audits.

As of September 30, 1999, the Recommendation achieved critical mass implementation among retailers in all regions of the country except Quebec. Among the manufacturing sector, 52 companies, representing approximately 70% of FCPMC members’ dry grocery volume sales, have signed the Best Practice Commitments.

A complete list of manufacturers and retailers who have signed the Commitment letter and the Protocol is available from CCGD and FCPMC.

• David Wilkes at 416-922-6228 ext.324; email dwilkes@ccgd.ca

• Elaine Smith at 416-510-8087; email elaines@fcpmc.com

For a copy of the French version, please contact FCPMC or CCGD.