Ten years ago we talked about returns and how they can affect your ability to do inventory management. It is not a surprise that only 20% of distributors keep accurate perpetual inventory on their computer software. A lot of effort can be spent on buying and selling. But let’s discuss again what is really Eating your Margins.

Blocking and Tackling: Managing Returns.

Let’s look at the typical “day” of a food distributor.

  •  5:00 a.m.  Rush to get all of last night’s orders in the system and pick tickets printed so orders can be picked.
  •  7:00 a.m.  Trucks finally filled and on the road.
  •  8:00 a.m.  Inventory put away from disorder caused by getting trucks out.
  • 10:00 a.m.  Receiving done by warehouse and inventory put-aways.
  •  1:00 p.m. +  Trucks start returning.

This is the time when the inventory can get skewed. Most trucks returning have a hodgepodge of product in the back including expired products, broken cases, undeliverable items, and items not accepted for delivery by client. One of the ways to decrease the disruption in your warehouse is to not allow your driver to pick up without a Pick Up Ticket.  Using your information system to take care of generating the pick up ticket and processing the return will ensure accuracy on all levels. Plus it will give you the power to plan and consolidate freight for return products, which is a key way to reduce fuel and labor expenses. Sample Pick Up Ticket below:

Because most distributors don’t have the time or staff to generate pick up tickets the other alternative is to use return reason codes that will let you know from reporting which return reasons are hurting you margins.

YOU NEED TO MONITOR WHAT IS EATING YOUR MARGINS

 



Issue 598 - Setting the Standards

 

We'll keep following last week's thread about Inventory Management and Profitability.   Food is a very unique industry, so making sure we measure ourselves against our industry cousins is important to understand the standard we are measured against. Got to know the other guy's score to see if you are a winner. Again focusing on inventory value and getting it right is one of the two key elements of our T&E analysis.

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