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How to reduce POS waste

How to reduce POS waste

By Richard Saysell of CREO

Is wastage the biggest single issue the instore advertising industry faces today?  The picture is a bleak one. Depending on what report you read, compliance of printed temporary POP displays in-store is somewhere between 50-70% and this has remained broadly unchanged for the past decade.

Taken on face value, that would seem to offer the industry an incredible available saving of anywhere up to 50% on budgets. So why then does the problem persist?

Gimmicks abound claiming to alleviate the issue, from store friendly packaging tape and assembly help lines through to auto-assembly of the displays and merchandisers getting involved. All these initiatives have been developed with the aim of making it easier for the retailers and their store staff. But they just address the symptoms rather than the root cause.

This is perhaps understandable because the actual root cause is very difficult to identify as it varies from client to client. Sometimes,  it’s as simple as not gaining retailer approval for the space; it can be poor communication within the retailer itself, breaching retailer restrictions for size or branding, damage in transit, missing promotional slots, or any combination of the above.

Compliance though is just the most visible form of waste, and although it rightly tends to be focused on as a result, other forms exist. These include double handling and excessive fuel costs in the supply chain, duplication of packaging, over-ordering in production and misallocation i.e. sending the wrong sorts of display collateral for the job intended. However, it is very difficult to assign a cost to these areas which is perhaps why they are, to a large extent, left untouched.  

Broadly, the solution to all of the above issues must lie in aligning the conflicting drivers of marketing, procurement and operations departments. However, it’s rare for brand owners to take a joined up approach to the problem, generally one of either marketing or procurement leads any initiative, with operations often not featuring at all.

There is a lot of discussion in the industry about the more strategic role POP should be playing within the marketing mix. The thrust of the discussion, arguing that the industry needs to get closer to the brand conversation, is a very laudable aim in itself, but our own research seems to indicate that clients actually want an approach that is more about delivery. And that ‘delivery’ embraces responsive service; speed and dependability of production; and quality of creative.

We also believe that meeting these objectives is the first step to strategic partnering with clients on an operational level, which is required to deliver the new targets for cost and sustainability. Brand owners are now having targets set against their products for reducing the carbon footprint delivered in-store.

Of course, the most obvious area that they can address is in the product packaging but how they promote the products is also bound to feature. This was also identified in Creo’s research with 100% of clients expecting a huge increase in importance to their supplier selection of sustainability i.e. the carbon neutrality of the supplier operation as well as the product supplied, in the next three years.

The answer requires a lot of trust and collaboration between all parties.  In my opinion, the only 100% guaranteed way of eliminating any waste through compliance is through live product packing – a display is extremely unlikely to be baled if it is packed with 72 DVDs for instance. Some sectors, particularly in grocery and health & beauty, do it successfully so why not all?

It can be a combination of any or all of the following; available promotional windows, time to market of the product, shelf life of the product and, the configuration of the supply chain. More fundamental however, is the nature of the supplier client relationship that is left after the procurement selection process.

Often, depending on how the process is conducted and the length of the agreement, the terms of the relationship can be stripped so bare that the supplier is left treading water for the volume they have gained. There is a reluctance to add any value because that value wasn’t acknowledged during the process.    

So, in order for us to continue to deliver the savings our clients and their shareholders demand, there needs to be a sea change in the approach from both sides. Truly collaborative partnerships need to be developed to unlock the potential in the supply chain and create the efficiencies that are available. There’s even a chance that everyone will feel good about it too!

The challenge is obvious.  We are all feeling the impact of the ongoing drive of brand owners and retailers to reduce costs and maximize budgets, and it’s only a matter of time before the impact of the environmental movement exerts a greater influence. Plus, incremental savings available through volume and sole supply deals could have run their course.

This leaves waste as the next logical area for improvement as it addresses both cost and environmental targets. But the approach needs to be meaningful, and above all, whilst embracing the whole green issue, it must have a viable commercial imperative.

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