The Supply Chain VP’s Lament

Alan Scroope – March 16, 2010
Whether your company has a solid Sales & Operations Planning (S&OP) process or you have an inventory reduction frenzy at the end of every quarter, if you’re in the Supply Chain organization you routinely come away from those meetings thinking, “I’ve heard that before”.  That’s your reflection on the Sales organization committing to move the excess inventory to the channel “this quarter”.  And as routinely, after several such “this quarter’s” the now-obsolete inventory makes its way to your Supply Chain organization for liquidation at cents on the dollar.

As inventory ages, financial reserves are increased and inventory valuation decreases.  How to stop the downward financial spiral and move this inventory while it still has good market value – without corrupting the channel?  That question stumps S&OP teams and can really paralyze the organization, despite good inventory management.

FreeFlow’s customers have the answer.  Having used FreeFlow for EOL liquidation, they know that with their FreeFlow marketplace they have total control over who can buy their product, unlike with mass market liquidators that support only uncontrolled market access.   They know with FreeFlow they can have 2 buyers or 200 buyers (or more) and they can stipulate the conditions of sale, including sell-to restrictions.  So they create a two-tier process using their FreeFlow platform.  The second tier is their existing EOL liquidation auction.  They simply insert a first tier process for the sales organization to use as a promotions platform, giving selected channel partners or approved alternative channel partners visibility of inventory at pricing close to wholesale, which they can progressively discount.  Residual inventory at the end of the period is simply rolled over to the liquidation platform.

I’m continually amazed and thrilled with the new directions our customers take us, and the use of FreeFlow as a sales promotional platform is now driving millions of dollars per quarter of revenue that was previously written off.  And maybe a bit more credibility for the Sales organization.