Alan Scroope – March 31, 2010

In a recent auction of “Open Box” product (untested customer returns), we recovered over 80% of standard cost for the OEM, a personal peripheral devices manufacturer, compared to their existing run rate which was averaging around 30%.  There are two lessons to be learned here.

First, why the huge jump in recovery?  The seller had settled into a comfortable routine of monthly liquidation with a single buyer.  This was a relationship of convenience for both parties; with pricing set in advance throughput was fast and intervention was minimal.  Convinced by FreeFlow to run a pilot auction with a wide audience of competitive bidders, the seller was astounded to recognize how much money they’d been leaving on the table, and with FreeFlow managing the process for them their overhead remains low.  They’re now fully committed to the auction process.

Secondly, why in the world would untested customer returns bring 80% of standard cost at auction?  Two reasons:  unlike the End-of-Life and close-out products typically found on auction, untested customer returns are typically on current version product.  Secondly, the No Trouble Found (NTF) rate on consumer electronics can be 80% or higher.  Secondary market buyers with test and repair capability capitalize on this situation and make a tidy margin, and they’ll compete for this inventory – driving recovery upward for the seller.
Sellers take note:  lured by the retail or near-retail pricing for manufacturer refurbished inventory, you may be convinced that adding the (not-insignificant) processing cost  of refurb is the way to go.  I’d suggest running some trial auctions on your untested returns – you too may be pleasantly astounded at what the market will bear.

Alan Scroope – March 24, 2010

The flip side of my previous blog is what’s going on in the Sales organization.  They’re under constant pressure to make the quarter, introduce new products, and meet other business development objectives set by the organization.  To them, seeing one more spreadsheet of excess, at-risk inventory that they have to sign up to is enough to make their eyes glaze over.  Yet they’ll take it on, knowing that it’s #25 on their Top Ten priority list, because they don’t want to risk product slipping onto the grey market.  They’d rather take the credibility hit for failing to move the excess than listen to their sales team regaling stories of channel corruption.

Then the Sales exec finds out what his counterpart in Supply Chain ended up selling the inventory for at liquidation.

Double whammy.  Besides failing to move the inventory as promised, the company’s bottom line performance took a hit with unnecessarily large reserves.  “If I had the tool and the flexibility on the ground rules that Supply Chain has I could have done way better.”   That’s the lament of the Sales VP.

Which is exactly why the two-tier platform run by many FreeFlow customers turns out to be a real win-win.  The Sales force gets a tool that lets their channel partners (or sales team if they want to keep it internal) a constantly updated view of product that is available for promotion to the channel.  The CFO is keeping an eye on sales and can adjust pricing as necessary.  And it’s only the residual inventory at the end of the period that ends up getting liquidated.

The Sales teams that have worked with a FreeFlow platform for promoting excess inventory to a safe, hand-picked, buying community are elated not only with the financial performance but with the minimum interference to the sales team.  No more email, spreadsheets, double-booking, price negotiation and exception approvals, the FreeFlow platform is always on and always up to date.

There will always be challenges to the credibility of the Sales organization, but excess inventory doesn’t have to be one of them.

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.

Innovative Alternative Channels Solution Earns Deloitte Recognition

Tralee, Ireland, March 29, 2010 – FreeFlow, the world’s leading provider of alternative channel solutions for at-risk inventory in consumer electronics companies, announced this week that it has been named as one of Ireland’s ‘Best Managed’ companies in the Deloitte Best Managed Companies Awards competition. In total, twenty companies who demonstrated superior business performance were recognized.

The Deloitte Best Managed Awards Program, in association with Bank of Scotland (Ireland), recognizes indigenous Irish companies that operate at the highest levels of business performance. The independent judging panel reviewed a broad range of criteria including strategy, capability, commitment, financials and growth potential across all key functions of the business.

Commenting on the award, Alan Scroope, CEO, FreeFlow said, “Every member of the FreeFlow team is committed to achieving operational excellence while serving our customers beyond their expectations.  This philosophy has driven our global success and it is gratifying to have our management philosophy recognized as best practice in such a prestigious competition.”

Commenting on the winners of the Deloitte Best Managed Companies Awards Program, Pat Cullen, Managing Partner, Deloitte said: “To be recognized as a Best Managed Company is a tremendous achievement, given the challenges that companies in all industries are currently experiencing. Our judging panel takes an in-depth look at each company – therefore to be chosen as a winner is testament to the sound management practices that are being implemented across the entire business. It is this thorough approach that will help these companies to take advantage of the upturn when it arrives.”

FreeFlow has proven to be a top Sales and Supply Chain partner by addressing its clients’ needs to build secure alternative channels for at-risk inventory.  Slow-moving, aging or end-of-life finished goods as well as consumer returns inventory sold as-is or refurbished is a multi-million dollar market for FreeFlow’s Global 1000 customers. The company’s branded and anonymous private marketplaces allow stock to be sold at auction, fixed price, or minimum price. Auction and ‘member privilege’ dynamics are deployed to improve bidding performance, resulting in higher financial recovery. With its private, detailed market analysis, integrated performance metrics and end-to-end business support services, FreeFlow provides low-cost, secure, high recovery alternative channel solutions for excess and at-risk inventory in all stages of the product lifecycle.

About Deloitte Best Managed Companies Awards

The Deloitte Best Managed Companies program, in association with Bank of Scotland (Ireland), promotes and recognises excellence in Irish owned and managed companies. It is the only awards scheme in Ireland that considers a business’ performance from every perspective. Entrants to the program compete for this designation in a rigorous and independent process that evaluates the calibre of their management abilities and practices.

Program sponsors include Bank of Scotland (Ireland), the Irish Management Institute and the Sunday Business Post.

For further information, visit www.deloittebestmanaged.ie.

About FreeFlow
Founded in 2001, FreeFlow improves its customers’ profitability by helping them identify excess and at-risk inventory and dispositioning the inventory through the alternative channel best suited for that inventory. FreeFlow’s customers include Apple, Creative Labs, Microsoft and SanDisk. FreeFlow’s leadership in the supply chain arena has been recognized with numerous industry awards, including Gartner’s Cool Vendors in Supply Chain Management and Procurement, the Supply & Demand Chain Executive 100 for 2009 and the 2009 Ruban d’Honneur European Business Award in the category of Information and Communication Technology Effectiveness. Privately-held, FreeFlow has headquarters in Tralee, Ireland and US headquarters in San Jose, California.  For more information, visit www.FreeFlow.com.

Press Contact:
Anne Patterson
FreeFlow
860.705.0285
Anne_Patterson@FreeFlow.com

At a ceremony held in Rome, winners in the ten European Business Awards categories were announced from a shortlist of ninety-nine companies from Ireland to Poland and from Estonia to Italy. Recognizing excellence and innovation in European enterprise, the award competition this year singled out companies that have defied the economic downturn and responded with a blend of inventiveness and industry.

The judges selected FreeFlow as the winner of the ICT Effectiveness category because of its success in helping enterprises generate new revenue streams from excess inventory. Because companies have traditionally focused on the forward supply chain, they seldom have the resources to run an excess inventory remarketing program as a profitable business. Whether they are an OEM selling obsolete inventory still in factory packaging, or are a manufacturer with returns or component inventory, FreeFlow offers a deployment solution to address each category.

FreeFlow provides pre-auction services such as FreeFlow Market Intelligence to maximize recovery with targeted pricing, fully-hosted online B2B auction technology, and post-auction financial settlement, all on a pay-as-you-go basis. This end-to-end solution has transformed the way enterprises view and manage inventory.

B.G. Srinivas, Senior Vice President and Member of Executive Council at Infosys, a global leader in the next generation of IT and consulting services, remarked: “The quality of entries this year despite the economic backdrop, has demonstrated a business environment in Europe that fosters talent management, gritty commercialisation and agility, that have enabled organisations to execute existing projects and in some cases completely re-engineer their business models for success. In our opinion, FreeFlow is a prime example of this.”

“FreeFlow has been adopted by more and more Fortune 1,000 companies who want to empower their sales and supply chain organizations to deal more profitably with excess and at-risk inventory,” noted Alan Scroope, FreeFlow’s CEO. “Such a prestigious award as the Ruban d’Honneur highlights our success in helping those companies utilize innovative software and business services to shift the paradigm of asset remarketing from a cost center to a revenue program.”

Despite the stringent economic climate, those companies shortlisted for the awards averaged an impressive 56% growth in profits. The judging panel, made up of highly regarded academics, heads of state, industrialists, entrepreneurs and media commentators drawn from across the 27 member European States, was impressed by the ability of all entrants to buck the downturn in the global economy and to post a combined turnover in excess of EUR570 billion.

FreeFlow has proven to be a top Sales and Supply Chain partner by addressing its customers’ needs to disposition slow-moving, aging or end-of-life finished goods and components, wherever those products are located. The company’s branded and anonymous auctions provide a private forum where only approved buyers view and bid on a company’s inventory.

Auction and ‘member privilege’ dynamics are deployed to improve bidding performance, returning higher recovery rate on all goods. FreeFlow’s inventory asset management solution is utilized in the high-tech, automotive, consumer package goods, telecomm, and apparel industries. With its auction platforms, detailed market analysis and related business services, FreeFlow provides a low-cost, high recovery alternate channel for excess and at-risk inventory in all stages of the product lifecycle.

About The European Business Awards

The European Business Awards recognizes and rewards excellence, best practice and innovation in companies across the European Union. Extensive research and high standards of judging have established the European Business Awards as the showcase of Europe’s skills, achievements and innovations in the field of business. The competition is free to enter and open to organizations of all sizes and from any industry sector.
The European Business Awards program serves three purposes for the European business community:

• It provides examples for the business community to aspire to
• It celebrates and endorses individual’s and organization’s success
• It provides case studies and content for learning from these exceptional organizations

About FreeFlow
Founded in 2001, FreeFlow improves its customers’ product profitability by helping them identify excess and at-risk inventory and dispositioning the inventory through the channel mechanism most appropriate to that asset. Some of FreeFlow’s industry leading customers include Apple, Creative Labs and SanDisk. FreeFlow’s leadership in the supply chain arena has been recognized with a string of industry awards, including Gartner’s Cool Vendors in Supply Chain Management and Procurement, Global Logistics and Supply Chain Strategies magazine’s Top Supply Chain Partners, and Manufacturing Business Technology magazine’s Top 40 Emerging Software Vendors. Privately-held, FreeFlow has headquarters in San Jose, California and Tralee, Ireland, with offices throughout the U.S., Europe, and Asia. For more information, please visit www.FreeFlow.com.

Press Contact:
Anne Patterson
FreeFlow
860.705.0285
Anne_Patterson@FreeFlow.com

The judges selected FreeFlow for inclusion in the Top 100 list for its role in helping its customers respond to the economic downturn and, more importantly, position themselves for growth ahead. With its core competency in helping manufacturers, retailers, and distributors identify and disposition excess inventory, FreeFlow has proven to be uniquely positioned to help its customers quickly move excess inventory as a result of supply-demand mismatch while at the same time develop sustained alternative channels to continuously, proactively move excess inventory in periods of growth.

“Our readers turn to Supply & Demand Chain Executive to learn about solutions and best practices for enabling the supply chain to weather the current economic storm in which we find ourselves, and also to position themselves for growth when recovery takes hold.” explained Andrew K. Reese, editor of Supply & Demand Chain Executive. “The corporate executives and line-of-business leaders who rely on the magazine want to know what the different supply chain solution and service providers are doing to help them meet these critical, corporate ‘life-or-death’ challenges.”

FreeFlow provides industry-leading on-line sales platforms utilizing both fixed price and auction methodologies that help its customers maximize financial recovery on risk inventory, while retaining control of their sales channels, resulting in direct positive impact on their P & L. FreeFlow’s alternative channel sales solutions are fully-hosted applications delivered on a SaaS (software as a service) model, making it easy for new customers to get started. FreeFlow’s supporting business services include market research and sales strategy to maximize recovery and comprehensive commercial management of channel buyers including financial settlement, delivering an end-to-end remarketing solution for its customers.

“Our goal with this year’s ‘100′ is to highlight a broad range of solutions and services targeted at a variety of industries, addressing the needs of companies of varying sizes, and assisting in the transformation of a diverse mix of the functions that make up the supply chain,” added Reese.

The judges selected FreeFlow for inclusion in this year’s list because of its success in helping enterprises generate new revenue streams from risk inventory in any condition and in all stages of the product life cycle. Because companies have traditionally focused on the forward supply chain, they seldom have the resources to run an excess inventory remarketing program as a profitable business. Whether they are an OEM selling obsolete inventory still in factory packaging or are a manufacturer, distributor or retailer with returns or refurbished inventory, FreeFlow offers global solutions to address each category.

“Our core mission of being our customers’ sales and supply chain partner creating immediate bottom line impact while retaining channel and pricing control was a strong fit with this year’s award criteria,” noted Alan Scroope, FreeFlow’s CEO. “Being recognized by Supply & Demand Chain Executive highlights our success in helping those companies develop alternative sales channels utilizing innovative software and business services to shift the paradigm of asset remarketing from a cost center to a revenue program.”

About FreeFlow

Founded in 2001, FreeFlow improves its customers’ product profitability by helping them identify excess and at-risk inventory and disposition the inventory through the channel mechanism most appropriate to that asset. Some of FreeFlow’s industry leading customers include Apple, Creative Labs and SanDisk. FreeFlow’s leadership in the supply chain arena has been recognized with a string of industry awards, including the 2009 Infosys Information and Communication Technology Effectiveness Award in the Ruban d’Honneur European Business Awards competition, Gartner’s Cool Vendors in Supply Chain Management and Procurement, and Global Logistics and Supply Chain Strategies magazine’s Top Supply Chain Partners. Privately-held, FreeFlow has headquarters in San Jose, California and Tralee, Ireland, with offices throughout the U.S., Europe, and Asia. For more information, please visit www.FreeFlow.com.

Media Contact:
Anne Patterson
FreeFlow
860.705.0285
Anne_Patterson@FreeFlow.com

About Supply & Demand Chain Executive
Supply & Demand Chain Executive is the executive’s user manual for successful supply and demand chain transformation, utilizing hard-hitting analysis, viewpoints and unbiased case studies to steer executives and supply management professionals through the complicated, yet critical, world of supply and demand chain enablement to gain competitive advantage. On the Web at www.SDCExec.com.

Media Contact:
Sarah Murray
Managing Editor
(205) 815-1463
smurray@sdcexec.com