The document discusses the case for outsourcing the liquidation of obsolete product. It notes that obsolete product occurs for various reasons like overproduction, forecasting errors, or packaging changes. Handling liquidation internally can take away resources from other important tasks and may not be done efficiently. Outsourcing the liquidation process allows a company to focus internal resources more effectively while also gaining expertise in moving obsolete product and maximizing its return. The document recommends outsourcing as a solution for companies that have undeveloped or informal liquidation programs.

1. The Case for Outsourced Liquidation
In today's lean corporations, every resource is extremely valuable. Yet, there are
always some activities that continue to be insourced when the logic dictates otherwise.
Let's take the case of Obsolete Product as an example. Obsolete product can be
described as product that:
 has been overproduced.
 is the result of product introduction underperformance.
 has not met forecasts and has aged beyond shippable life.
 is leftover from seasonal demand.
 is the result of a packaging change.
 was acquired from an acquisition.
 just becomes obsolete.
The quantity of product varies from company to company but in the long run it becomes
a reduced revenue sale, a donation, or a destruction. No matter how you look at it, it is
a hit to the bottom line.
The solution is not easy.
New Product Development - be it line extension or category extension - is the key to
growing you your business and most products do not meet initial
expectations. Minimum runs will exist as long as product is produced. Forecasting will
always have an inherent error rate, and seasonal production will always error on the
side of caution.
The response in most organizations is to assign the task to someone who may or may
not have the expertise to manage the process. It can end up falling to someone who
already has a full plate, or a headcount may be added to handle the process. None of
these are ideal and are not always effective.
Process is a very important word here. The act of selling the product is only part of the
process. Tracking down the opportunity, communicating to trading partners, and
coordinating shipping and invoicing are all time consuming tasks.
So why waste a headcount on coordinating the sale of obsolete product when the real
win is focusing on reducing the amount of product that becomes obsolete in the first
place?
Just like with most business decisions, there is no simple answer. But unlike many
other decisions there is a solution. Outsourcing your liquidation process provides the
best of both worlds. It allows for a valuable resource to be used more effectively,

2. provides focus for moving obsolete product before it becomes unsaleable, and provides
a larger trading partner base to maximize return.
If you have a liquidation program that is underdeveloped, or do not have a formal
program, think about outsourcing as an option.
Gene Schachte has over 15 years’ experience in Reverse Logistics