The Ecom Hangover: Reverse Logistics. Track 3 Session 1

Transcription

1 The Ecom Hangover: Reverse Logistics Track 3 Session 1

2 Gailen Vick Reverse Logistics Association Founder Phone: x11 Website: 2

3 Abstract Make it easy for people to shop online, and oh, they will and then they will return 25-40% of it vs. 8-9% in an actual store like where your grandparents shopped. In this class we will hear about the growing impedance of the return chain (reverse logistics), how leaders are structuring returns management, what advanced analytics are available to reduce returns, and the messy business of claims processing and disposition. Always shop responsibly. 3

4 Agenda Why the Reverse Logistics Association (RLA) was formed Know Your Terminology RLA s Mission Label Standard RLA/ANSI MH10 Where does RL fit in the Supply Chain The Dilemma Why the Omni Channel has increased returns Cisco Case Study Management structure suggestions & solutions Key Takeaways, Conference Cloud, Questions 4

5 Why Was The RLA Formed? To support third party service providers (3PSPs) To educate OEMs & Retailers on why they need to outsource their Reverse Logistics operations To enable Private Industry, Consultants, Academics & Governments to connect and share new ideas and opportunities 5

6 Reverse Logistics Terminology by Industry CORPORATE Industry IDENTITY Definition CHANGE INDUSTRY Apparel Automotive & HD Consumer Products Furniture Hospitality Military Retail Grocery Space & Aviation White Goods TERMINOLOGY Merchandise Returns Remanufacturing After Market Supply Chain Rebuilders/Refurb Reader Board Shopping Retrograde Unsaleables Obsolescence Takeback s = E Q U A L S = Life Cycle Management After Purchase Life Cycle Customer Service (helpdesk) Depot Repair/ReMan Service Logistics (Field Service) Transportation/Warehousing Spare Parts Management RMA Management Replacement Management Refurbishment Screening/Count Auditing End-of-life Manufacturing Remanufacturing Fulfillment Services IT Process Management Recycling Scrap/Waste Management Gray/B Channel Management Warranty Management Asset Management Sustainability Environmental Resources Reverse Logistics is the process of managing assets (whether negative or positive) after a product or service is 6 purchased or consumed in all industries and across all disciplines. R E V E R S E L O G I S T I C S = E Q U A L S =

7 What Is The RLA s Mission? To educate every department in all industries and across all disciplines about Reverse Logistics processes, which is the process of managing assets (both positive & negative) To produce events around the world where OEMs, ODMs, Branded and Retail companies receive information on RL support services 7

8 Label Standard for QR Codes How Many Barcodes? QR Code Listing - Type Code Desc Format Details B 000 Manufacturer Name Alpha Manufacturer Name On Product,DBA Or Brand B 001 Product Name Alpha Product Name B 002 Model Number Alpha Model Number B 003 Product Data Sheet Url Product Data Sheet- Specifications B 004 Date Of Manufacture Date Date Of Manufacture B 005 Product Serial Number Alpha-numeric Serial Number M 006 Product Configuration Alpha Configuration Of Specific Product Options As Shipp U 007 Product Support URL Click Here For Product Support U 008 Product Documentation URL Click Here For Product Documentation U 009 Phone Product Support Phone # Click Here To Dial Customer 8

9 Where Does Reverse Logistics Fit? CORPORATE IDENTITY CHANGE New Product Development Design Development Technology Roadmaps ASIC Development Mechanical Design PCB Layout Prototyping New Product Introduction Supply Chain - After Market Supply Chain PRODUCT LIFE CYCLE FORWARD LOGISTICS Material Management Vendor Relations Planning Procurement Inventory Planning Component Fabrication Manufacturing & Distribution PCB Assembly Box Assembly Volume Manufacturing Integration Configuration Final Testing Distribution to Customer Customer Fulfillment Transportation E N D U S E R / C O N S U M E R REVERSE LOGISTICS Aftermarket Customer Services Customer Service (helpdesk) Depot Repair/ReMan Service Logistics (Field Service) Transportation/Warehousing Spare Parts Management RMA Management Replacement Management Refurbishment Screening/Count Auditing End-of-life Manufacturing Remanufacturing Fulfillment Services IT Process Management Recycling Scrap/Waste Management Gray/B Channel Management Warranty Management Asset Management Sustainability Environmental Resources 9

10 Advisory Board 10

11 75 Editions WW Circulation of 50,000 Published Monthly e-reader formats kindle 11

12 The Dilemma di lem ma: a difficult or persistent problem Source: Merriam-Webster dictionary 12

13 Reverse Logistics Dilemma Every Company Has An RL Dilemma Obvious - Consumer Electronics, Computers, Automotive Not-so-obvious - Books, Apparel, Retail, Grocery, Software Practically invisible - Pharmaceuticals, Aerospace, Agriculture, Medical, Energy, Transportation 13

14 Companies Are Not Aware of the Dilemma! SEE THIS MISS THIS Senior Management Frequently Unaware Of: Size of RL operations Cost of RL operations Impact of RL operations on bottom line Impact of RL operation on customer service Impact of legislation on RL Many line/staff managers don t know RL Operations even exist 14

15 Case Study - Cisco Source: RLA Amsterdam Conference 2010, Keynote Address - Rehman Mohammed, Cisco 15

16 Case Study Cisco: Cost to Profit Center (2.4% of FY 09 Net Income) FY 09 Net Income $ 6.1 Billion GAAP Sources: RLA Amsterdam Conference 2010, Keynote Address - Rehman Mohammed, Cisco & Investor.cisco.com FY

17 REVERSE LOGISTICS PROCESSES 17

18 Reverse Logistics Landscape for Retailers 18

19 How to Make a Difference Ownership within Enterprise Who Owns the RL Function? Distributed across functions Hidden in operations or customer service Measurement Tools to measure the performance of RL? Few, specialized software tools Financially absorbed in other departmental budgets 19

20 Finance The RL Impact What are the true costs / benefits to the organization? i.e. Actual costs vs. retained asset value Operations How is RL affecting operational efficiency? i.e. Quality improvements based on RL Sales & Marketing What is the effect of RL on sales? RL affects the bottom line i.e. Customer satisfaction, brand reputation, remanufactured goods impacting prices 20

21 What is the Impact to Mother Earth? Environmental Are we a good corporate citizen? Are we alienating clients? Governmental / Legislative Are we meeting governmental regulations? (FMCSA, SMS) Are we open to legal action? Bottom Line Cost 3% to 15% in every company It all affects the bottom line 21

22 RL Trends $ Trillion Global GDP 3% is RL Opportunity Global RL Reverse Logistics - $2.22 Trillion Rank Country GDP (millions of US$) World [8] 73,993,835 1 United States 18,558,130 European Union [n 1][8] 16,477,211 2 China 11,383,030 3 Japan 4,412,600 4 Germany 3,467,780 5 United Kingdom 2,760,960 6 France 2,464,790 7 India 2,288,720 8 Italy 1,848,690 9 Brazil 1,534, Canada 1,462,330 22

23 Solution Resolve The Dilemma Create A C Level Position For RL Management The Chief Reverse Logistics Officer (CRLO) would: Have authority to make changes on RL globally, but dayto-day responsibility stays in the hands of each Department Monitor the P & L to develop a Virtual profit center Acquire the necessary tools to support the finance department and report effectively to the Executive Staff 23

24 Measurement of Results If You Manufacture 1 Million Units/Year Revenue per Unit is $1 - $1,000,000 total Profit per unit is 5% After Tax - $50,000 total Average Return Rate is 10% - 100,000 total units Returns represent $100,000 in lost revenue After returns your P&L shows a $50,000 LOSS! Reverse Logistics recovers 80% of the returns - $80,000 to the company s after tax profit After Tax Profit with RL recovery - $30,000 Product Production Cost % Returns Take Away From Bottom Line Profits After tax Profits; Are They Right? Reverse Logistics IT Management So who is most important, the VP of Sales that took 5% from your company, or the Reverse Logistics professional that gave you a After Tax Profit of 3% 24

25 Claims Department Key Takeaways Acquire the tools for your ERP to show RL saving Lobbying Bridges/Roads are Reverse Logistics Trash is an Asset A container of broken glass is raw material Supply Chain Assets Negative Liabilities Audit your vendors up & down the Supply Chain 25

26 Conference Cloud Websites: Linkedin: YouTube: Twitter: Periodicals RL Magazine: RL Trade Shows: RL Surveys: Whitepapers Research Documents Articles Additional Resources 26

27 Questions?