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From the Desk of Kim Zablocky: Want to Solve Problems? Pick. Up. The. Phone.

Posted By Administration, Thursday, February 8, 2018
Updated: Thursday, February 8, 2018


I've been in sales of one form or another since the late 1970s. To be successful in sales back then, you needed a good product, a fair price and, most of all, a good reputation. You could build such a reputation, and a strong business, through word-of-mouth marketing and strong relationships with your customers.

Today, a lot of people are relying on technology and social media for word-of-mouth marketing and relationship building. Instead of conversations, people are relying on impressions, views, clicks, likes, shares, yada yada yada. Share a useful article on LinkedIn and it might get a few dozen views. Share a photo with a funny or interesting quote and it could easily get hundreds of likes and a handful of shares. Problem is, building a relationship is hard work, not entertainment.

Attention spans have evaporated. Years ago, we had 15-30 seconds to deliver an elevator pitch and express a value proposition. On today's digital platforms – website, social media brand pages, mobile apps, etc. – we have three seconds to make a first impression and keep someone's attention.

Year ago, we communicated in person, on the phone or by snail mail. Today, people send e-mails, texts and instant messages. Many aren't read, and fewer are returned. I was talking to an RVCF member the other day who was out of the office on business for a few days. He returned to find 3,000 e-mails in his inbox. How many of those e-mails do you think he read or responded to?

My point here is not to demonize technology. And I'm not going to take your ball and tell you to get off my lawn.

We have more collaboration tools today than we did 20, 30, or 40 years ago. Technology can be a wonderful thing. Social media can be a wonderful thing. But technology and social media shouldn't replace the most powerful collaboration tools we have at our disposal – the phone call and the face-to-face meeting.

If you have a problem with a trading partner, or you have an idea to share with your peers, you don't make progress and drive positive change by sending e-mails, texts and instant messages. Those things create noise. And noise creates problems and delays.

Unreturned e-mails might give the impression that your peers and trading partners don't want to hear from you, or that they're avoiding you. But that's usually not the case.

They do want to hear from you – literally. They want to hear your voice. They want to see your face. They want to sit across the table from you. They want to get rid of the noise. If you want to build stronger business relationships, solve problems, share and implement new ideas, and streamline processes, don't type or tap.

Pick. Up. The. Phone.

I'm not saying you should delete all your apps and never use LinkedIn again. I would humbly suggest that you use them to support and supplement real conversations and face-to-face meetings, not replace them.

If there's one form of technology I'd like to see embraced, it's video conferencing. It's not realistic to schedule an in-person visit with every peer or trading partner. I get that. But there's no reason why you can't have a real time, face-to-face video conference, whether it's with your counterpart or a large group.

You don't need a large conference room with expensive technology to hold an interactive meeting. You just need a desktop computer, laptop, tablet or smartphone with a quality video conferencing app.

The need and desire for real conversations and face-to-face collaboration are why RVCF exists. That's why we have our signature conferences and other live events every year. That's why we spend months planning one-on-one meetings. That's why we hold monthly conference calls. Every conference, every event, every meeting, and every call are opportunities to solve a problem and strengthen a relationship.

The retail industry landscape is too competitive and challenging to let noise get in the way of progress. Take advantage of events and calls that give you a platform for verbal and face-to-face collaboration. At the very least, pick up the phone. You'll be glad you did, and so will the people you're calling.

Kim
kzablocky@rvcf.com
(646) 442-3473

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Tags:  Collaboration 

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Retail Value Chain 101: Surveying Suppliers and Acting on Their Feedback

Posted By Administration, Thursday, February 8, 2018
Updated: Thursday, February 8, 2018


by RVCF


Many retailers want to hear from their trading partners in the merchandise supplier community. Retailers want to know what suppliers like and don't like. They want to know what suppliers need from retailers to improve performance. Retailers also want to know how they compare with other retailers. However, there's a big difference between casually asking for feedback during a random conversation and taking a disciplined approach to surveying suppliers on a regular basis.

Just like top-performing companies ask for feedback from customers in a strategic way, retailers can use supplier surveys to gain insights into people, process and system challenges, and drive continuous improvement. Surveys can also be constructed to help you better understand your company culture and business acumen. When you take the time to gather and act upon feedback from suppliers, you show your commitment to becoming a better, more collaborative trading partner.

Questions to Ask in a Supplier Survey
We recommend a supplier survey include objective questions based on measurable data and performance, as well as subjective questions that tell you how the supplier feels about you as a trading partner. Responses might fall into categories such as "strongly agree," "agree," "disagree," and "strongly disagree."

Examples of general survey questions about your retail organization include:

  • Does the retailer share metrics and scorecards?
  • Does the retailer work with you in the spirit of a long-term relationship?
  • Is the retailer a collaborative partner?
  • Is the retailer open to your viewpoint?
  • Does the retailer have an effective merchandising team?
  • Is the retailer's senior management accessible?
  • Does the retailer plan effectively for the short term (seasonal/annual) ?
  • Is the retailer willing to change?
  • Is the retailer organization a well-managed company?
  • Does the retailer have a long-term vision?
  • Is the retailer willing to take risks?
  • Does the retailer make decisions in a timely manner?
  • Does the retailer have an effective marketing and advertising team?

You can also ask questions that focus on specific areas of your company, such as store operations, e-commerce, merchant teams and supply chain. Examples of supply chain-specific questions might include:

  • Does the retailer provide clear expectations for vendor performance?
  • Does the retailer promptly return phone calls/emails?
  • Does the retailer provide an appropriate level of support?
  • Does the retailer transmit information on a timely basis?
  • Does the retailer provide adequate and timely feedback?
  • Does the retailer demonstrate creativity in addressing issues?
  • Does the retailer meet deadlines?
  • Does the retailer ensure data integrity?
  • Does the retailer have reasonable standards (lead times, on-time delivery, etc.)?
  • Does the retailer generate accurate forecasts?
  • Does the retailer have systems that are accessible?
  • Does the retailer have systems that are accurate?
  • Does the retailer have systems that are easy-to-use?

How to Make Supplier Surveys a Valuable Exercise
We recommend supplier surveys be conducted on a regular basis. By soliciting feedback twice per year, or at least once per year, you gain the ability to trend your own performance over time. Are responses getting better, staying the same, or getting worse? For example, after two years, you could generate a report like the one below and determine whether your efforts are producing the improvements your suppliers need:

One of the primary benefits of conducting supplier surveys is finding out how you compare with similar retailers that do business with your suppliers, particularly your largest and most important suppliers. The best way to acquire this information is by asking your suppliers.

If a retailer is struggling and seems to be headed in the wrong direction, recent history has shown us that suppliers will be less likely to support and invest in that retailer as a trading partner. Comparisons with other retailers would allow you to learn how suppliers rate your performance as shown in the graph below:

Senior management should own the process and recognize the value of identifying and addressing problems with the supplier community. This will ensure supplier participation and support. That doesn't mean you have to survey every supplier. Use the 80/20 rule and focus on the 20 percent of suppliers that represent 80 percent of your supplier community's value.

Most importantly, supplier surveys need to be anonymous. Suppliers need to know that you expect and value their honest, unfiltered responses. Without anonymity, suppliers will be more likely to hold back because they're worried about protecting their own interests and offending the retailer. Watered-down responses diminish the value of supplier surveys because they don't paint an accurate picture of the supplier's view of the retailer.

Using a third party to manage the solicitation, collection, and formatting of your survey is one way to address this concern. Responses, ratings, and comments would only be seen in the aggregate. This will show suppliers that you view these surveys as an important tool for improving performance and you're not just going through the motions.

You Gather Feedback from Suppliers. Now What?
If you learn about problems and weaknesses but you're not prepared to do anything about it, what's the point? Put yourself in the supplier's shoes. They've been responding to these surveys for three years, but nothing has changed. Frustration sets in, and you add friction to the relationship.

Internally, surveys are designed to help you learn from suppliers so you can become a better retailer, increase revenue, and create competitive advantages. Gathering information without converting that information into insights and acting upon those insights is a waste of time.

Supplier surveys must go hand-in-hand with a formal process for implementing necessary changes that address specific problems. Do people need to be trained? Does a business process need to be altered? Is there a system within your organization that isn't doing or isn't capable of doing what suppliers need it to do? The sensible way to move closer towards becoming a best-in-class retailer is to make changes that enable you to operate like other best-in-class retailers.

Retailers should approach supplier surveys as a strategic discipline and process. This process includes the collection and analysis of data in a way that protects each supplier's anonymity, followed by a path to action. This feedback, when carefully considered and acted upon, allows the retailer to improve and become a better trading partner.


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Tags:  Supplier Relationship Management  Survey 

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Retail Value Chain 101: How to Prevent Chargebacks for Barcode Labels that Won't Scan

Posted By Administration, Thursday, February 8, 2018
Updated: Thursday, February 8, 2018


by RVCF


When it comes to satisfying retailer requirements and preventing chargebacks, many of the changes that need to be made must be researched. Implementation can be costly and complex. You might have to wait for information from the retailer before you can do anything.

However, preventing chargebacks caused by barcode labels that can't be scanned is a different story. Producing quality GS1-128 labels and having a process for identifying and addressing potential problems aren't difficult, expensive or complicated. Merchandise suppliers just need to be proactive and take the time to put a process in place at their own distribution centers in order to avoid issues at retailers' distribution centers.

In this article, we'll discuss two kinds of thermal printing methods, common labeling problems, the importance of using a high-quality barcode verifier, and the implementation of processes that ensure your labels are legible and scannable.

Thermal Transfer Printing vs. Direct Thermal Printing
Thermal printing is recommended for barcode printing because it uses thermal printheads to produce accurate images with well-defined edges. There are two types of thermal printing – thermal transfer and direct thermal.

With thermal transfer printing, a ribbon is heated by the thermal print head and ink is melted and absorbed into the label. The ink actually becomes part of the label. With direct thermal printing, a heat-sensitive, chemically-treated label is passed under the thermal print head, and a barcode is created when heat causes the label to darken.

Thermal transfer can use a wider range of label materials than direct thermal printing. Thermal transfer barcodes tend to last longer because the labels aren't affected by heat and light, which is important if your barcodes spend a lot of time in transit or in a warehouse. There are three types of ribbon used in thermal transfer, and the right ribbon must be matched with the right ink and label. These variables increase the risk of creases, smudging and poor image quality.

Direct thermal printing doesn't use ribbon, ink and toner, so you don't have to worry about compatibility issues, related costs, or smudging. However, premium-coated facestock, the label material used with direct thermal printing, tends to be more expensive than thermal transfer. Because direct thermal label materials remain chemically active after printing, exposure to heat and light can cause the label to darken.

For these reasons, direct thermal is not recommended for "lifetime" printing applications. However, if you have control over the environments where cartons are stored and transported, as well as the time spent in these environments, direct thermal is more desirable because of the smudge-resistance factor. Thermal transfer labels last longer, but a direct thermal label will usually remain scalable for at least six months.

Common Labeling Problems
Most of the problems that would prevent a label from scanning properly are clearly visible to the naked eye. Here are some of the most common issues we see.

The bars are too light (underburn). This can happen when the pressure applied from the printhead to the label material is uneven or inadequate. With thermal transfer printing, the heat may be too low.

The bars are too thick (overburn), which is typically caused by too much heat.

The barcode is smudged. Smudging can be caused by using the wrong combination of ribbon, label and ink, as well as exposure to heat. Labels can also smudge if cartons are loaded in a way that allows barcode labels touch. Again, smudging doesn't happen with direct thermal heating.

Diagonal lines or white streaks appear within the barcode. This usually happens when the ribbon isn't loaded properly or feeding correctly.

There are spots or voids within the barcode. This can be caused by the printhead burning out elements or abrasions, a wrinkled ribbon, or the use of incorrect label stock.

Other common issues with barcode labels include an unsustainable wide/narrow ratio and poor edge definition. Poor edge definition is often caused by fast print speed, incompatible label stock and print method, and printing in vertical orientation.

Verification of Barcode Print Quality
Merchandise suppliers must identify and address barcode quality issues as quickly as possible to avoid delays and chargebacks at retailer distribution centers. Sample labels should be printed from every printer in use, and a high-quality, ANSI/ISO barcode verifier should be used to determine the quality of barcodes and whether they're scanning at the proper grade.

Barcode verifiers do more than ensure a barcode can be scanned. Barcode verifiers ensure a barcode can be scanned in multiple environments at fast conveyor speeds. They can measure a variety of data that isn't visible to the naked eye, including barcode language (symbology), encoded data, data check digit and symbology check digit, bar and space dimensions and tolerances, allowable ratio of wide to narrow dimensions, and reflectance parameters.

Most retailers require an ANSI Grade of B or higher for GS1-128 barcode labels. If one or more retailers require a grade of A, it's a good idea to verify that all barcodes meet that standard so barcodes scan properly at all retailer facilities.

Verification of barcode quality should be done at least once per day, and ideally once per shift. If you're about to prepare a large order for shipment, it's a good idea to verify barcode quality before you get started. This will allow you to detect and fix printing issues before you end up slapping a large run of labels onto cartons and having them fail at the retailer's distribution center.

We encourage merchandise suppliers that do not have a barcode quality verification program in place to use this information as a roadmap. Have your cross-functional team meet with upper management to explain how such a program is a relatively easy fix and can reduce chargebacks that are completely avoidable. Packers who put labels on cartons need to be aware of their role in this process and the benefits it will create. There should also be some kind of identifier on labels that allows you to trace each label back to the source printer so issues can handled quickly and efficiently.

Merchandise suppliers, we want your feedback. What print method do you use and why? How is it working? Do you have a barcode quality verification program? How is it working? What problems are you facing, and what steps are you taking to overcome them? Please share your stories on the RVCF forum boards, join the discussion, and help and learn from other members.


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Tags:  Carton Labels  GS1-128  Label Quality 

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RVCF New Member Spotlight

Posted By Administration, Thursday, February 8, 2018
Updated: Thursday, February 8, 2018



RVCF is a member-based organization focused on promoting best practices, trading partner alignment and collaboration, and technology solutions to streamline operations, lower costs and speed goods to market throughout the retail value chain. RVCF welcomes new members CVS Health, Dunham's Sports, and Gina Group.


CVS Health
CVS Health is a pharmacy innovation company helping people on their path to better health. Through its more than 9,700 retail locations, more than 1,100 walk-in medical clinics, a leading pharmacy benefits manager with nearly 90 million plan members, a dedicated senior pharmacy care business serving more than one million patients per year, expanding specialty pharmacy services, and a leading stand-alone Medicare Part D prescription drug plan, the company enables people, businesses and communities to manage health in more affordable and effective ways. This unique integrated model increases access to quality care, delivers better health outcomes and lowers overall health care costs. Find more information about how CVS Health is shaping the future of health at https://www.cvshealth.com.




Dunham's Sports

We are… Dunham's Sports, the Midwest's largest sporting goods chain! Our roots go back to 1937 in West Bloomfield, MI, when a small shop called Dunham's Bait & Tackle opened. Over the years with hard work, great customer service and attention to detail we have grown into a full line sporting goods chain serving customers in 22 states, from Nebraska to Maryland. Every one of our over 230 stores nationally offers a full line of traditional sporting goods and athletic equipment as well as a wide variety of active and casual sports apparel and footwear. Our motto at Dunham's Sports is Big Names…Low Prices. That is what we do everyday, give our customers the choice of the name brands that they want, and give them to them at the lowest prices possible. You will notice this in every Dunham's Sports store you go into where you will find Hot Deals and Sport Values at prices that may be too low to advertise. Stop in for one of our awesomely low priced ad items and you may walk out with a couple of hot in-store deals as well. So the next time you're thinking sports…Get in the game at Dunham's Sports, where our big names bring you in and our low prices bring you back!




Gina Group

Gina Group is a fashion accessory, footwear, and apparel company serving the industry for over 30 years. With sixteen showrooms in their NY headquarters, they feature over ten product divisions and a multitude of brands, both licensed and in-house, including bebe, K-Swiss, Steve Madden, Betsey Johnson, Cosmopolitan, Superga, Laundry, Slazenger, Halston, Ellen Tracy, and Rampage among others. With a deep concentration on hosiery & legwear, footwear, intimate apparel, cold weather & fashion accessories, sleepwear, handbags, small leather goods, cosmetic accessories, tech accessories, home goods, and athletic accessories Gina Group continues to prove to be a resource to retailers in all segments of the industry.



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Tags:  CVS Health  Dunham's Sports  Gina Group 

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Yusen, We Have a Problem!: Think Traps! (Part One)

Posted By Administration, Thursday, February 8, 2018
Updated: Thursday, February 8, 2018



by Kirk White, Yusen Logistics (Americas) Inc.


Homer: "Not a bear in sight. The Bear Patrol must be working like a charm."

Lisa: "That's specious reasoning, Dad."

Homer: "Thank you, dear."

Lisa and Homer Simpson in The Simpsons "Much Apu About Nothing"

 

"It's a TRAP!"

-Admiral Ackbar in Return of the Jedi

In our last article, we explored two thinking systems – 1 (your GUT) and 2 (your brain) – when addressing complex problems at your gemba. We spoke of Gallagher and his "new eyes" approach to addressing an issue. Very often, our GUT (system 1 thinking) will trick us into believing we have thoroughly investigated an issue (system 2 thinking) when, in reality, we just happen to be acting on our own personal beliefs rather than proper data analysis.

The solution, one might think, is to just grab a whole bunch of data, lock a group of people in a room and go over everything until the clear and obvious answer presents itself. However, as anyone who has ever served jury duty can attest, very often the same people seeing the same information can come away with dramatically different conclusions. Turns out, we humans are predisposed to bring a heaping helping of good ol' fashioned logical fallacies to any think party and once they get in the door, they are seriously difficult to kick back out. These fallacies, also known as think traps, are insidious and often down right tenacious!

Quick call back to our Kaizen rules articles of yore. If you (and you should) use the PDCA method of problem solving, during the P (plan) phase you should have clearly articulated the issue, collected relevant data and put together a team to facilitate the process. When you move into the D (do) phase, the team will have to crack into the data. This is phase we are discussing at this moment.

Pearson's red critical thinking model (check out the excellent book, Now You're Thinking) suggests that the first thing to do before you begin to analyze the data is to take a moment and "recognize" your assumptions: What do we know? What do we think we know? Here is where think traps can first be sprung.

There are two major think traps that can derail your efforts for genuine and effective problem solving right out of the gate, so it's best to learn how to recognize them early.

The first is called Confirmation Bias know exactly what the problem is and how to solve it, and finally you have this opportunity to convince others and you are not going to waste it. You start the process already "knowing the answer" and the data and experience that supports your position is good evidence and anything that just happens to differ from your solution or presents a slightly alternate option of cause is obviously bad evidence and quickly discarded. This is a danger in all walks of life, not just critical thinking. Think of that uncle at Thanksgiving with the politics and such and you will see confirmation bias at its most primal. The danger, of course, is if you only take seriously that which supports your system 1 (gut) thinking and discard anything else, you will never obtain an objective view of the evidence and may miss an opportunity to hit root cause. The best plan is to, in the early stages of brainstorming solutions, never discard an idea, no matter how outlandish it may seem to you. Document everything as it comes out. There is plenty of time later to let the ideas enter Thunderdome and battle it out; for now, just get everything recorded. If you find yourself, or someone else on the team, debating and dismissing something as it's being suggested ("no, we tried that before and it doesn't work"), take a moment and acknowledge that yes, there may have been instances before where this idea/data/solution was broached on the floor, but let's not be too quick to dismiss until we've fully discussed.

Confirmation Bias has a step-sibling in the Texas Sharpshooter Fallacy. The idea behind this think trap is that if you take a gun and shoot a bunch of bullets at the broadside of a barn, then after shooting, draw the bullseye around the place where there are the most bullet holes sp you can prove that you have excellent aim! It's akin to Confirmation Bias in that you are still only addressing data that supports your position and ignoring the data (or bullet holes) that do not. It can also be called the ex-girlfriend fallacy: Oh, she posted on Instagram a picture of that movie we saw, so she must be thinking about me; why else would she have posted that movie? Oh, she's posting a favorite movie every day because this is "favorite movie week" on social media? Doesn't matter, because today is Tuesday and our first date was on a Tuesday, even though we saw the movie on a Friday, but that doesn't matter because she also posted a picture of her in that shirt that she wore once on a date, so that along with the movie proves that she is thinking about me. And the band played on… Same as Confirmation Bias, when you're collecting data or going over test results, don't focus on patterns that are not there, no matter how much you want them to be there. Data is data and it often doesn't lie. Take the time to fully explore every angle.

The main takeaway from these two think traps is to make sure you do not bring a "solution" with you when you enter the brainstorming session. After all, if you knew the actual solution, chances are the problem may not have occurred in the first place.

Next time we will look at two other major think traps – ones that can derail the train of conclusion!

https://yourlogicalfallacyis.com 
McRaney, David. You are not so smart: why you have too many friends on Facebook, why your memory is mostly fiction, and 46 other ways youre deluding yourself. Gotham Books, 2012.
Konnikova, Maria. The Confidence Game The Psychology of the Con and Why we Fall for it Every Time. Canongate Books Ltd, 2016.
Chartrand, Judy, et al. Now You're Thinking!: Change Your Thinking... Transform Your Life. Pearson FT Press, 2014
https://www.thinkwatson.com/the-red-model/red-critical-thinking-model


Kirk White has worked in every division of Yusen Logistics. After a brief stint in Transportation, he transferred to Corporate, where he coordinated Yusen's Employee Empowered Kaizen system and served as a Specialist for the Business Process Re-engineering group, after which he moved to the Warehouse division to serve as the East Coast Quality Manger before ultimately joining the International division, where he hopes to use his Quality knowledge base to prove an asset to OCM.

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Poking the Russian Bear: New Developments in the U.S. Sanctions Policy Targeting Russia

Posted By Administration, Thursday, February 8, 2018
Updated: Thursday, February 8, 2018


by Melissa Proctor, Miller Proctor Law PLLC


The first month of 2018 ushered in a flurry of new developments on the U.S. sanctions front which will impact U.S. companies doing business in Russia. On January 29, 2018, the U.S. Treasury Department submitted a series of reports1 to Congress as required by Section 241 of the Countering America's Adversaries Through Sanctions Act ("CAATSA")2, including a list identifying senior Russian political figures, oligarchs and entities that play a significant role in the Russian economy and Vladimir Putin's inner circle – it is possible that such parties may be targeted by U.S. sanctions in the near future under the CCATSA. The Treasury Department's reports also coincided with President Trump's recent decision not to impose retaliatory sanctions against parties dealing with Russian defense or intelligence sector entities, as well as the entry into force of expanded Directive 4 under Executive Order 13662 as mandated by the CAATSA.3 This article summarizes these key events and urges U.S. companies and their foreign affiliates doing business in Russia to stay vigilant as new developments arise.

1. Section 241 of the CAATSA & the Treasury Department's Report
Per Section 241 of the CAATSA, the Treasury Department was required to submit a report ("Section 241 Report") to Congress, no later than January 29, 2018, identifying Russian oligarchs, significant senior Russian political figures, and Russian parastatal entities based on their associations with the Russian government, their net worth, indications of any corrupt activities, and their involvement in the Russian economy. The Section 241 Report lists over 200 individuals, including the Russian Prime Minister and other senior members of the government who have an estimate net worth of at least $1 billion. The identified parastatal entities, which were included in a classified section of the report that was not made publicly available, include those that are at least 25% owned by the Russian government and were determined to have had revenues of at least $2 billion in 2016. The Section 241 Report also identified the U.S. economic and industry sectors that could be exposed to the identified Russian actors, the potential impact of future sanctions against the Russian actors (e.g., restrictions on dealings in new debt and equity involving these parties, adding them to the Specially Designated Nationals Lists, etc.), and the likely impact of secondary sanctions targeting non-U.S. entities that deal with them.

The key take-away? The Section 241 Report is not a sanctions list. Granted, some of the identified Russian actors are already listed in the Specially Designated Nationals List ("SDN List") enforced by the Treasury Department's Office of Foreign Assets Control ("OFAC") for reasons not relating to the Section 241 Report, and the Report identifies those preexisting SDNs by placing an asterisk by their names. U.S. persons are of course prohibited from dealing with those SDNs without prior authorization from OFAC. However, the remaining individuals and entities in the Section 241 Report have not been added to the SDN List or the Sectoral Sanctions Identification List, and they are not currently subject to other U.S. sanctions – this means that U.S. persons are not yet prohibited from dealing with these parties. Nonetheless, it is possible that they may be targeted by U.S. sanctions in the near future, such as under the Global Magnitsky Sanctions,4 the Magnitsky Sanctions,5 or the Ukraine-Related Sanctions.6

2. President Trump Decides Not to Withhold Sanctions on the Russian Defense or Intelligence Sectors
By way of background, on October 27, 2017, the U.S. State Department published a list of 39 Russian entities that are known to be part of (or that operate on behalf of) the Russian defense or intelligence sector, as well as formal guidance about the forthcoming sanctions anticipated in early 2018.7 Section 231 of the CAATSA requires the President, on or after January 29, 2018, to impose retaliatory sanctions to punish U.S. or non-U.S. parties that knowingly engage in a significant transaction with the Russian entities identified on the State Department's list. However, on January 29th, the Trump Administration announced that it would not impose the sanctions as it believed that the mere threat of the imposition of sanctions would serve as a sufficient deterrent.8

The key take-away? The State Department's List of Russian Defense and Intelligence Sector Entities under Section 231 of the CAATSA is not a sanctions list. Like the Section 241 List discussed above, some of the entities identified in the State Department's list are already included in OFAC's SDN List for reasons separate and apart from CAATSA. However, the remaining individuals and entities in the State Department's list are not currently on the SDN List or Sectoral Sanctions Identification List, and they are not currently subject to other U.S. sanctions – this means that U.S. persons are not yet prohibited from dealing with these parties. Keep in mind that these parties have the potential for being added to U.S. sanctions programs in the future, such as the Global Magnitsky Sanctions, the Magnitsky Sanctions, or the Ukraine-Related Sanctions.

3. Enhanced Directive 4 Prohibitions Are Now in Effect
On January 29th, the enhanced Directive 4 prohibitions on certain activities involving Russian energy companies and oil and gas projects formally took effect. The enactment of CAATSA required OFAC to amend and reissue the various directives9 that were made under Executive Order 13662.10 As originally written, Directive 4 previously prohibited U.S. persons from providing, exporting or reexporting (directly or indirectly) goods, certain services or technology in support of exploration or production for deepwater, Arctic offshore or shale projects that: (1) have the potential to produce oil in the Russian Federation, maritime claimed by the Russian Federation and extending from its territory; and, (2) involve parties designated on the Sectoral Sanctions Identification List that are subject to the mandates of Directive 4.

However, the amended Directive 4 now prohibits U.S. persons from providing, exporting or reexporting (directly or indirectly), goods, certain services or technology in support of the exploration or production for deepwater, Arctic offshore or shale projects that: (1) are commenced on or after January 29, 2018; (2) have the potential to produce oil anywhere in the world (not just in Russia); and, (3) involve SSIL parties subject to Directive 4, entities 33% or more owned by SSIL parties, or entities in which a SSIL party owns a majority of voting interests.

4. Conclusion
U.S. companies and their foreign affiliates doing business in Russia or testing the waters there should closely monitor the U.S. sanctions and policy posture towards Russia – especially with respect to certain activities involving the key sectors of the Russian Federation such as the financial, energy, defense and intelligence sectors. Companies should adopt a wait-and-see approach as to whether the U.S. government will continue its aggressive stance towards the Russian bear. And only time will tell if the Russian government will decide to retaliate against these measures.

[1] https://home.treasury.gov/news/press-releases/sm0271
[2] Pub. L. 115-44, August 2, 2017
[3] https://www.treasury.gov/resource-center/sanctions/Programs/Documents/eo13662_directive4_20171031.pdf
[4] https://www.treasury.gov/resource-center/sanctions/Programs/pages/glomag.aspx
[5] https://www.treasury.gov/resource-center/sanctions/Programs/pages/magnitsky.aspx
[6] https://www.treasury.gov/resource-center/sanctions/Programs/pages/ukraine.aspx
[7] https://www.state.gov/t/isn/caatsa/
[8] https://www.state.gov/r/pa/prs/ps/2018/01/277775.htm
[9] Directives 1 and 2 were amended and reissued by OFAC, as required by CAATSA, on September 29, 2017. Their prohibitions against engaging in certain new debts involving Russian parties designated on the Sectoral Sanctions Identification List were expanded and became effective on November 28, 2017.
[10] https://www.treasury.gov/resource-center/sanctions/Programs/Documents/ukraine_eo3.pdf


Melissa Proctor is the founder of Miller Proctor Law PLLC, an international trade law firm located in Scottsdale, Arizona. For more than twenty years, she has advised companies on the full of array of international trade issues, including export controls, embargoes and economic sanctions, customs laws, anti-corruption compliance, and other agency requirements that impact the cross-border movement of goods, information and services. She may be reached at 480-447-8986 or melissa@millerproctorlaw.com.

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Tags:  Economic Sanctions 

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From the Desk of Kim Zablocky: Balancing Optimism and a Harsh Reality as We Head into 2018

Posted By Administration, Thursday, December 7, 2017
Updated: Wednesday, December 6, 2017


Thanksgiving weekend was a record-setter as more than 174 million Americans shopped between Thursday and Monday. Retail sales have exceeded forecasts thus far, and that trend is expected to continue through Christmas. While much of the focus is on e-commerce growth, the vast majority of shopping still takes place in physical stores. Brick-and-mortar retail continues to be profitable – for those doing it right.

Yes, we're heading into 2018 with positive momentum. But if there's one fact that was reinforced at the RVCF Fall Conference, it's the need for retailers, merchandise suppliers, and service providers to adapt to the new retail reality. Consumer shopping behavior has evolved, and it's time for the retail industry to catch up. The early success of the holiday shopping season shouldn't make anyone think it's okay to continue down the same path they've been on for years.

The harsh reality is that doing things the same old way is the path to irrelevance and failure. The time for sugarcoating things and beating around the bush is over. Evolve or get left behind. It's that simple.

To be clear, success and profitability are still very much attainable, even for retail organizations that are struggling. At the Fall Conference, we discussed a number of the steps that need to be taken to optimize operations and satisfy today's consumer.

We had several sessions about drop ship/direct-to-consumer at the Fall Conference. Discussions spilled out to the lobby after each session as trading partners look to make drop ship/direct-to-consumer/direct-to-consumer work in today's retail landscape, not just for one relationship, but for all relationships.

RVCF offered an overview of a recent drop ship/direct-to-consumer survey and will soon provide a white paper that digs deeper into those insights. Retailers, merchandise suppliers, and service providers were in the same room discussing the challenges of drop ship/direct-to-consumer, such as the lack of EDI standards.

Retailers and suppliers also explored different ways to win market share and increase profits in such a highly competitive market. For example, more retail organizations are looking to make inroads in European markets. There's only so much share of wallet to go around with American consumers, so instead of constantly fighting for the attention and dollars of the same group of people, why not branch out to Europe?

The concept of strategic relationship management must become a priority in 2018. Retailers need to distinguish suppliers that meet compliance requirements and help increase profits from those that do not, and manage those relationships accordingly. In some cases, it may be time to cut the cord.

Suppliers need to evaluate their retailer customers in the same way. For example, entering a drop ship/direct-to-consumer relationship with a retailer doesn't mean you have to offer everything you have through the retailer. With so many suppliers operating as retailers, you don't want to dilute your business and create competition for yourself. You might want to hold onto a signature line of products and only ship them directly to the consumer without getting the retailer involved. Instead of offering everything to everybody, manage those relationships strategically.

Another major issue is the lost art of the face-to-face conversation. We didn't offer the Dale Carnegie session on communication and selling change at the Fall Conference just because we felt like doing something different. We hear from members all the time that people don't know how to talk to each other anymore. An entire generation of workers is so obsessed with texting and instant messaging that they're either unable or unwilling to hold a conversation. Instead of using emojis, show each other your actual faces and emotions!

Retail organizations need to train their employees to become better communicators, because the solution to every problem begins with collaboration. That doesn't mean you have to constantly fly all over the country. But it does mean you should pick up the phone once in a while and use video conferencing so you can actually see your trading partners and get things done.

Of course, the ultimate goal of any initiative must be to meet the expectations of the end consumer. They don't care about what's going on behind the scenes. They just want the right product at the right time at the right price, regardless of how or where they shop.

To that end, it might be time to take a hard look at omni-channel and determine if that's the right goal in 2018. The term itself implies that there are multiple shopping channels, but shouldn't the goal be to eliminate channels? Shouldn't the goal be to eliminate silos and have a single operation that's fully integrated, unified, and holistically managed?

RVCF will continue to provide the resources, research, and collaboration platforms required to address these and other issues. With your participation, input, and ideas, we can successfully navigate the new retail landscape.

We invite you to join us at the RVCF Spring Conference, May 6-9, 2018 at Clearwater Beach Marriott Suites on Sand Key in Clearwater Beach, Florida. The RVCF Fall Conference will move to the Manchester Grand Hyatt in San Diego, California from October 14-17, 2018. We also have a full slate of conference calls and webinars planned to continue these important conversations.

2018 will be a make-or-break year for many in the retail industry. RVCF looks forward to working with you to achieve greater operational efficiency and profitability, and become more responsive to the needs and wants of today's consumer.

Kim
kzablocky@rvcf.com
(646) 442-3473

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Tags:  2018  RVCF Fall Conference 2017 

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Retail Value Chain 101: The Importance of a Strategic Value-Added Services Program

Posted By Administration, Thursday, December 7, 2017
Updated: Wednesday, December 6, 2017


by RVCF


Many retailers require merchandise suppliers to offer value-added services (VAS) in order to do business with them. VAS refers to services a supplier provides to ensure a product is floor or consumer ready when it arrives at the store or can be immediately shipped directly to the consumer. This makes it possible for cartons to be cross-docked through the retailer's distribution center. Store associates can then open cartons and either place the floor ready product on a sales floor shelf or ship the consumer ready product to a consumer without adding price tickets, labels, polybags, hangers, etc.

In addition to saving time and labor for the retailer, floor and consumer ready products provide value to the end consumer at the point of sale and receipt. Common examples of floor and consumer ready VAS include:

  • Retail price marking
  • Ticketing
  • Hang tags
  • Hanging
  • Garments on hangers (GOH)
  • Sizers
  • Folding
  • Size strips
  • Polybags
  • Polybag labels
  • Electronic article surveillance (EAS)
  • Packaging materials
  • Item-level radio frequency identification (RFID)

While beneficial to both the retailer and the end consumer, VAS can require significant labor and time, and the costs can add up quickly. In recent months, suppliers have told us that they're struggling to wrap their arms around the different services that must be performed, particularly those that are on the high end of the cost spectrum such as EAS and RFID. For example, if only a handful of retailers are requiring a certain, high-cost VAS, it can cause an expensive hiccup in a supplier's operations.

Instead of shouldering the full burden of VAS in terms of expense, labor, and time, suppliers should be taking a strategic approach to VAS. That means working with the retailer to determine exactly what services are needed, why they're needed, and whether each service results in more benefits than consequences. Before entering into new agreements with retailers, suppliers need to take a hard look at the VAS process they currently have in place and determine how effective they are.

There are steps suppliers can take to meet the expectations of the retailer or consumer depending on the channel, but still minimize costs and avoid creating additional delays caused by disruptions to normal operations.

To recuperate VAS costs, suppliers might consider building the costs of materials and labor into the product price or upcharge for VAS. Some suppliers do both. To share costs, suppliers can enter into co-op agreements with retailers. Some retailers have preferred providers who offer a discount or advantage to the retailer in exchange for high product flow. Suppliers who use a retailer's preferred provider often realize small cost savings that can actually have a significant impact on profitability.

Suppliers should also consider the cost of materials and labor associated with offering VAS. Based on this information, would it make sense to ticket products in-house, via a third-party service provider, or at the factory? The more that can be done at the factory, the better. Shipments can cross-dock from the supplier distribution center to the retailer distribution center with minimal handling and reduced risk of errors. At the same time, if you're carrying a product for both brick-and-mortar and direct-to-consumer, you'll likely have to perform VAS of some kind before the order is shipped.

In some cases, it could be beneficial to carry separate sets of inventory for certain retailers, channels or order types. You also have to consider system capabilities and limitations. If your technology system isn't or can't be programmed to accept and segregate certain types of information and pass it along to the appropriate areas, you have to determine if it's more cost-effective to update the system or handle it yourself. Cheaper materials and labor could help, but they could also create delays.

Other factors to consider when evaluating VAS requests include a review of past and projected sales as well as the overall cost vs. margin. In other words, will the cost of VAS be adequately supported by future sales and current margins? The answer might be "yes" for some retailers and "no" for others.

Also, what is your offset experience with a particular retailer with respect to floor or consumer ready requirements? Requests for complex services might require renegotiation of terms or exemptions. Is there a promise of a minimum order quantity? It could be worth it to jump through hoops if you have a minimum guarantee.

When it comes to VAS, merchandise suppliers need to analyze the cost and benefits of their offerings strategically instead of saying "yes" to every VAS request. While certain services will be required to work with certain retailers, there are ways for suppliers to reduce, share, or recuperate the costs of VAS while meeting the expectations of the en


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Tags:  Consumer Ready  Floor Ready  Value-Added Services  VAS 

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Retail Value Chain 101: Time to Clean Up Your Compliance Manual and Website

Posted By Administration, Thursday, December 7, 2017
Updated: Thursday, December 7, 2017


by RVCF


For retailers, a well-constructed compliance manual acts as the foundation upon which a supply chain scorecard and compliance program is built. By providing merchandise suppliers with all the information and direction they'll need to comply with the retailer's expectations, a compliance manual charts the course for successful execution. This set of "how to do business with us" requirements typically lives on the retailer's website or a separate web portal.

Ideally, all retailer compliance manuals would have a similar structure. Ideally, the suppliers would know exactly where to go on the retailer's website to access the compliance manual. Ideally, the compliance manual would be as easy to read and navigate as the table of contents in a book. Ideally, any changes to the compliance manual would be communicated to the supplier and clearly explained, allowing the supplier sufficient time to make changes, if necessary, to satisfy new or revised requirements.

That's the ideal scenario, but it's not the current reality. RVCF pours through retailer compliance manuals on a daily basis for the Compliance Clearinghouse, so we have the process down to a tee. For suppliers dealing with multiple retailers, it can be a nightmare. Finding a compliance manual, finding specific information within the compliance manual, and learning about changes to requirements within the compliance manual are often painstakingly complex.

To bring more uniformity to compliance manuals and website presentation, reduce confusion, and reduce shipping errors, RVCF recently published The Recommended Structure for Compliance Manuals and Websites. This reference tool should not be considered a standard, protocol, or guideline, but a basic framework used by best-in-class retailers to organize and present compliance requirements and notify suppliers of changes.

Ultimately, it's up to each individual retailer to determine what information to include in a compliance manual. RVCF is simply providing a common structure for laying out requirements in an orderly manner and making them easy for suppliers to access and navigate.

The Recommended Structure for Compliance Manuals and Websites is divided into three sections: structure for compliance manuals, compliance website presentation, and communicating changes and updates to requirements.

Structure for Compliance Manuals
The basic structure should include chapters, which reflect the high-level steps in the purchase order-to-cash process, provide instructions, and direct the reader to supporting appendices. Appendices are supporting documents and materials, which are more likely to evolve over time than chapters. Recommendations for structuring chapters, sub-sections, and appendices are also included.

Compliance Website Presentation
Overall, the goal is to make the website presentation as clear, concise, and easy to navigate as possible. To avoid having compliance information lumped in with other content and functionality, retailers should have a dedicated compliance section on their main website or a completely separate web portal where the compliance manual can be accessed. This section recommends formats for compliance information and which information should be clearly marked for readers.

Communicating Changes and Updates to Requirements
The last thing you want to hear from a supplier is that they were never alerted to or couldn't find requirement changes. This can help to justify requests for chargeback reversals and exemptions. The Recommended Structure for Compliance Manuals and Websites offers suggestions for alerting suppliers to changes to the compliance manual and/or website and making those changes easy to find.

How to Ensure Your Compliance Manual and Website Are Ready for Prime Time

  • Gather feedback internally, walk through every requirement, and confirm alignment and agreement. Compliance requirements should include exactly what you need – nothing more, nothing less.
  • Validate each requirement and the completeness and clarity of your compliance manual and website presentation externally with several trusted, respected supplier partners. Look to these suppliers to provide valuable input that you can act upon before "going live" to save you and your suppliers from confusion and frustration.
  • Use supplier questions and issues caused by confusion and complexity to create a frequently asked questions (FAQ) amendment to your compliance manual. This will be a valuable resource, especially for newer and smaller suppliers.

Keep in mind that your compliance manual is a living document, and your website or portal can be a living platform as well. Always look for ways to make these resources better, clearer, and easier to follow, and continue to solicit feedback from suppliers. Download your free copy of The Recommended Structure for Compliance Manuals and Websites here.


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Tags:  Compliance Management  Compliance Manual  Compliance Portal  The Recommended Structure for Compliance Manuals a  Vendor Compliance 

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Yusen, We Have a Problem!: What Yoda and Gallagher Can Teach Us About Critical Thinking

Posted By Administration, Thursday, December 7, 2017
Updated: Thursday, December 7, 2017



by Kirk White, Yusen Logistics (Americas) Inc.


Continuing our series on critical thinking, pop quiz time! Answer the following questions:

1. You're on an airplane. Just as the plane reaches cruising altitude and the little "ding" goes off to tell you it's okay to use electronic devices, a baby starts crying uncontrollably. What's is wrong with the baby?

2. You join your friends after work for happy hour. What are you ordering to drink?

3. You are in a new town on a business trip and get lost on your way back to the hotel. There are two paths ahead – a dark alley with a windowless van parked there and a well-lit street lined with people. Which way do you go?

4. What's 275 x 456?

5. A colleague asks if it's better to buy a used car or lease a new one. What do you offer?

6. A new position opens at your company. The pay is more than you make now, but it requires travel at least 3 times a month. Do you apply?

And finally, are you ready for the "trick" question?

7. What is the one change that can be made at your company today that would increase employee job satisfaction?

Got your answers? What did you notice about your responses? Were any of the questions "easier" to answer? Did any answers come faster to you than others? Did any questions lead you to consult outside sources? Were there any you could not answer without asking a few questions first? The answers themselves are not important here; it's the way the answer comes to you that matters.

Psychologists have long discussed decision making and problem solving and over the years have come up with two distinct methods of thought: Keith Stanovich and Richard West coined the terms "System 1" and "System 2" to describe them. In his excellent book, Thinking Fast and Slow, Daniel Kahneman created the definitive source for understanding these concepts. Everyone uses both systems to get through their day-to-day lives. Both systems are important, but occasionally the wrong one is called upon leading to unresolved issues and lack of closure.

So what exactly are the two systems. The T-shirt answer is this:

  • System 1 is your gut.
  • System 2 is your brain.

Now, let's unpack them a bit.

Think about the crying baby on the airplane. Chances are when asked "What is wrong with that baby?" you answered, "He's hungry," or "His ears haven't popped yet," or maybe even "He's scared," but the answer probably came to you without much thought. These responses are likely based on your own experiences either as a parent with a baby on a plane or as a passenger of many flights with many screaming kids. Same as the dark alley with the windowless 70's serial killer van in it – you avoided that path without a second thought. Same as the drink at happy hour. Maybe it's a martini because they make great martinis there or maybe it's a diet coke because of your commute, but that answer is already there when you are asked. It's instinctual. It's autonomous. It's a "no-brainer." That is System 1 thinking. If you are a computer, System 1 is your operating system – always on under the desktop, always working, but never requiring any attention until something goes horribly wrong. It's in System 1 where your habits live, your prejudices, your likes and dislikes, and your preconceived notions. System 1 is what gets you into as much trouble as it helps you avoid.

Now what about that math problem? You probably knew how to solve it – get a calculator, grab a pencil, ask Alexa – but you didn't have the answer immediately. Same with the new job. Same with the "to lease or not to lease" (that is the question). You may have opinions on these subjects, but you would probably need a pro/con list about that new job – money vs. time away from your family, extra expenses, etc. – and would definitely need to know the average miles somebody drives a year before answering about a car lease! This is System 2. It's your spreadsheet program in your computer. It takes effort, requires work, often needs additional information, but the answers it provides are universally more reliable. System 2 is where logic and true root cause analysis take place.

So what about that trick question?

Remember Yoda from Star Wars: Episode V - The Empire Strikes Back, telling Luke he must "unlearn what you have learned"? Remember Gallagher, the comedian from the 80's? Yeah, the watermelon guy. He had a bit (not the watermelon stuff) where he would talk about the world we lived in and all the problems abound in it and then would put on some funny glasses and say he was going to look at the world with his "new eyes"; yes, then later he'd smash some watermelons (seriously, talk about your System 1 getting in the way of System 2!).

The point Yoda and Gallagher made is that, very often our System 1 thinking will confuse us into thinking we know something that, in fact, we just happen to believe. Chances are if you are asked about the one thing that can be done to improve employee satisfaction in your company and you immediately spout out an answer, you may not be considering the entire big picture; you may be going with your own experience and not including others' points of view.

Let's put it another way. Have you ever been in a situation where you must introduce a new concept or process to someone and that person, upon learning about the new system, immediately shuts you down by saying "Oh that will never work and here's why." A laundry list usually follows and probably makes a lot of sense, but the danger here is that by using System 1 to shut down something that needs System 2, the work that needs to be done to fully understand the situation and solve the problem is being circumvented.

We have a term called "Wisdom of the Organization" that is used to describe an inherent trustworthiness of those who work in a position to possess better knowledge and instincts than those who don't. The flip side of this coin is that new ideas are sometimes drowned out by all the wisdom.

So be mindful (pun intended) when presented with an issue at your gemba. Your System 1 gut may have a quick and obvious solution, but unless you also fully explore the issue with System 2 thinking, what you have will only ever be a guess.

Sources
Thinking Fast and Slow by Daniel Kahneman. FSG Press 2001
The Power of Habit by Charles Duhigg. Random House 2012
http://upfrontanalytics.com/market-research-system-1-vs-system-2-decision-making/


Kirk White has worked in every division of Yusen Logistics. After a brief stint in Transportation, he transferred to Corporate, where he coordinated Yusen's Employee Empowered Kaizen system and served as a Specialist for the Business Process Re-engineering group, after which he moved to the Warehouse division to serve as the East Coast Quality Manger before ultimately joining the International division, where he hopes to use his Quality knowledge base to prove an asset to OCM.

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Tags:  Critical Thinking 

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