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Returns: The Bottom Line Bully

Posted By RCVF Admin, Thursday, January 31, 2019

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Returns: The Bottom Line Bully
by Felton Lewis, IIII, Principal, Alliances and Business Development, NEWMINE

For many years, retailers have adopted the mindset that Merchandise Returns are just a cost of doing business. In order to create frictionless shopping experiences and compete with giants like Amazon, eCommerce retailers have taken a customer-centric approach to returns by making them fast, free, and easy. In fact, The Journal of Marketing found that retailers who offer free returns see customers spend up to 457% more than they did before initiating a free returns policy[1]—an indication that a customer-centric approach is a competitive advantage for top line growth.

Article ImageHowever, what’s good for the top line, isn’t always as good for bottom lines. As online and marketplace sales continue to grow, so do endless aisle sales via drop ship suppliers. While historic return rates for brick-and-mortar stores hovered around 8%, online return rates can skyrocket to 45% in some merchandise categories. Returns put strain on your reverse logistics as Distribution Center square footage or 3PL continue to expand, not to mention the monumental labor and transportation costs that returns processing incur. While many retailers don’t quantify the full cost of their returns, studies show that processing returns can cost 20%–65% of COGS.[2]

Newmine has uncovered that on average, each returned product requires more than 7 different resources to process the return: from store associates, to carriers, to return to vendor or return to DC. In 2018, around $400 billion worth of inventory was returned to retailers[3]. Combine this with the staggering reverse logistics costs, and retailers are seeing their bottom lines deteriorate. Despite these glaring issues, only 25% of retailers surveyed by Peerless Research Group reported they would change their returns handling process to course correct in the next 2 years[4].

JOIN THE RETURNS REDUCTION MOVEMENT!

Richard Branson once said that “Every great movement in the world starts with a tiny group of people who simply refuse to accept a situation. When companies are in a comfortable place, they are less inclined to take bold steps to create change. Without disrupting the current order, retailers will continue to see returns increasingly bully and erode their bottom lines. Not only is Returns Reduction possible and the benefits tangible, unifying your corporate culture around Returns Reduction is an endeavor with sustainable benefits across the value chain:

  • Article ImageImproved EBITDA and Reduced OPEX – While a “Returns Reduction Movement” may seem to have expansive, unattainable goals, the fact is that moving the needle just a bit leads to big financial rewards. Newmine has found that a $1 M Returns Reduction delivers $0.5 M to the bottom line—money that can be invested back into the business on revenue growth initiatives.

  •  Enhanced Customer Experience – Returns Reduction also improves your customer experience and retention. Retailers don’t like to admit the amount of merchandise that comes back for reasons like “wrong item shipped” or “defective,” but these events occur more often than they would like. Not only is it a waste of OPEX, it’s a significant customer experience risk, as 80% of first-time shoppers who must return an item will never shop again with that retailer. Returns Reduction has a substantial positive impact on Customer Lifetime Value.

  • Product Development Intelligence – Collecting and synthesizing return data, including quantified customer reviews and feedback, will offer insight into what customers are truly looking for. That ability to forecast will drive future product success.

SHOW YOUR RETURNS BULLY THE DOOR

The good news is RVCF members have the returns data, even if there is no single system of record for returns. In order to put a dent in your annual return rates, you will need both an aggregated and granular view of your returns data. The data is housed in business systems such as eCommerce, CRM, OM, WMS, and POS. Customer experience data is stored in reviews and on social media. The key to an effective Returns Reduction Movement starts with organizing all data into a single view to create a cohesive picture of customer returns. The next step is to leverage this data to achieve Returns Reduction through addressing four fundamental requirements:

  • Root Cause Discovery: “Returns Reduction” means reducing both the number of avoidable returns and the cost of returns when they do happen. Returns Reduction is only possible once the data is collected and analyzed in one central system in order to discover the root cause of returns.
  •  Timeliness: Too often have businesses relied on a “post mortem” after each season to recognize the impact of returns. By addressing the problems in-season, and in near real time, you can prevent avoidable returns.
  • Actionable: Your ability to reveal the Root Cause and focus on your highest priority products and categories will enable your team to effectively address the issues.
  • Collaborative: Returns and their associated reasons are a direct byproduct of the entire organization. Any successful initiative will require two essential elements:

1) a “single version of the truth” for all returns and shared by all business users, and

2) a collaborative workflow mechanism to manage team alerts, support action, and measure success.

ENSURING YOUR RETURNS REDUCTION INITIATIVE IS SUCCESSFUL

We are pleased to be working with RVCF to spark a Returns Reduction Movement in 2019. In direct response to members’ comments, RVCF has commissioned a new Returns Reduction study to spotlight the challenges.  Here are several guidelines to ensure your FY19 Return Reduction initiative is successful and delivers business value. 

1) Shared Vision: Build your movement around a shared Returns Reduction vision and strategy that is communicated relentlessly throughout the business. Start with a two-year retrospective of your returns data for FY17-FY18 and identify a few of the largest returned items (lost sales revenue) where the need for change is clear.

2) Accountability: Hold sponsors, process owners, project managers, and team members accountable to deadlines and deliverables. Set up the forums to manage return initiatives and give them the right support and attention.

3) Right Stakeholders:  Few, if any, organizations have a role titled “Chief Returns Officer.” In lieu of not having one executive that is responsible for the total lost revenue due to returns, we encourage our clients to assemble a cross-functional team including Merchandising, Digital, Marketing, Supply Chain, and Finance.

4) Tools and Skills: Give project managers, process owners, sponsors and team members Analytics and AI based tools. Spend time educating teams. Newmine’s flagship software, Chief Returns Officer™, is an AI-based Returns Reduction Platform that empowers teams with the analytics needed to reduce returns.

5) Processes, Metrics, and MBOs:  In order to preserve the new improvements and reduction in return rates, establish and monitor “at risk” products, set return rate goals, and create return reduction MBOs. Every $1 M in reduced returns, contributes $0.5 M to the bottom line EBITDA.

Article ImageCompanies rarely take business improvements seriously until it threatens their survival. Organizations that have made the leap to omnichannel, while still maintaining high operating costs, are risking severe deterioration to their bottom lines. Further, without disruption in this area, new e-retailers will struggle to enter the market sustainably.

All innovative disruption requires some discomfort as companies forge a new strategic path. Given that every $1 M in returns equates to $0.5 M in EBITDA, can you afford not to change?

ABOUT NEWMINE

The NEWMINE team is like no other – uniquely focused on optimizing retail commerce and Returns Reduction. We are all accomplished professionals with deep retail strategy, operations, and IT systems skills honed by decades of in-the-trenches experience. We have helped some of the retail industry’s biggest brands transform their customer experience and enhance profitability. We are the developers of the only AI-powered returns reduction platform, Chief Returns Officer™.

ADDITIONAL RESOURCES

INSIGHTS: http://www.newmine.com/insights

YOUR EBIDTA OPPORTUNITY: http://www.newmine.com/returns-calculator

BUILD A STRONG DEFENSE AGAINST ONLINE RETURNS: http://www.newmine.com/how-to-reduce-customer-returns

Articles Cited

[1] AMA - http://pinnacle.allenpress.com/doi/abs/10.1509/jm.10.0419

[2] UPS - https://www.ups.com/us/en/services/knowledge-center/article.page?name=return-shoppers-by-rethinking-your-online-returns&kid=aa3b199e

[3] CNBC - https://www.cnbc.com/amp/2019/01/10/growing-online-sales-means-more-returns-and-trash-for-landfills.html

[4] PRG - https://scg-scmr.s3.amazonaws.com/pdfs/SCMR1805_Reverse%20Logistics%20PDF.pdf

 

Tags:  Merchandise Returns  Returns  Returns Reduction 

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Are Product Data Standards Important?

Posted By RCVF Admin, Wednesday, January 30, 2019

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Are Product Data Standards Important?
by dataZen Engineering

Which ones, you ask?

If you’re doing business electronically you know that compliance with on-line data standards is necessary to get in the game.  For example, if you’re an EDI shop, then you know about “standards” like ANSI X12 that help trading partners “speak the same language” when exchanging EDI documents on-line. 

EDI paired with a leased line or VAN (Value Added Network) provides a highly secure and available means of doing transactional business.  Unfortunately, only about 5-7% of companies decide to invest in EDI and ANSI isn’t the only game in town when it comes to data standards.

Product Data Standards, overwhelming?

Enter the e-selling experience on the internet and the proliferation of data standards that can be downright overwhelming esp. in the retail industry.   In the early internet days of ecommerce, there was fear and resistance that data standards would only hasten the commoditization of a company’s products. The worry was that price would become the ONLY thing that mattered to the web consumer.  Many companies were reluctant to serve up structured product data fearing that it would allow a web shopper to “compare” their products to the competition.  Some companies chose not to include pricing.  Sadly, that practice didn’t work because price is a critical element in the customer’s selection and ordering decision process.   Lastly, some just hoped that the world of paper would somehow prevail.  Sadly, we all know what happened to the JC Penney and Sears catalogs.

Welcome to today’s Unified Commerce and its channel along with the normalization and synchronization of everything for the web.  Bottom line, like it or not, if your product data isn’t suitable for the digital marketplace together with prices, 360-degree photos, videos and other mandatory “standard” attributes needed for selling through channel partners or direct, you are pretty much out of the game.

So, what are the Product Data Standards anyways?

EDI processes aside, product data standards for the internet is where things get tricky.  Navigating the world of product data standards from GS1 (Global Standards 1), ETIM (Electro-Technical Information Model), UNSPSC (United Nations Standard Products and Services Code) are some acronyms that take some getting used to.  These standards organizations are all presumably helping to simplify the on-line digital experience for consumers / buyers. There are others. And, the value proposition for each one is pretty much the same; by aligning your product data with these standards, you will save money. Again, the idea is “save money”.

Remember the GDSN (Global Data Synchronization Network) which changed its name to 1Sync to presumably get better brand recognition in light of the “synchronization and normalization” buzz phrase for product data?   It’s not bad to be GS1 or UNSPSC compliant, but just like EDI, there are costs involved in getting there but then by implementing you save in the long run.

Are these Product Data Standards for me?

More importantly, understanding which standards affect your company and specifically retail industry takes some digging.  Fortunately, there are folks like us around that have been down this road before.  If you need a little help, we can help you speed up the process.   

So, what to look for and what are the byproducts? These are some outcomes to look for in general after you have applied some Product Data Standards.

Article Image

The idea is to start with a small footprint following some proven technology and methodologies to meet your desired objectives. Say, you want to implement UNSPSC standards. Then one of the goal from the get go must be how do you initialize your taxonomy down to the product attributes and values at the SKU level. That way a consumer is more informed to distinguish yours against what the competition offers.

Today, it is data about the product or service that is more important than the product or service itself. Therefore, having solid product data standards across the board is super critical for any business!

 

 

Tags:  data standards  ecommerce  e-selling  Product  United Nations Standard Products and Services Code 

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Are You Accounting for Supplier Performance During the Budgeting Process?

Posted By RCVF Admin, Tuesday, January 29, 2019

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Are You Accounting for Supplier Performance During the Budgeting Process?
by Victor Engesser, RVCF

The annual budgeting process for retailers, or any organization for that matter, is stressful. Every business need can’t always be met with dollars and labor resources, and not everything will get the green light. Some things just have to wait. However, one area that’s absolutely critical to achieving major budgeting objectives such as revenue, margin and inventory turns is supplier performance.

If you know where you stand with regards to supplier performance, you’re probably already tracking it at the category or merchandise level, or by merchandise group. Hopefully, you’re working on ways to better manage and improve supplier performance as well. But is supplier performance incorporated into the budgeting process so that it is "owned" in the same way that sales and margin targets are "owned"?

Suppose at some point during the year, it becomes obvious that supplier performance is holding you back from delivering the results you budgeted in certain merchandise categories. Can you really say you were caught by surprise?

After all, you know supplier performance is critical. Otherwise, you won’t maintain desired inventory in-stock, which means you won’t always make the sale, which means you won’t meet your revenue and margin goals.

Instead of waiting for something bad to happen, you need to make sure you get a voice at the table during the budget process when everyone is very much aware of what they’re signing up for. In addition to making sure you have the staff and the support you need, you need to plan for supplier performance. This will help you get the commitment and resources you need now, and the attention and follow through during the year to keep your suppliers’ on track so they uphold their end of the bargain, which is to meet your performance expectations.

The objective should be to have a well-defined, documented target for supplier performance within each merchandise category in order to support the high-level budgeted goals of your company. Merchandise category metrics with budgeted objectives that are affected by supplier performance include but are not limited to inventory dollar levels, inventory turns, order frequency, safety stock levels, and in-stock levels.

To support these category objectives, you need speed to shelf. To have speed to shelf, you need on-time, in-full performance. You need an accurate, timely ASN. And you don’t need delays caused by errors with labels, packaging or cartons. In a nutshell, you need the supplier to adhere to your compliance requirements to achieve your objectives within each category and deliver on your budget goals. When these supplier performance goals are identified and aligned with the merchant, the supply chain compliance team and the merchant can then collaborate and work with suppliers when and where necessary to drive these results.

Internally, you need to identify the necessary resources and required supplier performance levels to achieve your budgeted objectives. Externally, you need to make sure your suppliers know how important their performance is to achieving your goals. You need to make it clear that you’ve established performance goals for the supplier that, if met, will make it possible to hit your numbers.

Here is a simple, five-step approach to incorporating supplier performance management into the budgeting process.

  1. Campaign. Campaign to get others within your organization to understand the importance of incorporating supplier performance management in the annual budgeting process.

  2.  Partner. Partner with key stakeholders to identify what your expectations should be by major category and by major supplier.

  3. Collaborate. Collaborate with major suppliers. Seek alignment and commitment from them to achieve these goals.

  4. Commit. Commit resources and identify specific responsibilities to collaboratively accomplish these goals.

  5. Follow Through. Follow through by measuring, reporting and managing these goals.

The ultimate goal is to use the annual corporate budgeting process to revisit the supplier’s supply chain performance and recommit, both internally and externally with trading partners, to improve performance and the resulting financial benefits it provides to both companies.

You might say to yourself, “Well, we’re already doing this.” But are you truly seizing this moment in time during the budget process to communicate to merchants the importance of having a clear goal for individual supplier performance? If suppliers meet those expectations, you’ll have much more confidence, and much higher probability, that you’ll produce the results needed to meet your budgets in terms of sales, margins, and inventory turns.

The more you directly integrate supplier performance with your budgets, the more it remains top-of-mind throughout the year. Then you can constantly revisit performance goals, determine to what degree supplier performance is keeping you from meeting objectives, and address specific issues as quickly as possible to get back on track.

 

 

Tags:  Budget  Budgeting Supplier Performance  supplier performance management  Suppliers 

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From the Desk of Kim Zablocky: Design Thinking Program Announced

Posted By RCVF Admin, Monday, January 28, 2019

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From the Desk of Kim Zablocky: Design Thinking Program Announced

RVCF’s focus has always been on the “Perfect Order”.   As the industry evolves and online sales for both retailers and brands continue to grow, we are now faced with expanding our focus to include “Perfect Handling of the Reverse Flow of Product”.

Returns have a drastic effect as accounting departments must seek new ways to manage the reconciliation nightmare of debit/credits on returned products shipped on behalf of the retailer or .com.  From merchandising to payment, companies are struggling to find ways to stem the tide of returns (that can equate to 15-40% of all online sales) and protect their margin.

Surveys, coupons, pre-authorizations, reducing purchase dollar credit over an extended period of time before returning, time limits on returns and more are being deployed with mixed results.  These actions mean increased costs and less profit.  Is the answer to take the draconian step of shutting off the consumer from future purchases?

RVCF is addressing the subject of “Returns” in a big way beginning with our Returns Reduction Survey and continuing through the RVCF Spring Conference.  Along with a conference session dedicated to reducing returns (see related article, “ Returns: The Bottom Line Bully”), the conference agenda features a session on deploying Design Thinking methodology to the returns process along with the development of an E-Commerce Performance Scorecard, to be shared by the retailer with its brands. 

We introduced the concept of Design Thinking at our Fall 2018 conference and followed up with a series of teleconferences.  Based on the enthusiastic response received we will continue on this path.  Whether you joined us in the fall or are just getting started, this session is certain to bring tremendous value not only to your returns processing but to future projects in your organization and beyond. 

Experienced leaders from the Barkley Consulting Group, will facilitate this full day session intended for participants from both retail and wholesale/brands who manage the e-com returns process. The session will help you to think “Outside of the Box” and create new and innovative ways of addressing this timely issue.

For those that may not be familiar with the Design Thinking methodology, it is a human-centered approach towards problem-solving that sees a problem from the eyes of your end-user—the consumer, the employee, the partner. It is a way of thinking that embraces empathy, inspires creativity, and encourages experimentation to create solutions that meet the needs of the audience for whom you are designing. Design Thinking is a highly-experiential technique any company can employ to generate new ideas to solve problems while achieving maximum consumer benefit. Design Thinking provides a methodology that fuels innovative thinking. It helps people learn how to think vs. telling them what to think.

This full day session will take place on Monday, May 6th.  In order to receive the greatest value from your participation, attendees must commit to being present for the full session.  A pre-workshop conference call will be scheduled in April for further discussion with those who will be joining the session and a post-workshop review will be conducted to discuss ways to implement this learning in their work.  Spring Conference registration is required.

About Barkley Consulting Group and this unique process:

At Barkley Consulting Group, our team of experts has deep knowledge of Design Thinking through years of practical experience. We use that experience to help companies master Design Thinking to unleash the creativity that exists within their organization.

Our experiential workshops, classroom training, and customized activities engage, inspire, and educate participants and deliver the following value:

  • Comprehensive knowledge of the Design Thinking approach and how it is used to solve problems and create new opportunities
  • A solid understanding of innovation; how to inspire creativity and think innovatively
  • How to apply Design Thinking to real-world problems and opportunities
  • Valuable professional development skills, including collaboration, communication, leadership, and empathy
  • How to move rapidly from idea to action using rapid prototyping, experimentation, and iteration.

Changing mindsets to accept failure as a positive force; focusing on asking the right questions vs. giving the correct answers Our program is not merely informational but an actual agent of tangible change; attendees can implement these teachings immediately and achieve the Design Thinking Workshop for Retail: The best way to learn Design Thinking is to do Design Thinking. This highly experiential workshop will teach Design Thinking concepts and immediately put them into practice on the given challenge. More importantly, participants will be given the tools, knowledge, and experience to use Design Thinking in their jobs, with their partners, and with customers. Over the course of the workshop, attendees are exposed to new concepts and methods around human-centered design. They will learn how to empathize with the needs and desires of the end-users, how to define the real problem(s) that need to be solved, brainstorming techniques to ideate potential solutions, prototyping skills to act quickly on those ideas, and testing methods to iterate refinements to develop the ideal solution. Attendees will learn key aspects of the process through collaboration, communication, and reflection.

Finally, Companies can use Design Thinking to:

 • Create new products or services

 • Solve existing problems or challenges

 • Unleash creativity to discover new opportunities

 • Uncover insights regarding unmet needs of your customers

 • Develop their internal talent and increase their confidence, sense of empowerment, and contribution within the company.

 

 

Tags:  Design Thinking 

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Quick (2 Minute) Survey Results: Direct Ship Decision Factors and Score Card Question

Posted By RCVF Admin, Monday, January 28, 2019

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Quick (2 Minute) Survey Results: Direct Ship Decision Factors and Score Card Question
by Victor Engesser, RVCF

With the growing popularity of direct ship fulfillment (retailers asking their trading partners to fulfill the retailer's ecommerce order), we thought it would be informative to ask our members how they determine which products are stocked and which are direct shipped. Based on their responses here are some of the most common criteria used,

  • Supplier's ability to direct ship (obviously, but not all suppliers have this capability)

  • Size and weight of item (this is both a handling issue for retailer and customer as well as a warehouse space issue, and freight cost calculation)

  • If assembly or scheduled install is involved (what works best to support the overall customer experience)

  • Forecasted sales and profitability (anticipated sales rate while taking into consideration product turns and inventory holding costs)

  • Product seasonality or lifecycle, and in apparel, size or color popularity, etc.

What we also learned from many retailers is that inside their company it is the category buyer that usually makes the ultimate decision on which items to set up as direct ship. This makes sense when you consider today's direct ship has it's roots in yesterday's "special order" capability and has evolved and expanded with the  ecommerce "endless isle" objective which quickly filled up ecommerce warehouses. The buyer likely has to consider at least a few other factors before deciding how to proceed,

  • Supplier cost to retailer based on which way they decide
  • Direct ship product availability if they do not stock
  • Markdown risk if the own the inventory

With the rapid grow occurring in direct ship fulfillment we are likely to see more and better financial tools and software capabilities to support this decision making and fulfillment process for both retailers and suppliers.

Scorecard Survey results

 

Tags:  Direct Ship  Scorecards  Survey 

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RVCF Spotlight: Conference One-on-One Meetings

Posted By RCVF Admin, Monday, January 28, 2019

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RVCF Spotlight: Conference One-on-One Meetings
by Susan Haupt, RVCF

One-on-One Meetings began as casual, ad-hoc conversations between Retailers and Merchandise Suppliers during RVCF Conferences.  Fast-forward to today where One-on-One meetings have become a signature session on every agenda with literally hundreds of meetings taking place during the course of each RVCF conference.   

The meetings themselves look something like “speed dating”.  Retailers are situated at tables in a separate area of the event venue during designated meeting times. Merchandise suppliers report to the meeting area and move among the tables in 15-20 minute intervals following their pre-assigned meeting schedule.  The area is closely monitored by RVCF Staff to make sure that the meetings run smoothly and on time.   Discussions may include performance reviews, upcoming initiatives, deduction evaluation, and more.

Retailers wishing to conduct One-on-One Meetings with their merchandise suppliers need only advise an RVCF Staff member of their interest and availability to meet.  We will notify you of your meeting requests including the supplier number and topic(s) to be discussed. Only the requests that you approve will be included in your schedule, which is sent the week prior to the conference.

Merchandise Suppliers wishing to participate in One-on-One Meetings with their retailer trading partners must register for the event and pay their conference registration fee.  In the weeks prior to the conference, an on-line survey will be sent through which meetings are requested.  All registrants that requested meetings will receive a schedule of their approved meetings the week prior to the conference.

To make the most of this unique opportunity for collaboration, please be mindful of this timeline. 

  • On-going - Retailers commit to One-on-One Participation.
  • 6 weeks prior to conference – RVCF launches meeting request survey to paid registrants.  Please complete the survey as thoroughly as possible including your availability for meetings.  Be sure to take into account travel plans and sessions that you don't want to miss.  
  • 5 weeks prior to conference – meeting requests are distributed to Retailers for review and approval.
  • 4 weeks prior to conference – scheduling of retailer-approved meetings take place.
  • 1 week prior to conference – schedules are distributed to Retailer and Merchandise Supplier participants.


While the process has evolved over the years, the purpose remains unchanged; to provide an environment for Retailers and Suppliers to meet, exchange valuable feedback concerning their business relationships and pave the way for future dialog.   All participants benefit from being able to meet with multiple trading partners in one location during the course of a single trip saving precious travel dollars. 

Tags:  One-on-One Meetings  Retailers  RVCF Conferences  Suppliers 

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If You Ship with UPS or FedEx, You Should Be Auditing Their Invoices

Posted By RCVF Admin, Friday, January 25, 2019

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If You Ship with UPS or FedEx, You Should Be Auditing Their Invoices
by Kenneth Kowal, Founder of ShipStarter

The cost of shipping is a constant concern for manufacturers, retailers, and distributors who send a large volume of small packages with UPS and FedEx. Both carriers’ service agreements are complex, and their pricing is hard to understand, even for seasoned logistics pros. This makes optimizing cost extremely difficult for most companies.

What’s worse? The carriers can’t be trusted to invoice for shipments accurately. They also cannot be trusted to credit customers fairly for refunds they are owed for delivery errors like missing a guaranteed due date. In fact, the carriers make errors on an average of 5% of invoices. But since it’s so hard for shippers to audit invoices, most companies either don’t notice the errors, or see this problem as just a cost of doing business.

So, What’s a Parcel Shipper to Do?

To help recover the money they’re owed, smart small parcel shippers enlist help. Yet, the 2017 Annual Third-Party Logistics Survey from JDA reported that 68% of companies either conduct their own shipping invoice audits or are not auditing their invoices at all. And given how difficult it is to audit small parcel invoices thoroughly and well, it’s questionable if any of the companies that are conducting audits in-house are doing so effectively.

Perhaps shippers do not realize just how advantageous an audit can be, or as we’ve said, they would rather take the hit to their bottom line as a cost of doing business than spend the large amount of human resource time that’s necessary to properly audit the invoices.

Parcel invoice auditing is an integral part of confirming that carrier pricing matches the original agreement. An audit can tell a shipper if they are being overcharged for errors or late shipments, as well as find other inefficiencies in the supply chain.

Why Are There Errors?

The reason there are errors is that carrier rates agreements are complex and depend on a lot of variable circumstances. And since shipping by its nature often involves contingencies, costs can often end up being very different than what is estimated by a shipper when a package is handed off to a carrier.

There are several errors that occur regularly, including:

  • Fuel surcharge errors
  • Incorrect billing address
  • Wrong PO number
  • Incorrect exchange rates
  • Wrong weight calculation
  • Duplicate shipments or invoices

Some of the errors can be on the part of the shipper, and some by the carrier. An incorrect billing address can be easily corrected, but it comes with a hefty price tag. A mistake like this will cost at least $11 per shipment, depending on the carrier. Address errors are not always the shipper’s fault, however. But if you are not checking, how do you know?

How Much Can a Shipper Save?

On average, working with a parcel audit service will result in a savings of 2%–5% or more on the total spend. The average savings will vary by business and can end up being a lot more. So, is it worth it? Think about what a 5% reduction in small parcel shipping costs would mean to your company’s bottom line.

What Else?

It’s clear how auditing invoices can recover a significant amount of money for many shippers. But what about other areas of your business? The data on your parcel shipping program that comes out of the auditing process can also help you tighten up your shipping operation in other ways. Parcel data can provide insights into carrier performance and your overall network efficiency, down to the package level. Armed with data, logistics managers can analyze their operation to make better business decisions.

A partnership between a small parcel shipper and its audit team provides value across the supply chain. It’s a simple way to remove cost and waste from your company, while ensuring that the terms of your carrier agreement are being met.

Transportation Impact provides small parcel rate negotiation and invoice audit services to large-volume FedEx and UPS shippers. We’ve saved hundreds of companies over $100MM in the past ten years. To learn more, visit www.transportationimpact.com.

 

Tags:  audit  fedex  invoices  parcels  shippers  shipping  transportation  ups 

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RVCF's 2019 "All About Retailer Compliance"

Posted By RCVF Admin, Friday, January 25, 2019

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RVCF's 2019 "All About Retailer Compliance"

The 2019 edition of RVCF's "All About Retailer Compliance" publication is now available.  We've combined retailer requirements with industry standards and decades of experience to develop this all encompassing training and reference resource that is a "go to" guide for anyone connected to compliance in the retail supply chain.  
 
Users will be able to quickly and easily:
  • locate standards and prioritize those needing special attention
  • decipher industry terms and acronyms
  • understand the order fulfillment process - step-by-step, what's important and why 
This 90-page guide features individual chapters dedicated to :
  • EDI
  • Purchase Orders
  • Direct to Consumer
  • Floor Ready
  • Packaging & Marking
  • Transportation
  • Accounts Payable
  • Returns
  • Vendor Compliance
This document is available at no cost to RVCF Members and for the nominal fee of $295.00 for non-members.   Download your copy today.

Tags:  retailers; retail compliance 

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Managing the Complexity of Ecommerce Returns

Posted By RCVF Admin, Sunday, January 20, 2019

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Managing the Complexity of Ecommerce Returns
by Scott Weiss, VP of Business Development, Port Logistics Group

As the growth of online shopping continues to rise, so has the volume of ecommerce returns, often referred to as reverse logistics. Did you know that almost 33 percent of all online purchases result in an item being returned, compared to just 9 percent of physical store sales, according to figures from Bloomberg?

 

The challenge is that reverse logistics is generally far more complex than forward logistics. At the same time, consumers are increasingly expecting a seamless experience when it comes to returns. In UPS’s Pulse of the Online shopper study, 89 percent of customers would not shop again at a retailer if their return experience was suboptimal. Simple and free returns are becoming the new standard. In that same study, 79 percent of consumers consider whether a retailer has free shipping when making a purchase. The cost of a return is one of the biggest stumbling blocks for many consumers, so eliminating it makes sense, even if it is expensive. 

 

For online retailers, efficiently managing the returns process is one of the most challenging and costly aspects of ecommerce. Omnichannel retailing brings new processes, including increased dropshipping, BOPIS (buy online, pick up in store), and BORIS (buy online, return in store), making the management of returns difficult when cross-channel inventories are subject to many business rules.

 

Challenges come in small packages

 

Online retailers need to keep costs down and preserve as much of the original revenue of the returned products they can. But returns don’t always involve sending goods back to inventory following inspection or repair. Items may be destined for disposal, destruction, or put into secondary markets for resale. Online retailers may leverage the services of a 3PL fulfillment provider for reverse logistics, or even a 3PL specialist in returns. A proficient 3PL will be able to manage the returns process according to your guidelines and ultimately protect your brand’s reputation.

 

Another potential problem is the volume of returns to the fulfillment center, distribution center (DC), or store on any given day isn’t known, unless the receiver is given advance notice. Returns typically come back within 30 days of sale, or even longer as return policies become more liberal and return time is extended to even 60 days or more.

 

Returns also require more labor to process. New business models for returns are also upping the service ante as third-party returns specialists enter the market. One is Happy Returns which operates “return bars” to enable in-person returns for online purchases at its select customer base of online retailers. Another model is retailer/online retailer partnerships, such as Kohl’s accepting returns on behalf of Amazon at select stores, which makes it easy for the consumer who doesn’t have to package the item but only has to show proof of purchase on Amazon.

 

Whether you manage returns in-house or outsource, here are best practices:

 

Processes and quality control. From the consumer’s perspective, they shouldn’t have to make a phone call to learn how to return an item. Information should be included with the order or at the online retailer’s website. It does the retailer and supplier a favor when the consumer can easily inform them why the product is being returned. Return forms aid this process as do pre-printed labels.

 

Once received, a key benchmark for an efficient returns process is to return the appropriate goods back into stock as soon as possible for resale. So too is planning the flow of returns in the DC or store, allowing plenty of space for returns processing. The returned item will require inspection of its condition and quality to determine if it can be returned to inventory, and may require light repairs.

 

Value-added services and training. Apparel, electronics and shoes are some of the most returned items for direct-to-consumer ecommerce, according to returns optimization company, Optoro. To return to stock, apparel, for example, requires a close inspection under good lighting, refolding and relabeling. Goods may need steam cleaning, sewing or other repair which involves value-added services.

 

Training staff in returns processing is essential. Much of the knowledge for processing returns is specific to the product or brand, with returns specialists becoming very proficient in their craft. Knowledge is often handed down as tribal (undocumented) knowledge. It is always better to err on the side of documentation.

 

KPIs. Key performance indicators (KPIs) can be kept basic within your company or with your 3PL. Fulfillment processing rates for ecommerce orders are typically same-day or within 24 hours, including dropship orders a supplier fills on behalf of the retailer. A typical KPI for ecommerce returns is processing the item within 72 hours after the item is received, tracked as “return cycle time.” Hitting this mark 95 percent of the time is a reasonable aim.

 

Routing guides. With the multiple channels of omnichannel complicating returns, determining which party in the supply chain will handle each return may be subject to change. Developing a vendor routing guide is a great updatable resource. Use it to document which entity will do what processing, whether by type of product or channel, and so forth. For example, a dropshipped apparel order sent to the consumer on behalf of the retailer by the vendor may likely get returned to the retailer’s facility, and not the vendor or their 3PL, in part to maintain the brand image of the retailer. It’s also important to note consumer instructions for returns which must be included with the outbound order.

 

Communication checkpoints

 

In all aspects of the returns process, close communication with participating parties for each key event in the returns process is essential. From the systems perspective, communication should be reflected in alerts and notifications that involve parcel or shipping systems, warehouse management systems (WMS), and order management systems (OMS).

 

The key communication-alerting checkpoints are receiver and consumer confirmations. Once the return is scanned in at the parcel carrier or drop-off location, the receiver is alerted, and can thus better plan for disposition. Consumers want an easy return process. Alert them that the seller has received the item, which is enabled by the initial scan when the consumer drops off their return. Many leading ecommerce companies are providing electronic confirmations to the consumer that their credit card has been credited; the retailer or seller generally provides these confirmations.

 

The expense of handling ecommerce returns are high and the pitfalls are many. Many of these returns practices can reduce the cost of returns processing for online retailers while enhancing the consumer experience and contributing to a positive brand experience. Given the growth of ecommerce and returns, there is a business case for allocating resources into building a strong reverse logistics capability. 

 

Tags:  e-commerce  Inventory Management  KPIs  Omni-Channel  Returns 

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How to Talk About Blockchain at Parties

Posted By RCVF Admin, Monday, December 10, 2018

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How to Talk About Blockchain at Parties
By Kirk White, Yusen Logistics


2018 is, among other things, the year of Blockchain.  And for all the buzz and hype, many still don’t know exactly what it does and what it will bring to the world of supply chain.  It’s very easy to say,  “oh…it’s going to revolutionize the Supply Chain by streamlining documentation, removing non-value-added steps to processes,  speeding up payments, eliminating errors or miscommunications, providing better scrutiny and validation to our factories and, not for nothing, making everything just a little safer…and I heard it has vitamin C and electrolytes to boot?”  Okay that last part is not verifiable….but not any more NOT verifiable than anything else. THAT is the rub.  Right now a whole bunch of blockchain is just potential.  It’s going to become concrete faster than you can imagine but as of this moment, since we quoted the Terminator so much so far,  “the future is not set…there is no fate but what we make for ourselves”.  

Anywhoo…As the season wraps up, many of our loyal readers will be going to various gatherings and holiday parties…and invariably, if your parties are like our parties, the subject of Blockchain will come up.  And you may be tempted to make a quick dash for the snack table…but fear not…as our gift to you, please see our handy dandy guide to talking about Blockchain in any social situation (you’re welcome):

Things you can say when someone asks you about your opinion on Blockchain: 

“This is  nascent technology”

Nobody has cracked this…YET. But a lot of folks are trying.  Think back to the early days (1995) of the ol’ internet. Think of the companies that got on that train early…think about those who didn’t.  But again,  NO ONE HAS CRACKED IT YET…mostly because…

“the application of using it for supply chain on a global scale doesn’t exist”

This won’t be able to be said for long because there are a bunch of pilot programs in the works as companies fight to be the “Facebook” of Blockchain.  The main issue is that there is nothing standard…no standard connection and the supply chain industry already has multiple means of getting and transferring data…some use EDI, some use inhouse systems, some just email things to you.  Getting this many disparate individual operators to suddenly agree on the next big ONE platform of communication is not going to be easy. People fear change. People think if it ain’t broke, don’t fix it.  People like to do things THEIR way.  And we haven’t even TOUCHED the learning curve!  However, it is inevitable that there will be a blockchain/supplychain revolution soon, because…

“A lot of companies are taking this seriously”

Once again, think back to 1995ish, those of you who were not in grade school or diapers then!  This whole “internet thing” was a novelty….email was a hoot, yes, but nothing to worry about, until it wasn’t a novelty… and there was something to worry about.  Think about how many business failed because they were late to the online game.  Borders Bookstore went out of business in 2011 and the industry mostly attributes this to their inability to get with the online program. They doubled down on inventory (esp CDs and DVDs) just at the moment Ecommerce and electronic distribution of media was becoming ubiquitous. They even outsourced their ecommerce to Amazon…and a chill was felt around the room.  Many of the big companies do not want a similar fate with regards to Blockchain. IBM/Maersk is leading the supply chain side of Blockchain with a joint venture called Tradelens. There is not much info available yet, a visit to their website (www.tradelens.com) yields a lot of high level marketing materials but not much else at this point.  They have an early adopter program that, as of this time, features @ 94 participants and are looking for a general release / expansion in 2019 and to begin adding an A.I. component by 2020.  With 154 million+ events moving through their system, they are an early lead in the race.  The significant pushback seems to be coming from other carriers who believe the system may prioritize Maersk to clients.

Not to be outdone, Microsoft has teamed up with Adents (www.adents.com/adents-novatrack )to create NovaTrack. Initially created for the pharmaceutical industry to track and trace product for safety, it has quickly expanded into a robust system that is adding  A.I., serialization capability, and Internet of Things components early in the process.    By teaming up with a powerful partner in Microsoft, a company whose products are more than likely already used in many potential clients’ computers, they may have an advantage to a completely new platform.  This might actually be a good time to ask…

“Would YOU like to be an innovator in this?”

Never hurts to ask…you are at a party.  What are the other people hearing, seeing, thinking about using.  A lot of this is going to live and die on the buzz of early adopters and pioneers.  In fact, many people will probably wait to enter the blockchain world until there is a clear cut favorite.  It’s like the Academy Awards (the Oscars)…the Best Picture is chosen by every member of the Academy. However, many members…a LOT of members…don’t actually go out and see all the movies up for best picture. They usually vote based on all the articles that come out picking the favorite films; the “who should win” so early hype and buzz is uber important for film makers.  This is a similar thing to what is happening now, IBM/Maersk, Microsoft/Adent and Amazon (more on them in a moment)…and not for nothing, all the other dark horses we’ve not heard of yet…are all working to be the word buzzing on everyone’s lips. And speaking of dark horses…  

“there is still a chance for an indie solution”

Adding a giant monkey into the wrench, Amazon has thrown their hat into the ring with AWS (Amazon Web Services) Amazon managed blockchain. They have a HIGHLY SCALABLE platform called Quantum Ledger Database (QLDB for short:  https://aws.amazon.com/qldb/ )  and their aim is to provide the ability for multiple users to create their own proprietary APIs (application program interface) using the Amazon blockchain and therefore remove the need for a central blockchain system….instead of ONE system that everyone adopts, companies could build their own blockchain enabled systems and use them as a differentiator/revenue generator.  Will this be a game changer or simply muddy the field so to speak?  Time will tell, but QLDB does seem to level the aforementioned muddy playing field a bit as organizations with a robust and agile IT dept could use the AWS blockchain fabric with their own innovative API and revolutionize the industry. For the moment the sky is wide open and one may say that a small company doesn’t have a chance against IBM or Microsoft but then again…nobody thought The Hurt Locker would beat Avatar for Best Picture now did they?

And since we’re talking…what have YOU heard?  Be sure to leave in the comments below any early “buzz” you have picked up in your travels. 

Sources:

http://www.nsweek.com/wp-content/uploads/2018/10/Luca-Amato_ibm.pdf

https://whichblockchain.com/news/microsoft-and-ardents-partner-in-blockchain-project-for-product-tracking-platform/

Kirk White is a corporate creative and a supply chain futurist. He 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.

 

 

Tags:  Blockchain  Supply Chain  supply chain systems  technology 

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