Spacious Potential in the Sharing Economy

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Photo by Pixabay on Pexels.com

By ASCM CEO Abe Eshkenazi, CSCP, CPA, CAE

The sharing economy is no longer just a catchy turn of phrase; today, sharing, renting and subscription services are everywhere. AirBnB for your holiday rental; WeWork for freelancers who prefer the office environment; Rover for the pup’s midday walk; Uber and Lyft when you need someone to drive you places; and Zipcar, LimeBike or Bird Scooters when you’d rather do the driving yourself. The potential applications are endless.

Although only 19 percent of U.S. adults have engaged in a sharing-economy transaction, PwC research reveals that 83 percent of survey respondents believe these services make life more convenient and efficient, 76 percent say they are better for the environment, and 43 percent admit that owning things can feel like a burden.

As ownership becomes unfashionable, the fashion industry is also taking notice.

“In October, the mall fixture [Express] launched Style Trial, a service that allows customers to borrow up to three pieces — with no limits on exchanges, free shipping both ways and free dry cleaning — for $69.95 per month,” writes Jasmin Malik Chua in Sourcing Journal. “If a subscriber loves something to death, she can buy it at a discount for keeps. Otherwise, she can keep garments circulating in an eternally refreshed ‘closet in the cloud’ with virtually infinite options yet zero commitments.”

Jim Hilt, Express executive vice president and chief customer experience officer, explains that this allows customers to tap the company’s “full assortment and styling services without breaking the budget.”

In addition to this kind of flexibility and cost savings, sharing clothes eliminates the hassle of shopping malls and the time spent packing bags for donation — not to mention all those minutes staring at our wardrobes trying to decide if an item still sparks joy.

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Shifting business models

Until very recently, most of us would never have considered staying in some random person’s home while on vacation, let alone sharing a sweater with a bunch of strangers. Yet today, Airbnb averages 425,000 guests per night — nearly 22 percent more than Hilton Worldwide.

“The data shows, renting and sharing are becoming increasingly popular alternatives,” the PwC report asserts. “Executives will be wise to assess the role of their product and brand in this model — are you squarely a purveyor of goods, or are you an enabler?”

For those supply chain managers bracing for change and facing some tough calls concerning clothing lifespans; quality control of shared garments; and logistics economics, especially for lower-cost items, there is some good news. The sharing economy is also flourishing in the education space, with LinkedIn Learning, Grow with Google, and a seemingly infinite number of instructive and informative videos on YouTube. Our own channel is bursting at the seams with customer success stories, webinars, research, annual conference sessions, and a multitude of supply chain education tailored to fit just right.

To join ASCM, joint membership is available through Australasian Supply Chain Institute for just $440 per annum. Visit our website for a full list of membership benefits.

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Indian regulations rain on Amazon and Walmart’s e-commerce parade

By ASCM CEO Abe Eshkenazi, CSCP, CPA, CAE

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Amazon and Walmart subsidiary Flipkart is scrambling to revamp its supply chains, vendor relationships and systems. New regulations from the world’s fastest growing economy have undermined these retailers’ business models and obstructed their sales in India’s burgeoning e-commerce sector.

Previously, foreign companies were forbidden from holding their own online inventory and shipping it directly to customers. Amazon had found a workaround in the form of local subsidiaries of firms in which it had holdings, which opponents insisted was violating the spirit of the rule. Largely due to such proxy sellers, Amazon and Walmart had controlled almost 80 percent of India’s e-commerce.

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But as of February 1, such goods are not permitted for sale by foreign companies. In addition, these firms are barred from entering into exclusive online sales agreements. A vendor’s inventory also will be considered under the control of an e-commerce marketplace if more than one-quarter of its sales are derived there.

The protectionist move follows ongoing complaints from domestic retailers over anticompetitive practices. Amazon and Walmart both requested a six-month postponement of the effective date but were denied.

“Thousands of products were pulled from Amazon.com Inc.’s India website Friday — the first direct impact from the country’s new e-commerce rules,” writes Corinne Abrams in the Wall Street Journal. The article goes on to explain that the restrictions are the latest effort by India to curb U.S. tech giants’ dominance in the country and “promote homegrown companies” as Prime Minister Narendra Modi seeks a second term.

“Both Amazon and Walmart have made big bets in India, where the e-commerce market is estimated to balloon to $72 billion in 2022,” Abrams adds. “Amazon has pledged to invest $5 billion to expand in [India], while Walmart’s takeover of India’s Flipkart for $16 billion was its biggest acquisition ever.”

Global supply chain know-how

The operations of these e-commerce giants have been thrown into disarray. As these companies, and others, navigate such severe regulatory pressure, success will hinge upon the effectiveness, responsiveness and flexibility of their supply chains.

ASCM provides the resources you need to plot your own course through the ever-shifting global marketplace. The APICS Certified Supply Chain Professional (CSCP) program enables individuals to master the fundamentals of supply chain strategy, business model design, relationship-building, risk management and much more. In particular, the CSCP learning system includes a module centered around monetary, regulatory and trade considerations; negotiation and collaboration; and international standards and compliance. Begin your journey toward this world-class certification today.

The Australasian Supply Chain Institute (ASCI) is the Premier Channel Partner for APICS and offers joint memberships with ASCI for local and ASCM for global membership for both corporates and individuals. Contact us today at http://www.asci.org.au/membership or enquiries@asci.org.au.

Climate Change Disruptors on the Rise

By ASCM CEO Abe Eshkenazi, CSCP, CPA, CAE

As I write this, the National Weather Service (NWS) is warning of severe cold here in Chicago, with wind chill temperatures expected to reach an excruciating 55 below zero. The NWS has even urged us to protect our lungs by minimizing talking and not taking deep breaths. Meanwhile, on the other side of the world, people in South Australia’s coastal capital of Adelaide are facing a different kind of lung injury — from dangerous air quality and ozone exposure. Adelaide recently reached 46.2 Celsius (nearly 116 degrees Fahrenheit), breaking a 130-year record.

When we talk about extreme weather statistics such as these, they are typically followed by warnings of disastrous sea levels, catastrophic Arctic ice decline, and life-threatening floods or hurricanes. “Not enough water to make Coke” and “sweltering Disney theme parks” do seem to pale in comparison. However, a recent Bloomberg article suggests that climate change will have a business impact that is devastating in its own way.

“Climate change is expected to cascade through the economy — disrupting supply chains, disabling operations and driving away customers,” author Christopher Flavelle writes, adding that numerous executives see “inherent climate-related risks with the potential to have a substantial financial or strategic impact on their business.”

Visit ASCI’s previous blog form Corporate Member – Nufarm – who utilises specific advanced analytics for predicting and planning for weather patterns.

One of the most commonly cited issues by company leaders is draught. Specifically, in addition to Coca-Cola fearing water shortages will threaten its bottling operations, Intel is concerned about escalating costs for the water-intensive process of semiconductor manufacturing.

Other professionals are kept up at night worrying about damage to their networks from hurricanes and wildfires (AT&T), global pandemics dissuading people from travel (VISA), and increased flooding and flood insurance premiums forcing mortgage holders to default on payments (Bank of America).

Interestingly, some organizations have identified opportunities amid the chaos, as climate change can “bolster demand for their products.” With more people facing illness, Merck & Co. sees the potential for “expanded markets for products for tropical and weather-related diseases,” Apple predicts disasters will make its iPhone “even more vital to people’s lives,” and Home Depot expects higher air conditioner and ceiling fan sales.

Sustainable supply chains

No matter where your company falls on the threat-versus-opportunity spectrum, climate change is altering the global economy immensely, and supply chains must transform to survive. At this time of both challenge and potential, ASCM is collaborating with a network of world-class organizations — including The Bill & Melinda Gates Foundation, Accenture, Deloitte and PwC — to create opportunities for the kind of supply chain innovation that will be mandatory in the coming years.

In addition, our new SCOR-Enterprise (SCOR-E) designation features an ecological dimension, which focuses on the circular economy, climate strategy, energy, water and waste, material usage, and product life-cycle stewardship. SCOR-E is the industry’s first and only corporate supply chain designation.

I hope you will make the most of these valuable member benefits. ASCM mission-driven strategic initiatives such as these draw on the power of supply chains to address pressing global issues and achieve the brightest futures for individuals, companies and communities.

For more information, please visit the ASCI website and select ASCI Plus Membership which include your local and global membership with ASCM.

Nufarm site visit generates sharing

As part of the ASCI Site Visit Series, ASCI arranged for 14 ASCI Members to visit the Nufarm Raymond Rd manufacturing facility on Friday 25 January 2019.

Both nbn Co and Nufarm are ASCI Corporate Members, and within the ASCI Corporate Membership package, comes the benefit of sharing and learning within the network.

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Site Manager, George Fletcher gave the group an introduction to Nufarm and the site, see picture.

According to Angus Borland, Supply Chain Planning Manager – ANZ, Nufarm, the group enjoyed the balmy 44 degrees for a walk through a number of the production lines, followed by a planning discussion he led alongside two site planners (Michael Buttigieg-Raymond Rd and Matt Calabro-Pipe Rd).

“This was a good 2-way discussion between Nufarm and nbn Co,” Angus recalls.

Ryan Jones, Manager Integrated Demand Planning, nbn Co agrees. “The two organisations couldn’t be further apart in terms of industry. However, there were so many similarities both in forecasting and planning systems; S&OP processes; safety; and challenges such as demand accuracy and the management of inventory,” he said.

“In addition, we could really appreciate the weather challenges faced by the organisation and were impressed with Nufarm’s long term strategies and predictive analysis.”

There were some key areas identified where a visit to non Co could benefit the Nufarm demand planners. Hence, the sharing and learning process is in motion!

Look out for more events within the ASCI Site Visit Series, held all over the country in 2019!

 

Embracing the IOT

By APICS CEO Abe Eshkenazi, CSCP, CPA, CAE

We keep hearing about the potential of the Internet of Things (IOT), but how will it help supply chain professionals specifically? Last week, Industrial Distribution ran “Improving Process Flows in the Delivery System through the Internet of Things,” which outlines the practical applications of IOT.

“As the development and deployment of the IOT capabilities continues to expand, [transportation and logistics] companies could eventually have visibility into every operation across the entire supply chain, from the source of the raw materials to the end use of the product,” writes Thomas Schied, vice president and director of asset management for TD Band Equipment Finance.

IOT connects devices to the internet and collects data, but Schied stresses the value is in knowing how, when and where to use the data. Predictive analytics enables business leaders to make calculations that will increase efficiencies, reduce spending and improve overall processes. For example, data from sensors can be combined with historical data to establish when assets need to be replaced. Likewise, transportation and logistics companies can use sensor data and geographic and environmental information to customize truck maintenance plans.

Further, IOT data and analytics supports organizational decision making, as experts alter routes to prevent bottlenecks at loading docks and changing inventory locations. This information improves on-time delivery and reduces fuel and labor costs.

With all the promises of IOT, Schied does mention likely challenges. These include the potential of security breaches, a reallocation of current jobs and business disruption.

“Additionally, the IOT is expensive and time consuming to implement, and the more parts of a business that are integrated into an IOT system, the more disruptions that business could face,” Schied writes. “However, integration can be conducted in stages over the course of several years.”

He adds, “As we see logistics and supply chains become more complex, implementation of IOT is necessary.”

We’ve transformed our business to help transform yours

IOT is one example of how the world of supply chain is rapidly evolving. Technological advances combined with a renewed focus on sustainability and more, make staying ahead of the curve a challenge for corporations. That’s where we come in. In January 2019, we are officially launching the Association for Supply Chain Management (ASCM). This is more than a new name or a rebrand, this is an entirely new association. With ASCM, we expand our reach and broaden our impact, becoming the leader on all things supply chain. Plus, we’ll still do what we’ve always done — give your supply chain team the tools they need to advance their careers and create value for your company.

Abe Eshkenazi
APICS CEO

Top five supply chain podcasts of 2018

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Australasian Supply Chain Institute has reviewed podcasts interviews all over the globe to bring you the very best for your listening pleasure over the holiday break:

1.The Future of Work

Jacqui Canney, is EVP and Chief People Officer at Walmart and Clay Johnson, is EVP and Chief Information Officer at Walmart.

Jacqui is focused on the development, the retention and the rewarding of their 2 million employees. Clay is charged with putting ICT and HR together to create more productivity and automation. Walmart is the world’s largest employer with 5000 stores in the U.S and 10,000 globally.

Duration: 1 hour

ASCI review: An unbeatable interview on how Walmart is evolving and using tech to train and up skill their workforce; how they are using Blockchain to track food; what the future of Walmart looks like 5-10 years out. An interview just darn worth your time. 

2. ASCI Lounge

Daniel Kohut, Director, Solutions Advisor at JDA, shares his sales and operations planning expertise starting from his Australian career pathway, to the present day and the importance of professional development for supply chain experts in the midst of an era of digitisation transformation.

Duration: 20 minutes

ASCI review: So great to hear the Aussie accent and someone so passionate about the future of supply chain careers. Some good advice for professional development. 

3. Talking Logistics

Scroll straight to Episode 6: Angie Freeman, Chief Human Resources Officer, CH Robinson shares insights and ideas on the importance of recruitment and talent in the supply chain industry.

Duration: 29 mins

ASCI review: Best take on articulating the challenges in a succinct interview.

4. Supply Chain Now

Sandra MacQuillan serves as the Senior Director of Supply Chain Strategy & Transformation for Kimberly-Clark, where she leads company’s global supply chain, with responsibility for procurement, logistics, manufacturing, quality, safety, and sustainability.

Amy Gray serves as HR Director for Global Supply Chain at Kimberly-Clark. Amy has served in a variety of HR-related roles at K-C over the last 12 years, to include HR Business Partner and HR Project Leader.

Duration: 1 hour

ASCI review: Jump to 18 minutes in..the first part is just chatter. Interesting take on diversity to better represent customer profiles and global reach.

5. ASCI Lounge

Indrasen Naidoo, Director, Supply Chain System Transformation, Roy Hill (a 55 mega tonne per annum iron ore producer in Western Australia), joins us on the ASCI Lounge to reflect on Roy Hill’s roadmap for Intelligent Supply Chain for Assets, highlighting the need for leadership capacity; rethinking flows; and applying expert technology.

Duration: 20 minutes

ASCI review: Some salient points on how supply chain in Australia is stuck in traditional programs and what Roy Hill has done to move the dial. 

Enjoy your holiday podcast listening!

ASCI Lounge is Australasia’s supply chain podcast channel with over 3,500 downloads since 2016. To book an interview, or to join a panel discussion on a particular topic, email the ASCI National Office at enquiries@asci.org.au

ASCI National Office is closed from Friday 21 December however, you can purchase Guided Learning registration right up until 6 January 2019. For more information, visit: www.asci.org.au/education 

Monique Fenech is the host of the ASCI Lounge podcast channel.

 

 

 

Five reasons why the APICS Certified Supply Chain Professional (CSCP) could be your most audacious career move yet

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More than 25,000 supply chain practitioners have studied the APICS Certified Supply Chain Professional (CSCP) to master the essential technology, concepts, and strategies related to end-to-end supply chain operations. Here’s how it can benefit your career in 2019:

  1. Get promoted by developing unique solutions for the end-to-end supply chain like Arsalan Hussain who after studying CSCP, designed a management dashboard with end-to-end data and KPI visibility which was used by management for reporting. Arsalan was transferred to Procurement and Analytics and within two years promoted to Manager of Supply Chain. On average CSCP designees see a 12% pay increase and improve their hiring potential by 65%.
  2. Gain new ways to collaborate with partners like Maria Petrochenkova who after CSCP, developed the skills to effectively couple strategic buyers with product managers to drive innovation.
  3. Grow prospects for general management roles like Kuban Chetty whose finance background and CSCP study honed his skills to implement productivity initiatives around total supply chain, incorporating planning and operations management. He became confident in running financial scenarios around total supply chain activities and implement productivity initiatives focused on factory planning and highlighting capacity usages.
  4. Lead initiatives where supply chain is the business enabler like Nate Joliff who  after studying CSCP applied it to capture key data on extended database processes for racks and container design which helped minimise transportation and storage costs by 15%, saving US$2.3M to the bottom line.
  5. Bolster evidence for Practitioner Registration eligibility. ASCI’s newly launched Practitioner Registrations for Procurement, Logistics and Operations Management require eligibility through evidence of relevant certifications, qualifications and work experience. According to Dr Pieter Nagel, ASCI’s CEO-Professionalisation, the APICS CSCP is a favourable component for eligibility for registration and furthermore provides a significant knowledge base for examination preparation for the Professional Registration to be made available in 2019.
What’s more, you can now tap into accessible and affordable study options via self study and ASCI Guided Learning two hourly weekly sessions online either within the weekday or week evening as part of ASCI’s online pilot program with APICS! Register to 2019 classes before December 2018 and you’ll receive $100 savings. For more information, please contact us via enquiries@asci.org.au

Five reasons why APICS CPIM is a must for every ERP user and consultant

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For the most part of my career, I have been known to be an active member of the APICS community. This means that, quite frequently, I interact with SCM practitioners and ERP consultants from different industries and with different professional backgrounds. During discussions, I am often asked what ways are best to acquire more in-depth-knowledge of the SCM/ERP domains.

Drawing from my 9 years of extensive, hands-on experience in the fields of Supply Chain Management and SAP ECC ERP implementation/support within the Pharmaceutical and FMCG industries, and a unique techno-functional skill set in SCM enabling technologies and Domain Expertise in the SAP PP/PP-PI module, I have compiled some advice for others.

When reflecting on numerous SAP ERP implementation/improvement projects, I keep falling back on the certainty and solidarity of the APICS certification: Certified in Production and Inventory Management (CPIM) which I believe was one of the main factors that led to my implementation success. Here are five reasons why I believe the APICS CPIM is a must for every ERP user and consultant:

  1. It harnesses your talents: It is widely believed that a lack in SCM talent is the reason behind many ERP implementation failures or less than optimal ERP performances – both the user/consultant sides. And while there is no one-size-fits-all kind of advice, the APICS CPIM certification has so many benefits to both users/consultants that I almost always advise people to pursue APICS CPIM because it is more about getting the best ROI of an ERP implementation.
  2. It follows a process-orientated approach: ERP commercial packages are all built to computerise the classical value chain activities of a company. These value chain activities are resembled in the modular structure that all commercial ERP packages follow. For example, business processes relating to Supply Chain Planning including, Sales and Operations Planning, Demand Management, Production Planning/Scheduling would be found under the Production Planning “PP/PP-PI” module in SAP ECC ERP. Likewise, other business process compromising a company’s value chain would be found as “canned” business processes across different modules of an ERP solution. The CPIM follows a process orientated approach to Supply Chain planning in a fashion that’s is almost identical to what is found in a SCM/Manufacturing Modules of and ERP package. This strategic fit between how ERP systems are structured and the process-oriented structure of the CPIM courseware is what makes CPIM the most powerful framework for SCM/ERP professionals in both user/consultant roles.

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    Australasian Supply Chain Institute offers the CPIM Learning System for self study or together with Guided Learning sessions, available right across Australia

  3. It mirrors the same language as your ERP: The concepts and terminology of an SCM/Manufacturing module of an ERP system, such as MPS/MRP, BOM, phantom assemblies, time fences and forecast consumption techniques, just to name a few, that prove tricky for most users/consultants to grasp are explored in-depth in the CPIM courseware in an a clear and easy to follow approach with plenty of real life examples. This helps to better utilise system functionalities/features that are likely to be ignored due to the lack of underrating of such concepts.
  4. It builds confidence to apply a configuration effort: CPIM equips designees with knowledge that proves critical to guide system configuration efforts in the SCM area.
  5. It results in better, more streamlined implementations and a higher ROI for digital transformation efforts: Many companies the likes of BASF, DuPont and Intel have adopted APICS frameworks which helped them achieve organisational goals and increase the efficiency of their systems and people. It’s why over 110,000 other SCM practitioners around the world have attained the CPIM. Now it’s up to you. https://www.apics.org/apics-for-business/customer-stories

By Hatem Abu Nusair, M.Sc. Engineering, CPIM-F, CSCP-F, SAP Certified Application Associate, APICS Master Instructor

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Hatem is a Global Supply Chain Management & ERP Expert. He is currently the Production Planner at Tip Top, one of GWF’s divisions in Sydney, having moved from Jordan where he worked for a blue-chip international company that grew rapidly. Here, Hatem founded the Regional Middle East & North Africa (MENA) Supply Chain Department with the purpose of optimising Supply Chain performance across 13 subsidiaries through demand management and forecasting, capacity management, inventory control, and special projects, which entails: IT initiatives, ERP implementation, re-engineering of Supply Chain processes and other relevant matters.

Hatem is a qualified Industrial Engineer and a Master of Manufacturing Engineering candidate at UNSW. He is a Certified Fellow in Production and Inventory Management (CPIM-F) by APICS, a Certified Fellow Supply Chain Professional (CSCP-F) by APICS and a Certified Application Associate by SAP SE.

Hatem will be facilitator for Term 4 CPIM Part 2 Guided Learning for Australasian Supply Chain Institute where will be share his passion of streamlining supply chain processes, eliminating redundancies and utilising enabling technology to achieve operational goals with CPIM Part 2 students.

 

 

The Two Levers of Inventory Optimisation

By Henry Canitz, Director of Product Marketing & Business Development , Logility

When I hear the term “Lever” my mechanical engineering side comes out and I think of the Physics and Mechanical Design courses I took some 30+ years ago. Although I didn’t appreciate it at the time, my engineering education laid a strong foundation that has helped me be as successful as possible in whatever I did. More than anything, I learned how to analyse and solve problems. So when I think of a lever I think of a rigid bar resting on a pivot or fulcrum, used to help move a heavy or a firmly fixed load with one end when pressure is applied to the other.

Back to present day and the supply chain. Two powerful levers a company can use to optimise inventory are “Working Capital” and “Customer Service Levels.” Through the effective use of these levers, you can free trapped working capital while improving service levels.

Your company’s inventory efficient frontier is a tradeoff curve between working capital and service level and represents the currently achievable service level at any corresponding inventory investment. At its most basic, start with a piece of graph paper and plot your current service level on the x-axis and current inventory level on the y-axis. Chances are you are not on the inventory efficiency curve that is theoretically possible given your current operating capabilities. When you remove inefficiencies, failures, etc. and estimate how much your service level will go up and down with changes in inventory investment you end up with a curve – your current inventory efficient frontier curve. Organisations can slide up and down along this curve by manipulating the service and inventory levers (see Figure 1).

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However to create real value you have to be able to shift the inventory efficient frontier so that higher service levels can be achieved without increasing inventory or the same service levels can be achieved with less inventory. Multi-echelon Inventory Optimisation (MEIO) allows you to truly optimise your inventory across the entire supply chain and enables you to shift to a new efficient frontier for your entire supply chain (Read the eBook: The Inventory Optimization Handbook).

By modeling the end-to-end supply chain, MEIO determines not only the optimal inventory to carry at each location but also at which locations each item should be carried. MEIO looks across sales channels, distribution tiers, and even types of inventory (raw, WIP, FG) to understand how best to minimise total inventory while still providing the desired customer service levels. MEIO can take you into unexplored territory providing reductions in working capital of up to 30 percent or more. For most companies that amounts to millions of dollars in savings annually. That is an impressive use of levers.

What is important to understand is that the supply chain is a living, breathing and constantly changing organism. Your optimal inventory strategy for this month might be suboptimal next month due to changes in demand or supply, changes in competition or market health, or a variety of other factors. Modeling your end-to-end supply chain inventory is not a “one and done” activity and therefore there is always opportunity to shift that efficient frontier into new and undiscovered territory.

Do you understand your company’s service level – working capital tradeoff? Can you model your end-to-end supply chain to determine your optimal inventory locations and levels?

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Henry Canitz, Director of Product Marketing & Business Development, Logility

 

 

Turning Reverse Logistics into Profit

While retailers are still celebrating one of the strongest holiday buying seasons in recent years, the secondary retail market is now enjoying its own successful season. Once consumers take their unwanted items back to retailers, resellers and reverse logistics groups acquire those items to turn their own profits, according to an article in The Wall Street Journal.Golden_Passenger_1

The National Retail Federation reports that holiday sales totalled nearly $692 billion in the last two months of 2017. Reverse logistics provider Optoro estimates that about 13 percent, or $90 billion, of that merchandise, will be returned by the end of this month. The most commonly returned items include clothing and apparel, electronics, beauty products, and sports and outdoor gear.

About half of this returned merchandise is restocked on the retailers’ shelves and often resold at a discount. Some 5 billion pounds of merchandise is just thrown away because this option is cheaper than restocking and reselling the items. The remainder is picked up and sold by the secondary retail market. Retailers have actually improved their reverse logistics processes in the past few years, with many being able to process hundreds or thousands of items a day, noted Tony Sciarrotta, executive director of the Reverse Logistics Association. Some retailers even add a second logistics shift to help manage the returned items and move them to the next selling point as quickly as possible, he said.

As a result of these return trends, January and February tend to be the busiest months for resellers and the reverse supply chain, explained Howard Rosenberg, chief executive of B-Stock Solutions. B-Stock Solutions manages liquidation sites for Best Buy and Sears, among other major retailers, and auction sites for retailers such as Costco, Macy’s, JCPenney and Lowe’s. “It’s just mayhem during this period,” Rosenberg said.

Resellers acquire the returned items through liquidation sites at a deep discount, enabling them to turn a profit. For example, last week, Best Buy sold 49 returned washing machines and dryers on one online auction site for $13,300 — a 68 percent discount. Similarly, on the same day, Sears resold four pallets of sportswear, intimate apparel and accessories for only $5,825 — a 93 percent discount. Damaged or bulk items usually have the greatest discounts.

Because of the strong holiday selling and returning seasons in the past few years, the resale market is stronger than ever. Post-retail sales of returned and overstocked items totalled $554.2 billion in 2016 — only $137.8 billion less than 2017’s November and December sales — and have been growing at approximately 7.5 percent a year, reported Zac Rogers, an operations and supply chain professor at Colorado State University. Nearly half of those 2016 sales were collected by salvage dealers and online auction houses, the remaining half collected by smaller vendors like dollar stores, factory outlets, pawn shops and flea markets.

The secondary retail market also received a volume surge this year following the rise in online purchases, which are more likely to be returned than items purchased in a physical store.

In conjunction, online liquidators like B-Stock, Liquidation.com and Optoro’s Bulq.com have grown their businesses. Online auction sales have increased 66 percent in the past 10 years, and combined sales through factory outlets, dollar stores and value retailers have more than doubled.

Be a part of the action

These retail trends are fueling the growth of the reverse supply chain, which the APICS Dictionary defines as, “The planning and controlling of the processes of moving goods from the point of consumption back to the point of origin for repair, reclamation, recycling or disposal,” or, in this case, resale. The growing secondary retail market will need resources to collect, manage and move an increasing amount of inventory to the new end users.

APICS offers resources to help you and your company participate in the growing reverse supply chain. Consider earning your APICS Certified in Logistics, Transportation and Distribution (CLTD) designation. The APICS CLTD program covers reverse logistics as well as capacity planning and demand management, order management, inventory and warehouse management, transportation, global logistics, logistics network design, sustainability and other important topics. Learn more at asci.org.au/cltd.

Author – CEO, APICS
Abe Eshkenazi

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