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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BAEP’s Beaumont on understanding the economics of innovation

1515326886990by Julian Beaumont

For all the interest in self-driving vehicles, blockchain, 3D printing and the like, very little time is spent by investors in understanding the economics of new innovation and who might actually benefit.

Most investors in these hot industries can’t fathom anything other than a bright future. With the benefit of hindsight, however, investing in the latest hi-tech industry isn’t necessarily the easy path to riches most might presume.

Looking out from the 1920s when air travel was just taking off and the commercial airline industry was attracting much excitement, few would have been disappointed by its subsequent growth or importance to society. Investors in airlines, however, have been losing money ever since. Indeed, many airlines have gone bankrupt, including Ansett and Compass, and most have at some time required bailouts.

Consumers, however, have benefited, especially through lower flight prices over time. And to prove innovation isn’t the key to success, the supersonic Concorde stopped its super-fast flights in 2003.

Similarly, automobiles, plastics, personal computers and dot-coms were all once new-age industries that have caused carnage for investors. Picking the few winners that will emerge from the hype is often difficult.

From the dot-com bubble, Amazon is obviously one. Other big tech winners, such as Facebook, Google and Netflix, weren’t even listed at the time.

To date at least, Amazon has won with profitless prosperity, with arguably little profits to show for its success. Online retailing has been a tough place to invest.

Here, the value of the innovation accrues to customers rather than shareholders, as those in Surfstitch and Temple & Webster can attest.

Improved range, searchability, price transparency and convenience all clearly benefit the customer, but come at a cost to retailers – particularly due to increased price competition and expensive delivery costs.

Interestingly, it has been bricks-and-mortar retailers like Zara and H&M whose fast fashion and express supply chains have been among the most profitable innovations in retail in recent years.

Right now, investors are enthusiastic about lithium stocks, disruptive tech names, pre-profit concept stocks and bitcoin. Of course, that which is new and lacks much historical track record allows this optimism, with little in the way of disproof.

The key for investors is not to focus exclusively on the importance, societal value or seemingly exponential growth of the innovation, but to understand the economics behind it.

For example, if lithium is ultimately plentiful, it won’t be lithium miners that will prosper from the electric vehicle revolution. Nor will it necessarily be Tesla, as incumbent auto manufacturers can just as easily go electric.

Ultimately, whether any one company truly benefits from innovation comes down to whether they have something unique – a competitive advantage – that limits the extent to which the value of the innovation is competed away or otherwise passed on to the customer.

A common example is where the innovation makes for a unique product or service. Often forgotten as innovators are a number of world class Australian-based healthcare companies that include Cochlear, Resmed, Sirtex and CSL.

They spend big on researching and developing new and better medicines and medical devices.

Their products are protected by intellectual property rights such as product registrations and patents, allowing them to reap the profits of their innovation. Interestingly, investors don’t seem to attribute much value to R&D spend, perhaps because it usually represents an expense and subtracts for profits.

For example, CSL’s pre-tax profits would be almost 40 percent higher but for its R&D investment, which is rarely raised by those focused on its apparently lofty earnings multiple.

Other examples on the ASX include Aristocrat, which is spending more than $300 million annually on developing new market-leading slot machines and online social games; Reliance Worldwide with its Sharkbite push-to-connect plumbing fittings that offer ease and time saving in installation, and which are taking share by disrupting the market; and Costa Group, with its intellectual property in blueberries that improves quality and all-year-round availability.

As these cases attest, seemingly boring innovation can produce exciting profits.

Another less risky way to play innovation is by understanding where it can augment a company’s competitive advantage.

For example, the stock exchange ASX Limited is soon to replace its CHESS settlement system with blockchain technology that is expected to reduce costs and provide added functionality.

Another good example is Domino’s Pizza Enterprises, which operates a franchise of pizza stores. The company has very profitably leveraged new innovation to improve the efficiency of its operations and the cost, convenience and appeal of its customer offer.

For example, new ovens cook pizzas in less than four minutes, its GPS tracker helps speed up deliveries and grows the appeal of using its online ordering app, and DRU (Domino’s Robotics Unit) delivery robots save on costs and are fun for customers.

Of course, it is hard to get ahead using innovation that is readily available – all supermarkets now get the labour savings of self-service checkouts, for example – but Domino’s has been ahead of the curve in integrating new technologies into its customer proposition and thereby advancing its competitive advantages.

There are two takeaways. Firstly, to profitably invest in innovation often means looking beyond the latest sexy sector, including to second derivative beneficiaries. And two, looked at this way, the Australian market is full of innovative companies that are worthy of investment. After all, miners like Rio Tinto have already started using driverless trucks and trains, well ahead of Silicon Valley.

Julian Beaumont is the investment director at Bennelong Australian Equity Partners.

Source: Australian Financial Review


Read more:
http://www.afr.com/markets/baeps-beaumont-on-understanding-the-economics-of-innovation-20180102-h0cdwv#ixzz53eEa52qM
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Overall view of event logistics is crucial for Melbourne Cup Carnival

The Melbourne Cup is the race that stops a nation but, behind the scenes, supply chain management experts are far from stopping.

An overall view of the entire end-to-end supply chain with control over the entire management of the process for large scale events is imperative otherwise chaos erupts. We saw this unfold during an Olympic Games where there was no clear management of processes. Most supply chains are managed in an ongoing, sustainable way, however, supply chain management for large scale events operate entirely differently with rapid ramp up and ramp down phases, detailed master delivery schedules, ample availability for consumable goods, and lastly a rigorous plan for waste removal. The Melbourne Cup Carnival is no exception.

Lexian has developed proprietary event management software to manage the logistics for major sporting events.

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The Australasian Supply Chain Institute (ASCI) and myself wish to invite those working in supply chain and logistics to a breakfast where Bruce Craig, from Llamasoft and myself will offer you the opportunity to:

·       Learn how these best practice companies are achieving competitive advantage by significantly improving in the areas of; cost, margin, customer service and risk.

·       Understand how they are implementing analytical centres of excellence to perform; network, product flow, production, cost-to-serve, multi echelon inventory optimisation and simulation.

·       Join a discussion on common supply chain problems

·       Run through the “Supply Chain Matrix Scorecard”

Imagine if you had a living, digital model of the end-to-end supply chain, enabling continuous improvement and innovation to rapidly and accurately answer the toughest ‘What-if’ questions and generate effective and clear data driven recommendations. The principles of Supply Chain Design are applicable to most businesses that have a supply chain. This presentation will provide members with sufficient information about Supply Chain Design so that they can determine the “fit” within their own business as well as the foundations of building a business case for action.

ASCI Networking Breakfast: An Overview of Supply Chain Design

When: 7.30am, 30 November 2017

Where: Michael Page offices, Level 19, 600 Bourke St, Melbourne

Cost: Free to ASCI members and their guests

RSVP: via EventBrite: https://www.eventbrite.com.au/e/a-brief-overview-of-supply-chain-design-tickets-38645845765

Guest Blogger

Shaun Gates (Managing Director, Lexian Solutions)

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ASCI2018 Advisory Panel

Our journey continues on the path to ASCI2018. Our main announcement has been made and the implementation is well under way. Our next step is to announce our advisory panel, and here it is.

·       Pieter Nagel, CEO, ASCI – Dr Nagel has spent his whole working career of more than 30-years, in the Supply Chain domain. He has achieved a dynamic balance between corporate, consulting and academic positions and has always endeavoured to advance the logistics profession. He developed an international reputation as a leader in Supply Chain Strategy.

·       Penny Bell, ASCI Director and Supply Chain Director, Medical Devices, ANZ, Johnson and Johnson – Penny Bell is a highly effective strategic supply chain executive, with well-developed general management competencies who focuses organisations on their strategic direction, challenges the status quo through continuous improvement initiatives, guides transformational change programs and identifies and develops high performing talent.

·       Henry Brunekreef, ASCI Director and Director Advisory Services, Supply Chain and Operations Management, KPMG – Henry Brunekreef is a Senior Manager with nearly 20 years of industry and consultancy expertise in leading organisations to operations excellence, with extensive domestic and international experience in all aspects of Supply Chain, Customer Service, Logistics and Project / Change Management. First-class strategic thinking, networking and interpersonal skills allow him to create high performing teams and drive necessary change. Henry is result driven whilst constantly focusing on customer requirements.

·      Laynie Kelly, ASCI Director and Marketing Manager ASIA Pacific, IPTOR – Laynie is an accomplished marketing and communications executive and advisor with more than 20 years corporate development experience in the technology, food & beverage, automotive and media sectors, managing sales and creative project teams. Laynie specialises in applying her expertise and market knowledge to consistently exceed the marketing performance of her clients.

Our advisory panel will be able to provide the strategic advice and relevant industry knowledge to take ASCI2018 to the next level. The panel includes an array of experienced professionals from across the supply chain, as you can see above.

With such a strong advisory panel, ASCI2018 is sure to be a unique opportunity. Each panellist comes from varying sectors within the industry, meaning your organisation will be able to engage everyone, from logistics to procurement and overall, your entire organisation can benefit from the latest industry advances.

You are also invited to take part in our survey and let us know what you want to see and hear at the conference – HERE

 

Regards,

Pieter Nagel
CEO
Australasian Supply Chain Institute

RAAF Site Visit

Green Light Day 2017

Our August site visit was one of the most interesting and insightful we have had to date. This is ASCI’s first step as we change the format of our site visits and ramp up the learning experience to new heights and what better way to start this take off than with the RAAF Base Richmond.

The day started off with ASCI staff and members meeting up on a crisp Richmond morning at 8:30, where we were lead into the base and given our safety briefing. The first session provided an outline of the Australian Defence Organisation’s supply chain, including the role of Capability Acquisition and Sustainment Group (CASG) in supporting the C130J and C27J aircraft based at RAAF Richmond.

Now we come to the exciting part, we got to go inside the C27J Spartan , a battlefield airlift transport aircraft operated by Number 35 Squadron. This particular aircraft is able to move people, equipment and supplies in Australia and the surrounding area. Inside, we got to see how everything is packed in and all the different facilities they have to get their goods from point A to point B. The aircraft is able to take a wide variety of tasks including being able to support humanitarian missions in remote areas, delivering ammunition to front line troops and also undertake aero-medical evacuation of casualties. This aircraft is able to carry a significant amount of weight and land on airstrips that are not suited to some of their other aircraft, providing additional capability especially on humanitarian disaster relief missions.

Some of the C27J’s missions include air drops, this means they cannot land due to the damage or limited capacity of an airstrip however supplies are still able to be delivered.  Our next stop was 176 Air Dispatch Squadron, where the parachutes used for the air drops are cleaned, repairs, packed and stored.  These parachutes go through a whole production line to make sure they are suitable for both trained personnel and supplies which can include supplies as large as tractors.

Our day ended with a chat about the storage of inventory in the Australian Defence Force including the use of a national network of warehouses and storage sites. This allowed for question time, where members were able to better understand concepts used at the RAAF Base Richmond and take these notes back to their own daily job.

The whole experience was interesting and shows the steps ASCI is taking to make these experiences more exciting and intriguing for members to benefit.  One member stated, it was a “great lifetime experience… thanks for organising it.” We are eager to see what our next site visit will entail!

ASCI2018 Save the Date

Here at ASCI, it has been a pipeline dream of mine to run our own conference for the many members of ours in the community.  I am fortunate enough to announce, that this has become a reality and our very own conference ‘ASCI2018‘ is underway to be brought to you on 23 & 24 May 2018.

We have been working and will continue to be working hard in the lead up to ASCI2018. I am aware of the rapidly changing environment of the supply chain industry and the ASCI team have implemented this into the theme and program of the conference. ASCI2018, will allow for supply chain managers to receive some clarity around the latest industry developments admit a rapidly changing supply chain landscape due to e-Commerce disruptions.  This is why we have named the conference ASCI2018: e-Commerece: Driving Supply Chains into the Future.

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The world is experiencing major disruptions. CEOs see more threats today versus three years ago, up 78% according to a recent study.* As e-Commerce turns the spotlight onto the supply chain, Operations, Logistics and Supply practitioners have a huge responsibility to offset these threats, leverage new technologies and build faster, better global supply chains. More than ever, these practitioners need to be at the top of their game, working together across functions within the organisation, and building the capability to respond to e-Commerce. Equally important is that this theme is addressed in relation to the technical best practice knowledge on which ASCI has laid its foundations.

Attending ASCI2018 will be a unique opportunity to engage your organisation’s entire supply chain, logistics and procurement teams in a professional learning experience. At ASCI, we’re passionate about helping members re-position themselves for sustainability in light of major disruptions. These major disruptions are coming thick and fast. We need to protect and educate our members so they can respond to such change.

Finally, I have to mention that we have selected our strategic endorsement partner, Akolade to help run our conference. We are very impressed with the quality and relevance of Akolade’s leading-edge, well researched events which we have been participating as the Endorsement Partner. Akolade has demonstrated the expertise and professional approach we require to run ASCI2018 and we look forward to collaborating yet again on our very own conference.

I am so proud of this achievement and milestone the ASCI team have accomplished. Looking back at all the hard work the team have done to make this conference happen shows how dedicated they are to bring the best of the best to our member base. I look forward to seeing you all at our conference.

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*PwC CEO Insights, 2017: http://www.pwc.com/gx/en/ceo-agenda/ceosurvey/2017/au/key-findings.html

 

Pieter Nagel
CEO
Australasian Supply Chain Institute (ASCI)

Is your business disruption ready?

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A technological storm is brewing, one that has many different names. The Fourth Industrial Revolution. The Cyber Physical Supply Chain. Industry 4.0. The Age of Disruption. The Digital Age.

Whatever name you prefer, the concept behind them all is the same; we are facing a wave of change driven by innovations in robotics, autonomous vehicles, additive manufacturing, smart machines, e-commerce, big data, artificial intelligence, machine learning and cognitive computing. Machines are becoming smarter. Jobs are becoming automated. Management is becoming outdated.

It is poised to affect the entire end-to-end supply chain. It’s impacting every area from digging stuff out of the ground, through to the factory, the warehouse and now the transportation of goods. Your children are unlikely to do the same job you did. In fact, the entire concept of a job for life, even just a career, is something that may soon be a relic of the past.

It’s a winner take all model. For those winners, the spoils will be enormous, concentrating great power into the hands of a small group of technology driven organisations. Unlike the First Industrial Revolution, which benefited people both as participants in the production and consumption of goods, this time round the greatest beneficiaries will be those with capital; the shareholders. The benefits to ordinary people will be limited to that of a consumer.

To demonstrate how big this shift is, according to a 2014 estimate, the three leading companies of Silicon Valley had a combined market capitalisation of $1.09 trillion and employed 137,000. Just twenty-five years earlier, in 1990, the three largest companies in Detroit had a market capitalisation of $36 billion – but they also collectively employed about 1.2 million workers. The trickle down model seems to have stopped trickling.

So while the World Wide Web provides many things for free, such as knowledge, many workers are seeing their traditional skills become redundant by new computer technologies and the new employment opportunities have mainly been created for highly skilled workers. The scary point is, we are only at the very start of this economic and social transformation. By 2025 autonomous vehicles –cars, lorries, drones – will be commonplace, replacing the multitude of driving jobs currently carried out by people. In the US alone there are 8.7 million trucking-related jobs, and approximately 1 million car drivers (180,000 taxi drivers, 160,000 Uber drivers, 500,000 school bus drivers, and 160,000 transit bus drivers). Very few of these will have a job moving forwards.

The transformation will affect more than blue collar workers; the nature of occupations and whole industries is changing. Technology is enabling not just the automation of repetitive tasks but also cognitive tasks involving subtle and non-routine judgment. All the signs indicate that we are entering a period of disruptive change of a scale not seen since we decided to put down our pitchforks, stop living an agricultural existence and head for the cities to become part of an industrial society.

Companies like Amazon, who have a clear vision as to how these technologies can aid their mission to dominate the world of retail, are mercilessly pushing their virtuous cycle of innovation, changing the way we buy goods, and our expectations around when and how they are delivered. They envision an end-to-end value chain dominated by platforms that they are in control of, a model where the consumer only has to say out loud what they want, and behind the scenes a fully automated global supply kicks into gear to provide your goods within hours.

The days of mass production are now over. The future supply chain will be personal, automated and local. The question is – are you ready?

To find out the answer to this, and to learn more about the nature of this new wave of creative destruction, be sure to attend my full day workshop on Disruption in the Supply Chain.

During the day we will explore the nature of the changes currently underway, how they will affect your business, what companies like Amazon are doing with these technologies to ensure they orchestrate the whole international supply chain, and how companies need to change their mindsets and organisational structures in order to adapt to this new world.

Learn how to not just survive, but thrive during this time of disruption.

About our Guest Blogger

Sean Culey

Member of the European Leadership Team of the APICS Supply Chain Council SCOR-P, FCILT, is a recognised strategic advisor, business transformation expert, keynote speaker and author focusing on helping companies develop compelling value propositions and strategies that get executed. Previously CEO of SEVEN, Sean has 25 years of global experience across numerous verticals, and is also CMO for an international software company. Sean will be delivering a series of workshops on the impact of disruptive innovations on business across the Asia Pacific region in November 2016, and his first book; Transition Point: Revolution, Evolution or Endgame? is due in 2017.

http://www.supplychaindisruption.com

The world through a different lens

 

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As supply chain professionals, we see the world through a different lens. We delight more than others when our products and services are delivered on time or when the quality of the products and services meets our expectations. So when supply chains let us down, we feel very passionate about it.

This week’s Government meetings regarding Murray Goulburn pull at our heart strings. Do we buy the $2 milk or boycott it? Our thoughts go out to the supply chain professionals in the dairy industry and every supplier caught in the industry’s current situation. If you missed the Four Corner’s episode Milked Dry on Monday night, it offers a very balanced view of the industry’s current state of play.

As supply chain professionals, we are also acutely aware of the rules of business. So we do our best at solving very complex problems to uphold integrity. APICS has release a great three-minute video Raising the bar on supply chain management which captures our profession. It gives us a sense of pride and belonging.

The global supply chain industry is undergoing one of the largest changes in apicsAU’s 53 years in the industry. apicsAU has been working closely with APICS and its global Channel Partners to address these changes and determine how they affect the future career development needs of the supply chain professional.

If you review the APICS competency models for supply chain roles, every one of our roles requires higher order problem solving, planning and organisation, decision making and analytical thinking. As we move through change, these qualities will be much needed.

Here are five elements to a future-proof and supportive professional industry membership in supply chain:

  1. Global perspective

A global supply chain requires membership to a global professional body. It is our responsibility to apicsAU members to deliver a global outlook on their professional career in supply chain. Connecting our members with APICS will allow us to provide a truly international professional membership.

  1. Innovation

The global supply chain industry is undergoing one of the largest changes and yet locally, we’ve seen our manufacturing industry contracting, with the associated loss of jobs. The Government has made several announcements recently about the future of employment in our country and the fact that innovation will be an integral component to jobs in Australia.

apicsAU’s Supply Chain Innovation Report will keep members up to date on innovation and how to approach disruption. It’s close to completion.

apicsAU is working closely with Australian Industry Group to better understand the Industry Skills Fund and how employers can up skill their supply chain teams in a growth phase. If you would like more information about how the Industry Skills Fund applies to your business, please refer to our resource section. Look out for our podcast on the topic.

  1. Continual learning

Professional learning is about having access to resources, especially for those of you who are unable to attend our keynote presentations and site visits due to remote location or timing. We are planning a comprehensive calendar of local webinars, podcasts, whitepapers and reports to assist in your professional development.

We’ve launched a recording studio in our National Office to develop the apicsAU Thought Leader Series of podcasts. Download them to your preferred pod catcher today.

Come along to apicsAU’s Regional Symposiums commencing this month to explore seven vital elements to Navigating your supply chain into the future.

  1. Flexible learning offerings

The next generation learner requires a flexible and vibrant delivery of programs. At apicsAU we want to ensure that we appeal to young members and can incorporate the APICS material in such as way that engages with their learning style.

We are introducing block classes and Saturday classes for certification modules, site visits combined with keynote presentations, Closed Facebook groups for alumni and students, exam apps, Q&A forums and special interest groups all in the effort to deliver a learning format to suit differing needs.

  1. Career development

We are excited to announce a Career Portal which will allow you to look for jobs in the supply chain industry from your member portal. You will be able to post your own profile when you are looking for employment and employers will be able to post job ads amongst our 10,000+ community. Recruitment partners will also post jobs and are committed to offering valuable employment market insight, career advice and talent acquisition counsel to members.

Become an apicsAU member today!