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Archives for August 2016

Return to Sender: Steps for Retailers to Keep Customer Returns of Dangerous Goods Compliant

By DC Velocity | 08/31/2016 | 8:28 AM

By Mike Pagel, Senior Consultant, Labelmaster

For companies in the e-commerce retail market, coordinating consumer returns of hazardous materials – otherwise known as reverse logistics – can be a challenging part of business. Hazardous materials or dangerous goods (DG) make up an increasing number of manufactured items and include batteries and battery-powered devices, electronics, paints and coatings, perfumes, aerosols, cleaning solutions, smoke detectors and even cosmetics. 

Returned products complicate logistical planning because they are subject to the same hazmat shipping regulations as other outgoing shipments. Plus, a majority of customers don’t know how to ship hazmat compliantly, and often don’t even know they are shipping hazmat.

The problem has been exponentially exacerbated with the surging use of lithium batteries.

How big of a deal is returns in the U.S. economy? Almost 9% of total U.S. purchases are returned to the amount of $284 billion annually. If your products include DG, it only complicates returns. 

In addition to customer returns, there also are employee store returns that must remain compliant. For example, a large technology company may have employees in retail locations returning a large number of products back to a distribution center. Any violations or penalties in this case would directly affect the company involved.

The Reverse Logistics Rule

To make the process of returning shipments easier for retailers, the United States Department of Transportation’s (USDOT) Pipeline & Hazardous Materials Safety Administration (PHMSA) recently published a final rule that sets forth specific rules to regulate the transport of materials under the so-called “Reverse Logistics” principle. This ruling makes some return shipments easier for retailers with brick-and-mortar stores. 

PHMSA HM-253 defines reverse logistics as the “process of offering for transport or transporting by motor vehicle goods from a retail store for return to their manufacturer, supplier, or distribution facility for the purpose of capturing value (e.g., to receive manufacturer’s credit), recall, replacement, recycling or similar reason.”

The new regulation provides the appropriate procedures for retail outlets returning unused, damaged, or defective hazardous materials products to their sources. Previously, such products were shipped in accordance with the Limited Quantity and ORM-D exceptions. Very often, such goods were not even recognized by their shippers as being regulated in transportation. This has caused shippers to occasionally run afoul of regulations that in many cases they were not even aware existed.

It is important to note that, under the new rule, HM-253 applies only to highway transport, limited quantity shipments and private carriers. It does not apply to air shipments, rail shipments and marine shipments.

Per HM-253, for retailers shipping returns with their own vehicles, most hazmat packages do not have to be labeled or marked to reflect their specific contents. They can be shipped with a new marking. If shipping returns through non-private carriers – such as FedEx, UPS or USPS – all the full labeling and marking rules still apply.

To meet these new DOT guidelines, retailers will benefit from streamlined training requirements that include:

  • Identifying the hazardous materials in the shipment and verify compliance
  • Providing clear handling and shipping instructions
  • Ensuring that the instructions are known and accessible to employees when they prepare the shipment
  • Documenting that employees are familiar with the requirements

The Customer Conundrum

Unfortunately, HM-253 does not apply to returns that come directly from customers. Still, it’s the shipper’s responsibility to comply with hazmat transportation regulations and, in the customer return scenario, the customer is the shipper.

Should a customer have a return shipment rejected, who are they going to blame? A business, as a recipient of non-compliant hazmat shipments, is not necessarily liable for mistakes made by customers returning shipments. However, the company’s name and address are likely to be on the package. If a customer has a return shipment rejected, they are going to blame the business who shipped them the product.

If an incident in transport should occur, ultimately the package is going to have the company name on it. If that business was not providing instructions or guidelines on how to return dangerous goods, it can have a significant negative impact on the company’s reputation.

Additionally, regulatory inspectors will care more about the commercial aspect of the non-compliant shipment and will likely follow up with either the carrier or the company involved based on the number of customer violations. And, the inspector may recommend that the company provide better guidance on shipping methods.

Thus, it’s important that a business takes whatever steps possible to help customers ship packages in accordance with regulatory requirements.

Helping Customers Meet Shipping Requirements

Easy returns are an essential part of overall customer care. Retailers can help consumers ship returns compliantly by developing a returns process that includes the following components:

  • Train customer service representatives on the basics of hazmat shipping so they can assist customers.
  • Notify customers that rules exist, and give them guidance on the shipping requirements for the products being returned.
  • Insist that all return shipments be made via ground shipping, since air transport is exponentially more complex.
  • Consider sending customers packing materials and instructions.
  • Consider sending customers replacement items and skipping the return process altogether. In this case, provide the customer with information on the proper disposal of the items.

In addition to the training aspect, sticking to ground shipping is an important component. Employees won’t know what happened to that battery or that device from the time it got to the customer to the time they are returning it — if it’s damaged, then it’s an even greater risk. And there’s no need to receive it overnight, so there’s no reason to have an untrained person package a battery for air shipment. It just doesn’t pay.

Reverse logistics is a growing issue – especially with the increased use of lithium batteries in technology. Businesses should consider partnering with a DG consultant who can establish logistical processes to ensure compliant shipping, including appropriate hazmat labels and packaging, and provide optimal customer service training and resources.

 

Mike Pagel - High Res
About the Author
Mike Pagel is Senior Consultant for Labelmaster, providing dangerous goods and product regulatory support to customers worldwide through his vast experience and knowledge of hazardous materials regulations and his extensive network of dangerous goods professionals. Pagel may be reached via email at mpagel@labelmaster.com. 

The Smart Enterprise: Leveraging Mobile Data and Analytics to Make Better Business Decisions

By DC Velocity | 08/24/2016 | 7:44 AM

By Samuel Mueller, CEO and co-founder, Scandit

Many supply chain executives are realizing that mobile initiatives are paying off more than they expected. Sure, they might have assumed that mobile solutions would provide greater flexibility and help cut costs—but there’s more to mobility than many think. One key benefit that is often overlooked is the enhanced visibility that mobile technology can provide when you’re evaluating your company’s performance. 

Each mobile device that is deployed throughout an organization is collecting massive amounts of useful data. Every time a worker uses a mobile device, data is collected. For example, details about supply chain performance, inventory trends, sales figures, or asset location. The question is this: are you using that data in beneficial ways or is it just sitting untouched?  

This data can provide unprecedented insight into your operations when it’s used correctly. Not only will it fill in the gaps that you have in your existing knowledge, but it will also help you predict what’s going to happen in the near future and even years down the road. This kind of business intelligence contributes to the bottom line and leads to smarter decision-making and improved efficiency. Let’s take a look at just a few examples.

Manufacturing

When you leverage the business intelligence available from mobile devices to understand your customers’ requirements and have a complete view of your operations, you can closely evaluate your workflows and better predict upcoming orders and inventory needs. The efficiency boost that this provides leads to more efficient picking, increased employee productivity, and improved fulfillment.

Transportation and Logistics

Equipping drivers with mobile devices means that the efficiency of your delivery fleet won’t be a mystery anymore. Smartphones and mobile solutions work together to track assets and facilitate proof of delivery, and since that information is sent to the cloud, you can get real-time data at any given moment. You’ll have visibility into every truck, which will help you to understand shipping trends and optimize routes and load capacity so you can save money on fuel and make your drivers more productive.

At the same time, when you understand where an asset is at any given moment, you can provide up-to-the-minute status updates for your customers so they know exactly where their packages are. This level of visibility improves your customer service and drives loyalty. 

Retail

Getting the right products in the right locations at the right time is the goal of any retailer, and mobile data collected from stock taking and order entry helps you understand inventory and customer demands so that can be possible. The result: increased sales and more efficient distribution of products.

Analyzing data on customer shopping behavior also gives you the opportunity to provide a personalized sales approach for each customer through mobile clienteling so you can increase the likelihood that you’ll make the sale and provide excellent customer service along the way. 

Clearly, by integrating mobility into your operations, you’re not just taking advantage of the latest opportunities—you’re working to create new opportunities for your organization each and every day. Being data-focused will ensure that you stay ahead of your competitors. It’s time to get smart about mobility and find out what detailed data can do for your company and the decisions that you make. 

 

Samuel

Samuel Mueller is the CEO and co-founder of Scandit and is responsible for overall strategic direction, marketing, sales and business development. Prior to Scandit, Samuel was a management consultant and project leader for multinational companies such as Swiss Airlines, Swiss Re and IBM as well as a corporate researcher at the renowned IBM Zurich Research Lab. While at IBM, Samuel was awarded an IBM Research Division Award and a total of three IBM Invention Achievement Awards. He has authored numerous patent applications and has published his research results in leading conferences and journals. Samuel holds a PhD from ETH Zurich and graduated summa cum laude with an MSc in Computer Science and an MA in Financial Economics, both from the University of Zurich, Switzerland.

New Look at Supply Chain Start-Up Landscape

By DC Velocity | 08/16/2016 | 7:53 PM

By Julian Counihan, Red Sea Ventures

Given the enormous size of the entire supply chain market, verticals (and the start-ups within) are mostly discussed in isolation. I thought it would be interesting to examine start-ups in relation to the supply chain as a whole and soon noticed a pattern. Companies fell into one of three buckets: technology enabled, software infrastructure or automation infrastructure — and each bucket seemed loosely tied to particular verticals.

Julianchart

(Click chart to enlarge)

For more detail on the framework, I’ve defined the categories below.

Technology Enabled

Business models that easily integrate into a supply chain network and are generally characterized by a high service component and transactional pricing. Most start-ups in this category are disrupting brokerages, one of the largest verticals within supply chain composed of ~$125Bn in transaction fees. At first glance, start-up offerings can appear similar to incumbents but innovation lies underneath the surface. Automation through software achieves better operating margins which are leveraged for faster growth, better product, higher levels of service or lower pricing. If a start-up company in this category cannot automate labor-intensive processes, it heads down the challenging path of raising significant capital and chasing economies-of-scale. Transactional sales are easier to close than software or hardware sales meaning lower barriers-to-entry and more competition.

Software Infrastructure

Software businesses balance all the levers in a supply chain for optimal utilization. Even without adjustment to physical infrastructure, the opportunity for cost savings through optimization is massive. Software has been a part of supply chain networks since the early stages of the Internet and the major verticals (MES, SCP, TMS, WMS, ERP, etc.) are now dominated by large software companies. While this can mean considerable challenges for start-ups, incumbent platforms carry the baggage of decades-old technical design allowing start-ups to outperform on price or product offering. Alternatively, start-ups can seek to create new markets by digitizing formerly analog processes. This approach has little competition but a more difficult sales hurdle of justifying a new expense line item to the customer. In either case, the sales process can be difficult whether disrupting incumbent platforms or creating new markets. To get around this difficulty and lengthy hardware integration, software start-ups sometimes rely on systems integrators for channel sales.

Automation Infrastructure

Robotics & automation are the holy grail of supply chain technology; the idea of a physical internet with near-zero marginal cost for the transportation of goods. With e-commerce growth and the still unrealized potential for mobile commerce, existing supply chain networks cannot continue to satisfy rising consumer expectations on price and service without robotic automation. To meet this need, start-ups are leveraging advancements in other technology sectors (drones, virtual reality, self-driving cars) for autonomous trucks, last-mile drones and warehouse robotics. This market comes with challenges as physical infrastructure requires massive capital expenditure oftentimes expected to last for over ten years. Risk-averse customers may be unwilling to work with unproven start-ups without significant funding or sector experience on projects of such scale. Even in seamless design situations, cultural obstacles can stall transition from labor to automation; despite measurable benefits, companies may not be ready or willing to make the change.

Gross Oversight?

Thought I forgot about air & rail? Well, the above landscape includes start-ups that I personally track and I’ve yet to encounter more than one start-up operating in air or rail. My best guess is that the high barriers-to-entry (regulation, capital intensity, sales cycle, concentrated market share) make launching a start-up in those industries very difficult.

The supply chain market encompasses more than one trillion dollars and is an exciting, difficult market for start-ups. Innovation in this sector could bring near-zero marginal cost of delivery that will revolutionize where / how we live and what our cities look like. Needless to say, I’m excited to meet any founder willing to take on this challenge.

If you would like to be added to the landscape or have any questions, please shoot me a note at julian@redseaventures.com. Thanks for reading!

 

Julian

 

Julian is a principal with Red Sea Ventures. He started a career in technology at Fortna where he helped develop distribution & supply chain CAD software. After leaving, Julian joined Citigroup where he designed portfolio analysis systems and later transitioned to advising technology companies on M&A and capital market transactions. At Red Sea, Julian focuses on investments in logistics, automation, robotics and other emerging technology sectors.

The opinions expressed herein are those solely of the participants, and do not necessarily represent the views of Agile Business Media, LLC., its properties or its employees.

About One-Off Sound-Off

Welcome to "One-Off Sound-Off," a blog page devoted to guest commentary on all things supply chain. This is a space where industry leaders can share their opinions and expertise with the logistics and supply chain community. If you have an article or commentary you'd like to share, please consider sending a guest blog proposal to feedback@dcvelocity.com.



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