Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
No one buys Rooms To Go's products for the stuff they're shipped in. The cardboard, plastic wrapping, hardwood and plywood, and foam padding are mere afterthoughts, literally tossed aside by customers eager to try out their new furnishings.
But the privately held Seffner, Fla.-based retailer, which generates $1.75 billion in annual revenue selling mid-priced furniture, accessories, and home theater equipment, has a different take on trash. Through a recycling program launched in the early 1990s, one man's garbage has become Rooms To Go's gold, helped along by robust aftermarket demand for the packaging materials returned to the company's five U.S. distribution centers.
As for how much gold, Rooms To Go's recycling business produced $3 million in gross revenue in 2007. That's roughly triple what the program generated in 2005—an increase the company attributes to both its overall growth and the rapid run-up in scrap material prices. John Zapata, who conceived the recycling initiative soon after the company's founding in 1991 and is today senior vice president of distribution, estimates 2008's recycling revenue will be roughly equal to 2007's.
Not only has the program been profitable, it's also having a significant environmental impact. By year's end, Zapata projects the company will recycle more than 26,200 tons of solid waste, up from more than 21,400 tons in 2007. Of the 2008 total, 96 percent of all cardboard and foam is expected to be recycled, along with 87 percent of all plastic and wood.
Since the program began, 96,000 tons of solid waste—the equivalent of a 25-mile-long train pulling more than 2,200 boxcars—has been recycled rather than dumped in landfills. That figure includes 7,000 tons of plastic and foam, neither of which is biodegradable. The recovered scrap material is sold to a variety of buyers. The regional sites are responsible for determining their own aftermarket, with the consent of corporate headquarters.
Although the recycling program operates solidly in the black, the company did have to allocate funds for startup and maintenance expenses. Zapata estimates Rooms To Go has spent $3 million on the initiative—roughly equal to one year's revenue from the recycling operations—since its launch. That includes a $1 million investment in 2005 to upgrade and modernize recycling operations at the company's Lakeland, Fla., and Atlanta distribution centers, which has already been repaid, he says. Most of the remainder has been allocated to shredders, chippers, and balers, equipment that paid for itself in roughly half the time originally projected and that has also long since been paid off, Zapata adds.
The ongoing recycling expense mostly consists of routine maintenance on equipment and systems that is performed at relatively nominal cost. This means virtually every dollar in recycling revenue flows to Rooms To Go's bottom line, Zapata says. He adds that the program has also saved the company thousands of dollars in shipping and administrative costs, and has helped protect the environment, an achievement the company's founders—furniture retailing pioneers Jeffrey and Morty Seaman—"are most proud of."
Starting small
The recycling program was launched in 1991, after Zapata, who was one of the company's first employees, realized that the returned materials represented the kind of clean waste that could be profitably recovered for reuse. Because Rooms To Go is primarily a retailer and performs little manufacturing, its facilities were largely free of the tar, grease, and other gunk often found on factory floors. "We couldn't afford to have greasy stuff on any of the furniture, so the material that was shipped out was always shipped out clean," Zapata says. "When the materials came back, we knew we had clean refuse that could be recycled and that had value."
Today, about 60 percent of the company's waste stream comes from trucks returning to the DCs from home deliveries, retail sites, and other distribution centers. The remaining 40 percent is generated through internal processes (like repackaging) within the DCs themselves. Rooms To Go's DCs are high-throughput operations: Collectively, the facilities stage 8,000 to 10,000 individual pieces per day.
The recycling program has come a long way since its inception. The company's early recycling efforts consisted of a nearly 40person army of employees collecting 800 tons of cardboard—equivalent at the time to 60 percent of Rooms To Go's cardboard waste—and stuffing the pieces willy-nilly in 40-foot open-top construction containers and into compactors. No other materials were being recycled during the early 1990s.
The company was also unloading trash and returned furniture at the same time, a process that would sometimes result in furniture damage. "It could be something as simple as allowing a piece of cardboard to rub against an inbound dresser or sofa," Zapata says. "If the cardboard had a staple in it, damage to the dresser or sofa could occur."
Rather than implementing a comprehensive initiative that covered the four main recyclable commodities— cardboard, plastic, foam, and wood— at once, Zapata decided to tackle the project one commodity at a time. The cardboard recycling program was launched in 1992, followed by plastic in 1996, foam in 1998, and wood in 1999. Zapata says the key to the program's overall success was a "practical approach" taken by his managers in "working out some of the particulars over time as opposed to trying to get every element captured at the outset."
A "leap of faith"
As part of the initiative, Zapata and his managers re-engineered the company's DCs and work processes to compartmentalize the flow of the returned materials. Starting with the cavernous 1.7 millionsquare- foot distribution center in Lakeland, they developed procedures for separating the incoming refuse from the furniture arriving on the same trucks. In the past, the company had sometimes experienced problems with goods' being mislabeled because tags from empty boxes would be mistakenly entered into the system in place of tags for the items passing next to them. By separating the two streams, Zapata hoped to eliminate those problems.
Zapata initially thought that adding the separation step would lead to increased costs. As it turned out, however, the company realized savings from more accurate labeling of incoming merchandise and a clearer alignment of employee duties, which ended up reducing staffing requirements.
Zapata then reorganized the dock door area to even out and streamline the material flow from truck unloading to the sortation areas. Two conveyors centered between an eight-door, 100-foot dock now shuttle the material from the dock to specially designated sorting areas. After sorting, the materials are transferred to shredding, chipping, or baling stations for further processing.
What happens next depends on the type of commodity. For example, cardboard is sorted at the incoming doors and then placed on dedicated conveyors. Most cardboard requires no further handling and can be brought directly to balers. The finished bales are then weighed and placed in a container in the same general work area, where they await pickup.
The plastic and foam materials are conveyed to the sort area, where they are separated and sorted by hand, then placed on special conveyors. The plastic is routed to a baler, while the foam is conveyed to a chipper. Items not sorted out ride the conveyor belt into the trash truck and are then taken to landfills.
Companies buying the materials are mostly responsible for arranging and paying for the pickups; Rooms To Go is charged with taking any nonrecycled materials to landfills.
Zapata says his biggest challenge was to convince upper management to budget for three balers, each of which cost approximately $300,000. Buying the high-cost equipment required a leap of faith, he admits. Zapata told his bosses that it would take 27 months to recoup the cost of each baler. "As it turned out, the reality was actually 14 months," he says.
To house the operation, Zapata has had to allocate 5,000 to 50,000 square feet in each distribution center. This has generally not been a problem due to the overall size of the company's warehouses.
A side benefit of reorganizing and streamlining the material flow has been a reduction in labor requirements, which has freed up employees for other tasks. Today, 21 employees work on the recyclables program, down from 39 when the program began, Zapata says.
In the past few years, Rooms To Go has fine-tuned its procedures for identifying and extracting recyclable materials from its waste pile, according to Zapata. As a result, the company has been able to keep its recycling revenues constant even though its total "waste stream" has actually declined since 2006.
Overall, Zapata reports that the company is pleased by the recycling program's results. "All of the unexpected things that have happened have been positive," he says. "I never could have predicted the success of all this."
Above the crowd
In a world where everyone's eager to go green, why haven't more of Rooms To Go's competitors copied its programs? One difference, according to Zapata, is that Rooms To Go will ship directly to its customers, while its rivals ship first to their stores and then on to the end user. Because those competitors have an extra layer between the customer and the DC where the packing materials are returned, their operations incur more cost and are less efficient, according to Zapata. "They may generate as much recycled material, but they won't be as profitable as [we are]," he says.
Zapata believes that reluctance to make the significant initial capital investment required for equipment—especially in a tough economy—is also an obstacle. "I don't think many companies looking at recycling focus very carefully on the ROI. What they see are costs," he says.
But a deliberate, carefully constructed recycling plan, along with a "take the long view"' mindset on equipment expenditures, can carry almost any company with recyclable materials a very long way, according to Zapata. "Anyone with even half of our distribution capabilities can execute this successfully," he says.
States across the Southeast woke up today to find that the immediate weather impacts from Hurricane Helene are done, but the impacts to people, businesses, and the supply chain continue to be a major headache, according to Everstream Analytics.
The primary problem is the collection of massive power outages caused by the storm’s punishing winds and rainfall, now affecting some 2 million customers across the Southeast region of the U.S.
One organization working to rush help to affected regions since the storm hit Florida’s western coast on Thursday night is the American Logistics Aid Network (ALAN). As it does after most serious storms, the group continues to marshal donated resources from supply chain service providers in order to store, stage, and deliver help where it’s needed.
Support for recovery efforts is coming from a massive injection of federal aid, since the White House declared states of emergency last week for Alabama, Florida, Georgia, North Carolina, and South Carolina. Affected states are also supporting the rush of materials to needed zones by suspending transportation requirement such as certain licensing agreements, fuel taxes, weight restrictions, and hours of service caps, ALAN said.
E-commerce activity remains robust, but a growing number of consumers are reintegrating physical stores into their shopping journeys in 2024, emphasizing the need for retailers to focus on omnichannel business strategies. That’s according to an e-commerce study from Ryder System, Inc., released this week.
Ryder surveyed more than 1,300 consumers for its 2024 E-Commerce Consumer Study and found that 61% of consumers shop in-store “because they enjoy the experience,” a 21% increase compared to results from Ryder’s 2023 survey on the same subject. The current survey also found that 35% shop in-store because they don’t want to wait for online orders in the mail (up 4% from last year), and 15% say they shop in-store to avoid package theft (up 8% from last year).
“Retail and e-commerce continue to evolve,” Jeff Wolpov, Ryder’s senior vice president of e-commerce, said in a statement announcing the survey’s findings. “The emergence of e-commerce and growth of omnichannel fulfillment, particularly over the past four years, has altered consumer expectations and behavior dramatically and will continue to do so as time and technology allow.
“This latest study demonstrates that, while consumers maintain a robust
appetite for e-commerce, they are simultaneously embracing in-person shopping, presenting an impetus for merchants to refine their omnichannel strategies.”
Other findings include:
• Apparel and cosmetics shoppers show growing attraction to buying in-store. When purchasing apparel and cosmetics, shoppers are more inclined to make purchases in a physical location than they were last year, according to Ryder. Forty-one percent of shoppers who buy cosmetics said they prefer to do so either in a brand’s physical retail location or a department/convenience store (+9%). As for apparel shoppers, 54% said they prefer to buy clothing in those same brick-and-mortar locations (+9%).
• More customers prefer returning online purchases in physical stores. Fifty-five percent of shoppers (+15%) now say they would rather return online purchases in-store–the first time since early 2020 the preference to Buy Online Return In-Store (BORIS) has outweighed returning via mail, according to the survey. Forty percent of shoppers said they often make additional purchases when picking up or returning online purchases in-store (+2%).
• Consumers are extremely reliant on mobile devices when shopping in-store. This year’s survey reveals that 77% of consumers search for items on their mobile devices while in a store, Ryder said. Sixty-nine percent said they compare prices with items in nearby stores, 58% check availability at other stores, 31% want to learn more about a product, and 17% want to see other items frequently purchased with a product they’re considering.
Ryder said the findings also underscore the importance of investing in technology solutions that allow companies to provide customers with flexible purchasing options.
“Omnichannel strength is not a fad; it is a strategic necessity for e-commerce and retail businesses to stay competitive and achieve sustainable success in 2024 and beyond,” Wolpov also said. “The findings from this year’s study underscore what we know our customers are experiencing, which is the positive impact of integrating supply chain technology solutions across their sales channels, enabling them to provide their customers with flexible, convenient options to personalize their experience and heighten customer satisfaction.”
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
As the hours tick down toward a “seemingly imminent” strike by East Coast and Gulf Coast dockworkers, experts are warning that the impacts of that move would mushroom well-beyond the actual strike locations, causing prevalent shipping delays, container ship congestion, port congestion on West coast ports, and stranded freight.
However, a strike now seems “nearly unavoidable,” as no bargaining sessions are scheduled prior to the September 30 contract expiration between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) in their negotiations over wages and automation, according to the transportation law firm Scopelitis, Garvin, Light, Hanson & Feary.
The facilities affected would include some 45,000 port workers at 36 locations, including high-volume U.S. ports from Boston, New York / New Jersey, and Norfolk, to Savannah and Charleston, and down to New Orleans and Houston. With such widespread geography, a strike would likely lead to congestion from diverted traffic, as well as knock-on effects include the potential risk of increased freight rates and costly charges such as demurrage, detention, per diem, and dwell time fees on containers that may be slowed due to the congestion, according to an analysis by another transportation and logistics sector law firm, Benesch.
The weight of those combined blows means that many companies are already planning ways to minimize damage and recover quickly from the event. According to Scopelitis’ advice, mitigation measures could include: preparing for congestion on West coast ports, taking advantage of intermodal ground transportation where possible, looking for alternatives including air transport when necessary for urgent delivery, delaying shipping from East and Gulf coast ports until after the strike, and budgeting for increased freight and container fees.
Additional advice on softening the blow of a potential coastwide strike came from John Donigian, senior director of supply chain strategy at Moody’s. In a statement, he named six supply chain strategies for companies to consider: expedite certain shipments, reallocate existing inventory strategically, lock in alternative capacity with trucking and rail providers , communicate transparently with stakeholders to set realistic expectations for delivery timelines, shift sourcing to regional suppliers if possible, and utilize drop shipping to maintain sales.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.