Victoria Kickham, an editor at large for Supply Chain Quarterly, started her career as a newspaper reporter in the Boston area before moving into B2B journalism. She has covered manufacturing, distribution and supply chain issues for a variety of publications in the industrial and electronics sectors, and now writes about everything from forklift batteries to omnichannel business trends for Supply Chain Quarterly's sister publication, DC Velocity.
Managing the returns process has long been an afterthought for many retailers, manufacturers, and fulfillment companies, but it may finally be getting the attention it’s due, given the supply chain challenges and accelerating e-commerce activity of the past year. Industry observers say more companies are catching on to the importance of a good returns process these days—one marked by clear policies, smooth processes, and greater visibility across inventory networks and IT (information technology) systems.
“Returns are becoming a more important issue across all stakeholders due to the volume increase of e-commerce orders. Whether B2B, B2C, 3PLs, or pure-play brands, the current returns process is too manual and complex to effectively scale with the increased volume of returns,” explains Gaurav Saran, founder and CEO of returns management system (RMS) technology platform ReverseLogix. “Returns have become so mainstream now [that] most organizations need to think of a returns management system as part of their toolbox. Volumes are so high, and that will continue to be the trend.”
Tony Sciarrotta, executive director of the industry trade group Reverse Logistics Association (RLA), says cost is a driver as well.
“The cost of all of these returns used to be hidden in many different silos,” including transportation, customer service, and sustainability, with no high-level view of the end-to-end cost of a return, Sciarrotta explains. “Now, because of volume, companies are starting to see that they are paying more to ship goods back than [those goods are worth]. It’s a complicated world, and I’m glad that more people are paying attention to it.”
Roughly $450 billion worth of goods were returned in the United States in 2020, according to Saran and Sciarrotta, who cite widely accepted industry statistics. About 8% of brick-and-mortar purchases are returned, a figure that more than triples for online purchases to an average of 30%, they said. Those numbers are only expected to increase, creating an even greater incentive for sellers to get a better handle on the problem.
FOCUSING ON RETURNS
A good returns process is critical to getting and keeping customers, especially in retail—and that’s another reason reverse logistics is taking on a higher profile. A survey of more than 1,000 consumers this past fall found that nearly 40% said they won’t buy a product online if they can’t find the return policy. The research, an annual consumer returns survey conducted by retail technology platform Narvar, also found that three-quarters of first-time shoppers who had a positive returns experience with a retailer said they would shop with that retailer again based on the experience.
Essentially, a better returns experience contributes to a better overall customer experience, which is another important aspect of addressing the reverse logistics challenge.
“Returns don’t occur because people buy stuff they don’t want. Returns occur because of a bad customer experience,” Sciarotta says, adding that much work remains to be done to improve the online buying experience so that fewer items are sent back. “Reducing the amount of returns is related to improving that customer experience—tell people what they are going to get and deliver what you promise them, and you will reduce returns. Make their experience so great that they will not only love what you send them, but they’ll go on Facebook and tell people about it.”
MANAGING INCREASED VOLUMES
Even if companies are already working to improve service and reduce returns, they are likely to face a flood of incoming items this post-holiday peak season—due largely to accelerating e-commerce activity. Beyond those problems are even deeper issues that are complicating the returns environment, according to Terry Neidiffer, senior manager, solutions design, for third-party logistics services provider (3PL) Ryder System Inc. A labor shortage and the associated cost increases are making it difficult for DCs to process higher returns volumes, for example. And for some companies, materials shortages are hampering efforts to automate DC operations in response to those challenges.
“While there are options for automation, most equipment vendors are backlogged more than double what they historically have been. Additionally, a shortage of raw materials such as steel and computer chips is impacting the manufacturing and cost of automated equipment, which makes it much less deployable for many,” Neidiffer explains, adding that the post-holiday returns season will be tough for many to manage. “Unless a company planned to invest in its returns area many, many months ago, the ability to now impact the process is very limited.”
Limited, but not impossible. Training is one card companies can always play, Neidiffer says, calling it an often overlooked and simple way to maintain processes, service, and efficiency. Cross-training “forward logistics” associates—those involved in regular receive/pick/pack/ship operations—to handle returned goods is critical, as is training all employees on the triage and disposition of returned items so the process moves effectively, without rework and waste. A clean and accurate returned merchandise authorization (RMA)—a mechanism companies use to track returns—is also essential, he says.
“From a technology standpoint, RMA ‘cleanliness’ and accuracy is the single biggest driver of returns efficiency from a general units-per-hour standpoint. Assuming an employee has a clean, well-presented RMA that is easily credited back and dispositioned through technology, the process will move quickly,” he says. “However, [the need for] RMA research, having to cross-reference orders, and other issues will quickly cause a reverse process to stall. Well-built triage software that allows configuration by SKU [stock-keeping unit] and product type is the single best technology investment in returns.”
Saran urges organizations to take a step back and ensure they have clear returns policies that are well communicated to customers—and that employees understand the complexity of the returns process, which is highly dependent upon product type, seasonality, geography, and other factors. The return of an electronic device may involve triage, testing, and other steps, whereas the return of a book may be more straightforward, for instance. A winter jacket may need to be returned to inventory more quickly than a pair of sneakers. Clear policies and procedures form the baseline from which good processes and technologies can be applied, the experts say.
And when it comes time to adopt technology, Saran says companies should first visualize and be clear about the current state of their process and where they want to improve.
“Then look at evolving that process and making it smarter and more intelligent,” he says, emphasizing the advantages of applying an end-to-end RMS—software that can integrate with existing enterprise resource planning (ERP) or warehouse management systems—over more piecemeal approaches. “One central platform can enable a variety of strategies, from cradle to grave.”
Technology solutions can also help provide greater visibility across your inventory network, which is critical to managing the returns process, adds Brenda Stoner, founder and CEO of last-mile delivery service Pickup, an asset-light company that handles delivery of big, bulky, high-value goods for retail, commercial, and industrial customers. She advocates for a “singular view of inventory” that allows for greater flexibility in the returns process, meaning that customers can return items in a variety of ways—via an app, in the store, to another location, and so on. That ability is increasing as more companies digitally transform their businesses, she says.
“Without digital transformation and that singular view of inventory, [it’s hard to solve] for the returns problem,” Stoner adds.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
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.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.