Post on 03-Jan-2016
description
Returns in the Omni-Channel
Dr. Dale S. Rogers Professor, Logistics & Supply Chain Management Co-Director, Center for Supply Chain Management
Rutgers UniversityLeader in Sustainability and Reverse
Logistics Practices
ILOS - Instituto de Logística
Returns in the Omni-Channel
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Returns in the Omni-Channel
• Retailers and manufacturers are increasingly finding that their sales are distributed across many different channels and supply chains. This creates greater complexity and becomes a difficult problem to solve efficiently. Additionally, issues such as assert recovery and the secondary market further complicate the returns mission. End-of-life concerns and new regulation impact reverse logistics processes.
• In this session Dr. Dale S. Rogers of Rutgers University will describe the new realities surrounding returns. He will explain relevant regulation, end-of-life issues and changes in the secondary market. Integrative strategies for managing returns across multiple channels will be discussed.
Returns in the Omni-Channel
Omni Channel
Web Store
Mobile
CallCenter
PhysicalStore
Kiosk
DirectMail
Display Ads
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me
Returns in the Omni-Channel
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Returns in the Omni-Channel
Reducing Consumer Risk
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Returns in the Omni-Channel
OmniChannel?
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Returns in the Omni-Channel
OmniChannel
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Returns in the Omni-Channel
Victoria’s Secret
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Returns in the Omni-Channel
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ame
Returns in the Omni-Channel
System “Drains”
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Returns in the Omni-Channel
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Returns in the Omni-Channel
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Secondary Markets
• Secondary markets are effective in diverting a large number of products from landfills, creating numerous jobs, resulting in substantial economic value in the process.
• Although not reflected in current government metrics, aconservative estimate is that the secondary market represents
2.88 percent of the 2012 U.S. GrossDomestic Product.
Returns in the Omni-Channel
Secondary Market
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Returns in the Omni-Channel
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Returns in the Omni-Channel
Product Responsibility Curve
Product Life CycleEnd ofResponsibility
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Product Responsibility Curve
BirthEnd of Life
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16
Returns in the Omni-Channel
Reverse is DifferentForward ReverseProduct quality uniform Product quality not uniform
Disposition options clear Disposition not clear
Routing of product unambiguous Routing of product ambiguous
Forward distribution costs more easily understandable
Reverse costs less understandable
Pricing of product uniform Pricing of product not uniform
Inventory management consistent Inventory management not consistent
Product life cycle manageable Product lifecycle less manageable
Financial Management issues clearer
Financial Management issues unclear
Negotiation between parties more straightforward
Negotiation less straightforward
Type of customer easy to identify and market to
Type of customer difficult to identify and market to
Visibility of process more transparent
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Visibility of process less transparent
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Returns in the Omni-Channel
17
Inventory Driven Carrying Costs
Time
100%
50%
0%
Product
Introduction Obsolescence And Volume
Sales
Product
Bargain Basement Discounts
ProductSalvaged
Returns in the Omni-Channel
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Returns in the Omni-ChannelScoping The Issues
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Sample Logistics Costs Meant To Be Purely Illustrative
Source: Kevin Winneroski
Top Line Retail Sales $50,000,000,000
Sample Return Rate 9.0%
Total Returns $4,500,000,000
Sample Avg. Ticket 100.00
Units Returned 45,000,000
~25% Resold In Stores 9,000,000
Net Distribution Flow 36,000,000
Sample Cost Per Unit $1.85
Sample Processing CostFrom Returns
>$60,000,000
Returns in the Omni-ChannelScoping The Issues
Retailers incur a baseline cost / margin loss from end-to-endReverse Product Flow; primarily from net DWO/EOL liquidation.
No n-PRC reverse f lo w (e.g ., rep airs , warranty , Geek Sq uad )
3
TBD
196
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TBD
17
5
TBD
0.434
5
4
$ in millions
Transp o rtatio nto D D C / PRC
In-s to re returnp ro cess ing
PRC p hys icalp ro cess ing
No t-ad d ressab le (o ut o f b aseline)
Vend o r / o utb o undinf o rmatio n f lo ws
Op timize SKU co d es and setup
Red es ig nvend o r term s andnetwo rk f lo ws
Next steps:+ Id entif y what p o rtio n o f the $196M is ad d ressab le b y the Reverse Flo w wo rk+ Verif y the es tim ated im p ac t o f the in-f lig ht wo rk (K im And ers , Paul M ann, etc .)
$1.84 p er unit
Source: Kevin WinneroskiUnit Name
Illustrative Example
Store Transport DDC DDC PRC PRC Total Shrink Net DWO/ Total
disposition to DDC handling to PRC processing Outbound Opex (net loss) EOLlabor transport & overhead Transport liquidation
(net loss) 1
Returns in the Omni-Channel
Date Codes
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Returns in the Omni-Channel
Central Return Centers
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Returns in the Omni-Channel
End of Life
• Innovate use of end-of-life
• Recycle• Good corporate
citizenship• “Cradle-to-
Cradle”
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