Shipping In Reverse
A relatively new kid on the block, Liberty Bottleworks has only been operating since 2010. Much has transpired in the five years since the Yakima, Wash.-based company opened its doors, however. Liberty—which distinguishes itself as the only American manufacturer of aluminum water bottles— currently ships to Asia, Europe and the Middle East, in addition to serving its domestic market.
Even so, the company’s Operations General Manager Bill Keys says Liberty still retains a small-company feel. “Because of our size, we really are a small business,” Keys says. Operating on a smaller scale has also allowed the company to handle much of its supply chain operations in-house—particularly reverse logistics. It’s just easier that way, Keys says, “since working with a [3PL] requires some level of management and interaction on our part.” Plus, he argues, Liberty has had plenty of success in going it alone.
Recycling is a key pillar of Liberty’s reverse-logistics strategy, Keys reveals. In addition to reconditioning all defective products, the bottle manufacturer recycles all unusable water bottles and all manufacturing-related aluminum waste. Also recycled are Liberty’s bottle caps, which are fashioned from eco-friendly polypropylene.
“We take great care in minimizing our impact to the environment,” Keys says. Liberty works with a local company to recycle its lubricants—a move Keys says is strategic. “When possible, we try to work with local or at least regional [partners] in our supply chain and recycling endeavors.”
The benefit is clear, Keys says: Increased visibility allows Liberty to ensure recycling initiatives adhere to company policy. “We’re conscious about who we partner with both upstream and downstream.”
Brian Bourke, vice president of Marketing at SEKO Logistics, praises such efforts, commenting how contentiousness can make or break a company’s supply-chain operations. “You can protect the integrity of your brand if you [handle reverse logistics properly],” Bourke says. For manufacturers, this means complying with all regulations surrounding the proper retrieval, reuse and disposal of used or damaged goods. Take mattresses, for example. Since mattresses are breeding grounds for bedbugs, manufacturers can’t simply discard torn or used items; disposal regulations vary from state to state. That’s why Bourke says it’s so important that manufacturers know the specific requirements surrounding the reverse logistics of their particular sector.
Also important, he says, is mapping out the returns process. For retailers, in particular, the way returns are handled can either “turn off a customer or make them a lifelong client.” Bourke says that SEKO Logistics actually consults new customers about returns before they delve into their business plan. “Returns are that significant,” he insists. For instance, SEKO may advise the company to include return instructions with their products, along with labels, packing slips and postage; such a scenario is especially likely if the goods are purchased online. Once the returns procedure is firmly established, Bourke explains, companies can reverse engineer their sales process.
He makes no bones about it: E-commerce has changed the face of reverse logistics. Thanks largely to the advent of web giants like Amazon and eBay, brick-and-mortar retailers are increasingly beefing up their online presence to maximize sales opportunities.
While such tactics may be good for business, they can be tricky from a logistics perspective. What’s critical, Bourke says, is that a company’s returns policy stays consistent throughout all sales channels. For instance, a liberal in-person returns policy, such as that held by Nordstrom, must translate to a liberal online policy. “Whatever philosophy they have in the store, they also have to fulfill online,” Bourke says.
Still, Dave Vehec, senior vice president of Retail at GENCO, cautions that e-commerce presents unique challenges to retailers. Not only is centralizing and handling online returns more complicated—customers typically have the option to ship back the unwanted merchandise or return it to a brick-and-mortar store—there’s also the anonymity aspect. Put simply, Vehec says, people are more comfortable returning items to a faceless entity than to an actual salesperson. Plus, there’s the fact that people often purchase products in multiple styles and sizes when they’re buying them online and then return the superfluous items. Nowhere does this ring truer than in the apparel industry, according to Vehec.
Disparities in clothing sizes make it much easier to find the perfect fit in a brick-and-mortar store, he says, as opposed to online, where sizing is often a guessing game. “A size eight in one style might be a size 10 in another style,” Vehec says. “And it’s the same way with shoes.” Because of this, so much of what goes back into a retailer’s inventory is e-commerce, he explains.
“Even brick-and-mortar retailers who have an online presence make it really easy for consumers to send things back because every item has a return label right with it,” Vehec adds. “They’re basically encouraging that behavior while also trying to build brand loyalty.”
Expediting the returns process also builds brand loyalty, Bourke says.
He describes how SEKO once helped a major furniture retailer replace their customers’ TVs. “If you pick up an old TV and deliver the new TV two days later, how happy is that customer going to be?” Bourke asks, rhetorically. Keeping customers satisfied led SEKO to coordinate the pickup of the old TVs with the delivery of the new sets. “Small things like that can make a world of difference for a brand experience.” After all, Bourke says, customer service is a major component of reverse logistics.
Vehec concurs, adding that big-data analytics help retailers understand consumer behavior. Tangible data, such as the peak seasons for returns as well as the percentage of sales items that are returned, allows companies to better plan their supply-chain activities. Acquiring such information, Vehec says, requires increased collaboration between retailers and their suppliers. “Having real data that’s actionable is a key component of the reverse supply chain,” he says. “[Data analytics] have become much more sophisticated over the years.”
He says it’s also important to analyze the environmental component of the returns process. Look at the product life cycle, Vehec recommends, and scrutinize the impact of taking back a discarded item and putting it back into the marketplace. How merchandise goes back into the stores is an interesting topic to explore, he says.
In the case of Liberty Bottleworks, environmental sustainability is the hallmark of the company’s supply-chain activities, according to Keys. Liberty executives are currently mulling the installation of a closed-loop water system, which could reduce the company’s water discharge by more than 75 percent. “The idea of being environmentally responsible for the handling of items that come back, as well as our excess material and waste, is part of what Liberty was founded on.” Keys acknowledges that the company certainly has room for improvement, but maintains that any progress is positive. “We truly believe that if you can make even small changes, everyone ultimately benefits.”
HOW ONE TECH FIRM BENEFITED FROM ITS 3PL PARTNERSHIP
There had to be a better way. Executives at the large high-tech firm needed to find an alternative means of retrieving set-top boxes from customers canceling their cable/Internet service. After all, time was money—the recovered boxes could be repaired, refurbished and utilized for future customers.
The firm’s previous retrieval methods just weren’t cutting it. Executives initially tried incentivizing customers to take the equipment to a service center, as well as deploying technicians to retrieve boxes from customers’ homes. They even went so far as to ship empty boxes to customers’ homes in hopes that they would package the equipment and mail it back to them. Such tactics proved to be fruitless, however.
Finally, the firm consulted a third party and employed the help of UPS. Officials at the global 3PL suggested that the firm leverage the retail footprint of The UPS Store network and encourage customers to drop off the equipment at one of the chain’s 4,300 locations. Ken Rankin, UPS marketing director, says it’s a model that has benefited the high-tech firm greatly. With 72 percent of Americans living within five miles of a UPS Store, “The UPS Store network provided service consistency to inspect, pack and ship the recovered assets back to the high-tech firm,” Rankin says. A win-win situation, indeed.
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