That assessment includes evaluating if the product has enough value to return into the A-stock inventory if it meets the criteria to return, explains Iaria. If this is not possible, the next step in disposition might be to liquidate the product that still has inherent value into secondary markets such as into closeout or outlet types of operations. Donating the product allows a company to do a tax write-off while avoiding disposal costs involved with the landfilling process.
Of course, the fewer items being returned is the best goal from a sustainability perspective, adds Fanning at Inmar. “But for the items that do return, we optimize that process which begins with as few touches as possible in handling products. “We start by evaluating whether a product can be restocked. If it concerns products at the end of a season or at the end of a promotion, we can help get those products back into inventory to be resold.”
Optimize Your Processes
Among leading reverse logistics providers, sustainability initiatives are inherent components of reverse programs. Experts in reverse logistics agree that optimized efficiencies in the reverse logistics supply chain produce higher levels of sustainability. “The biggest sustainability piece to this puzzle is avoiding altogether the extra costs involved in handling and transporting returned products,” says Iaria at C.H. Robinson. “Our philosophy within our reverse programs is to get as much information from our clients about why freight is being returned or refused. We then dig into that data to uncover root causes so we can help our clients improve their supply chain practices so they don’t have those problems in the future.”
Fanning at Inmar notes that when both the forward and reverse supply chains are optimized, sustainability goals are achieved. “Optimization on the frontend of your supply chain will produce efficiencies on your reverse supply chain that will eliminate waste overall.”
Here are some major areas logisticians focus on for optimization efficiencies resulting in sustainability goals for their customers.
Dig for root causes: Before you can even begin to fix something you know is not working properly, you need to know what it is in your supply chain operation that is resulting in unsaleables. So one of the first steps reverse logisticians take is to analyze the data relative to the root causes of unsaleables in order to help customers minimize incidents of unsaleables overall.
Inmar, for example, spends a significant amount of time and resources examining the entire supply chain of each of its customers, reports Rob Small, senior director of supply chain consulting. “We measure the percentage of unsaleables and then dig down to the root causes so we can begin to prioritize where to look for opportunities to minimize and eliminate these incidences. Many times we find the problem relates to the need to improve packaging design, improve handling practices, optimize inventory level planning and management, or examine product age and expiration dates relative to rotation practices throughout the supply chain.”
Miser-ize your miles: C.H. Robinson’s OS&D (Over, Short, and Damaged Products) program manages and coordinates all refused freight, regardless of the hauling carrier, notes Iaria. “We dedicate an 800-number hotline to each manufacturer, who publishes that number on every bill of lading. Anytime there is a pallet or truckload that is refused, our customers can call the hotline. We gather information relative to the refusals such as the quantity being refused, the value, and the reasons for the refusal and then we apply that information to a formula we co-created with our customers to determine immediate disposition.”
Immediate disposition decisions are critical in preventing costs that continue to accrue as time passes. “Many times refusal requests get passed from one department to another—such as the manufacturer’s transportation department passing along these requests to its customer service group,” explains Iaria. “This critical time lapse means drivers must wait for disposition directions. As a consequence, you have to deal with detention time and idling, each of which reduces your sustainability efforts while increasing your overall costs.”