Manufacturers Save by Leveraging Returns
Hi-tech manufacturers are under growing cost pressure from rising costs of rare earth metals. Many of these metals you have heard of such as gold, silver, and platinum. Some of these metals most of our readers have never heard of such as palladium, ionium, gallium, and other “ums”, all of which are used in cell phone, TVs, and PCs. The reserves for many of these metals will be used up over the next 20 years. To add to the inflation risks, 97% of these metals come from China.
In addition to the dramatically rising costs of metals, manufacturers are also facing increased costs and potential liability from product disposal. There are 17 states that have laws on the books that outlaw throwing e-waste in their landfills. In addition to these 17 states there are a number of other states that have similar laws working their way through their legislatures. All of this is in an attempt to do something to reduce the 400 million units of e-waste that are landfilled every year in the US.
This can have a significant impact on electronic manufacturers. When states, such as Rhode Island, decide they want e-waste cleaned out of their landfills, they charge the manufacturers. To be clear, consumers threw these items in the landfill, not the manufacturer.
The question is what can a manufacturer do to control the rising costs of metals and reduce the risks of having to clean up a landfill after their customers have finished using their products? The answer is to rethink the manufacturing process by incorporating reverse logistics processes that harvest parts and recycle returns and end of life goods.
Some wonder if trying to develop these capabilities are worth it. We argue that it is not only worth it but the way of the future. Did you know that one ton of mobile phones has more gold in it than 17 tons of gold ore?
Think about this – According to the Electronic Takeback Coalition every year there are about 1.2 billion cell phones sold worldwide. At any one time there are over 4 billion mobile phones in use around the world. Assume that for every phone purchased there is one that is thrown away. That is 1.2 billion cell phones or about 200,000 pounds of waist created every year. If the manufacturers were to extract just the gold, silver, palladium and copper from just one ton, or 6,000 of these phones, the metals alone would be worth over $48,000. That’s about $8 of value per unit at 2011 metal prices.
If only 50% were recycled and used in the manufacturing process, mobile phone manufacturers would be reusing $4.8 billion dollars of gold, silver, palladium and copper. This doesn’t include a number of other rare earth metals that could also be extracted and reused. In addition, the manufacturers would also greatly reduce their carbon footprint and their risk of liability from their goods going to a landfill.
This is just one example of the impact the integrating reverse logistics into the manufacturing process could have for a manufacturer. The same is true and impact greater for PCs, TVs, and other hi-tech electronics. The only question is why aren’t the manufacturers adopting this? Now that is a great question. The answer is that manufacturers have to rethink how they source their materials and manufacturer their products.
Note to Apple, Nokia, Google, Sony, Samsung, and others – do the right thing…profitably.
Product Recalls – Preparation is Key
In 2009 the Consumer Product Safety Commission (CPSC) issued 465 mandatory recalls. In 2010 the CPSC issued 433. While the CPSC was ordering product off the market, the FDA was busy pulling drugs off the shelf. Over the last 10 years the FDA has recalled over 250 drugs off the market every year. The reality is that recalls are here to stay. In fact, you can expect the number of recalls to trend up over the coming years as regulations continue to increase.
In addition, many manufacturers and retailers voluntarily recall products. There are many reasons for voluntary product recalls. Bad buying decisions, seasonal changes, packaging issues, and taking proactive action to minimize risks and liabilities drive companies to pull inventory off the market. ”Stuff” happens and product recalls are a fact of life for retailers and manufacturers. Therefore, it is critical to have a comprehensive recall program in place to deal with these unfortunate yet inevitable events.
Just as manufacturers and retailers have insurance for their people, property and customers, they need insurance for recalls. This insurance is a recall program that lays out a clear plan to deal with recalls when they occur. The financial liability and the risk to human life is too great not to have a well defined recall procedure in place, before it is needed. If a you wait until you need it, the costs and the additional liability could literally put your company out of business.
Recalls can increase exposure to many different risks. Recalling an item due to a known quality problem, or because a regulator ordered the item off the market exposes companies to obvious potential liabilities such as law suits from customers, clean up costs, and fines. However, there could also be even greater risks created by how your organization reacts to the problem and processes the recall. These risks often have a greater impact on customers, employees and stockholder than the actual item itself.
In order to minimize these risks companies must have a buttoned up recall procedure that addresses the following five key areas:
1. Internal communications procedure
2. External communications procedure
3. Physical process to remove the recalled goods
4. Product sorting, accounting and disposal processes
5. Data gathering, reporting and record keeping
Communications is the most critical component of any recall process. The internal communications procedure for a mandatory recall must include emergency communications chain. Key people need to know who has to be notified and each person must know what their roll is in the recall communications process.
Speed is critical.
There must be a clear line of communications and the internal communications must be fast. The first hours after being notified of a recall will determine if the rest of the plan has a shot at succeeding and actually avoiding risks and liabilities. The internal communications process is the start gun to the race to get the recalled goods off the market. This is also where you decide who is going to speak for the company, what they are going to say, and who they are going to say it to.
External communications is the most critical component to minimize the impact of a recall on customers, employees, and shareholders. Honest is the best policy. It is actually the only option. Even companies that try to spin the facts or dodge the truth always end up telling the truth. It is only a matter of time and in some cases that means jail time.
In high profile situations, employees will want to hear from the CEO directly. They will want regular updates and they will want closure when it is over. Remember, employees have families so you must arm with enough information so they can tell their children why their mommy and daddy are good people working for a good company. Many organizations underestimate the impact of bad press and lack of internal communication will have on employees. It is a big deal to them and can cost a company more than just money for years to come. Shareholders have similar concerns and they have a legal right to know about potential liabilities and actions that could impact the value of their investment.
Talking to the press can be very tricky when dealing with recalls. Remember journalists are there to get a story. They aren’t necessarily concerned with right and wrong, or giving your company a fair shake. A professional PR person can be worth their weight in gold during a major recall or any negative event.
The obvious group to consider in any external communications plan are the regulators. There are two ways management teams can deal with regulators. One way is to treat them as adversaries. Don’t offer any help. Answer only the exact question asked. Make them get a court order for everything, etc. This is a terrible way to deal with people who decide the size of the fine and the scope of the investigation.
The other way to deal with regulators is to politely cooperate with them. This means be polite, escort them around, ask if they need help. This means politely saying things like “Sir, I was told to get you a cup of coffee and set you up in my office until our Vice President of Loss Prevention gets here. This is a big deal and we want to cooperate fully.” While you are waiting, talk to them like the intelligent professionals they are.
This is the only way to deal with any kind of public authority figure. You must ensure that your entire staff is trained to be respectful and cooperative. They must have a clear idea of what they can and cannot say, as well. They must know the difference between being cooperative and saying things that will can cause your company harm. Training your staff on who is authorized to speak to regulators, along with what, how, and when to speak to regulators is a prudent, operational best practice. Don’t leave this up to your staff to figure out on their own. Train your management team.
This training should address both verbal and written communications guidelines. Emails have become law firms favorite hunting grounds. As the team at Goldman Sachs will attest, written communications can cause significant damage in a number of ways, even if you did not do anything illegal. You must have clear policies on both verbal and written communications.
Recalls are a fact of life and every company must have a well defined recall process that is focused on doing the right thing, communicating the right message, and minimizing all the liabilities and costs associated with every recall. Your recall plan of action must clearly and directly address internal and external communications in order to minimize the damage caused by the recall.
Customer Return Policies
According to an article published in the MIT Sloan Management Review, written by J. Andrew Petersen and V. Kumar, product returns cost companies over $100 billion or approximately 3.8% of profits every year. They also note that the electronics industry alone spends over $14 billion on returns every year.
When executives realize how returns impact sales, many will do what seems to come naturally and that is to reduce the volume of returns by tightening up their customer return policies. Many go so far as to institute anti-customer strategies such as restocking fees, reduced time limits on when goods can be returned, complicating the return authorization process or simply deny all returns. Many of these tactics are effective in reducing the volume of returns in the short run. However, most of these measures have a detrimental impact on sales and profits as well that may not be immediately visible.
Petersen and Kumar studied six years of purchases and customer returns data from a nationally known catalogue retailer. They found that a lenient return policy does NOT drag down sales but in fact promotes sales growth. They found that even with a higher return volume, the impact on the bottom line was positive.
The results seem counter intuitive to what many think when looking at customer return policies. Because of the huge financial impact of returns and the obvious impact on a company’s bottom line, many companies attack the problem by restricting customer return privileges which has been proven time and again not to work. What many find out, much to their latter disdain, is that when companies restrict customer return privileges they are in fact restricting sales and encouraging their customers to go elsewhere.
In the fall of 2010 Best Buy realized that having a restrictive customer return policy was having a negative impact on sales and this strategy was driving customers away. For a number of years Best Buy had one of the most restrictive returns policies in the US retail market. They would not take back some returns after a specific time periods at all and would often charge restocking fees when purchases were retuned within the prescribed time after the initial sale. The result was disappointing sales figures for November of 2010 and a warning about the forth quarter results that pulled the rug out from under Best Buy’s stock price.
However, Best Buy didn’t sit back and hope for miracle. Immediately following their poor numbers, they announced they were easing customer return policies and eliminated many of their restocking fees. This all took place just a few days before Christmas of 2010 and it provided a welcomed shot in the arm that helped December’s sales recover. (Click here to read Best Buy’s current return policy.) This relaxed return policy reduced the risk of a bad purchase for Best Buy’s customers. This is a clear illustration of the link between a company’s return policy, sales and value.
To a customer, the return policy is really about limiting risk. For the majority of buyers, the return policy is not about abusing the company that sold them the product. It is about buying something with some assurance that if the item does not satisfy their need they can return it and get the a different item that will satisfy their need. A study conducted by the National Retail Federation found that less than 9% of returns were fraudulent. That is less than 1% of total sales. However, many customer returns policies are written like the almost all customer returns are fraudulent. All to often the return policy reads like it was written by the VP of Sales Prevention.
The study conducted by Drs. Petersen and Kumar found that when return policies are less restrictive, customers tend to make more purchases. We believe that this is true and it this happens because the customer’s risks are limited by the customer friendly return policy. In addition, a liberal returns policy increases sales because the returns experience provides the seller an opportunity to interact with their customer. This is the critical point to satisfy your customer in the short term and improve your long term customer relationship.
A company’s return policy says a lot about who they really are and how much they really care about their customer. What many fail to understand about customer returns is that the more they return, the more they buy.
Part 1 – Five Components to a Recall Action Plan
There are many reasons for product recalls. Bad buying decisions are a big one reason for recalls. Regulator’s orders is another. Every year for the past twenty years, for example, the FDA has ordered between 200 and 300 pharmaceuticals off the market. Most of these recalls go unnoticed and were recalled for reasons other than any adverse effects on people who may have taken the drugs.
You have probably heard of many of the famous Rx recalls for serious adverse effects such as death, or other serious health problems. However, the vast majority of Rx recalls are for reasons such as a microscopic variance in the chemical compound, or some quality issue with packaging or an issue with the labels and inserts. There are other recalls driven by other regulatory agencies that find an issue with manufacturing of products. Often these recalls are ordered after a significant number of accidents. Recalls for products such as infant products, cars parts, desk lamps, and items such as computer batteries are all good examples of regulator driven reca
lls.
“Stuff” happens and product recalls are a fact of life for retailers and manufacturers. Therefore, it is critical to have a complete recall procedure in place to deal with these unfortunate yet inevitable events. Having a comprehensive plan of action in place will remove the threat from the public and avoid or at least minimize the liabilities associated with the recalled item.
For many recalls, the liability and the risk to human life is too great not have a well defined recall procedure in place, before it is needed. If a you wait until you need it, the costs and the additional liability could literally put your company out of business.
Recalls can increase exposure to many different risks. There are the obvious potential liabilities such as law suits from customers, clean up costs, and fines from regulatory agencies. But, there could also be significant risks, costs, and exposure caused not by the recalled product itself but how your organization handles the recall. These risks include the impact on long term customer attitudes and satisfaction because of bad press; stockholder concerns and related lawsuits; and the impact from negative employee morale. In order to minimize these risks companies must have a buttoned up recall procedure that addresses the following five key areas:
1. Internal communications procedure
2. External communications procedure
3. Physical process of removing the recalled goods
4. Product sorting, accounting and disposal process
5. Data gathering, reporting and record keeping
Communications is the most critical component of any recall process. This post is the first of a two part series on recalls. The rest of this post will focus on communications and the second post will go into more detail are the physical movement, processing, and reporting of regulated recalls.
The internal communications procedure for a mandatory recall must include emergency communications chain. Who has to be notified and each person must know what their roll is in the recall. Speed is critical. There must be a clear line of communications and the internal communications must be fast. The first hours after being notified of a recall will determine if the rest of the plan has a shot at succeeding. The internal communications process is the start gun to the race to get the recalled goods off the market. This is also where you decide who is going to speak for the company, what they are going to say and who they are going to say it to.
Regardless of what anyone may say, it is always better to be completely honest with every communications. External communications is probably the most critical component to minimize the impact of a recall on customers, employees, and shareholders. Again, honest is the best policy. It is actually the only option. Even companies that try to spin the facts or dodge the truth always end up telling the truth. It is only a matter of time and in some cases that means jail time.
Employees will want to hear from the CEO directly. They will want regular updates and they will want closure when it is over. Remember, employees have families so you must arm with enough information so they can tell their children why their mommy and daddy are good people working for a good company. Many organizations underestimate the impact of bad press and lack of any credible communication will have on employees. It is a big deal to them and can cost a company more than just money for years to come, if not addressed properly.
Sharehold
ers have similar concerns and they have a legal right to know about potential liabilities and actions that could impact the value of their investment. There have been a number of companies that never recovered because management lost the faith of their investors because of their poor communications on negative events.
Talking to the press can be very tricky when dealing with recalls as well. A key thing to remember is that journalists are there to get a story. They aren’t necessarily concerned with right and wrong, or giving your company a fair shake. A professional PR person can be worth their weight in gold during a major recall or any negative event. In the middle of a major recall is not the time to try to your hand at press relations. You will have plenty to keep you busy.
The last group to address in you external communications plan are the regulators. There are two ways management teams can deal with regulators. One way is to treat them as adversaries. Don’t offer any help. Answer only the exact question asked. Make them get a court order for everything, etc. This is a terrible way to deal with people who decide the size of the fine and the scope of the investigation.
The other way to deal with regulators is to politely cooperate with them. This means be polite, escort them around, ask if they need help. This means politely saying things like “Sir, I was told to get you a cup of coffee and set you up in my office until our Vice President of Loss Prevention gets here. This is a big deal and we want to cooperate fully. We want our best and brightest here to assist you with your needs so please bear with us for a few minutes until they arrive.” While you are waiting, talk to them like the intelligent professionals they are.
This is the only way to deal with any kind of public authority figure. You must ensure that your entire staff is trained to be respectful and cooperative. They must have a clear idea of what they can and cannot say, as well. They must know the difference between being cooperative and saying things that will can cause your company harm. Training your staff on who is authorized to speak to regulators, along with what, how, and when to speak to regulators is a prudent, operational best practice. Don’t leave this up to your staff to figure out on their own. Train your management team.
This training should address both verbal and written communications guidelines. Emails have become law firms favorite hunting grounds. As the team at Goldman Sachs will attest, written communications can cause significant damage in a number of ways, even if you did really do anything illegal.
Recalls are a fact of life and every company must have a well defined recall process that is focused on doing the right thing, communicating the right message, and minimizing all the liabilities and costs associated with every recall. Your recall plan of action must clearly and directly address internal and external communications in order to minimize the damage caused by the recall.
In part 2 of Five Components to a Recall Action Plan, I will discuss the best practices and steps to be taken to properly remove, process, and record physical products that have been recalled.
Understanding the Cost of Change and 3PL’s
Understanding “the cost of change” is critical to organizations that are outsourcing or are considering changing service providers. While outsourcing supply chain management continues to grow, competition between third party logistics providers (3PL’s) is increasing as well. Many who have outsourced for years are now seeing the power of competition and use two 3PL’s where they use to use one for their entire networks. Executives tasked with responsibility for managing 3PL relationships are getting smarter and negotiating tougher terms.
3PL’s find themselves in the unenviable position of having to bid on business they have had for years, knowing that their best case scenario is to retain the business at a lower margin. Many retailers and manufacturers require an RFP process that often doesn’t recognize any value for past performance or loyalty on the part of the incumbent. With the proliferation of systems across the spectrum of supply chain functions, more and more providers find their services and the associated value commoditized. Most 3PL executives see requirements getting tighter, competition getting tougher, and margins getting squeezed.
Today, every 3PL is looking for ways to increase margins and increase the cost of change for their customers. Increasing the cost of change is really referring to those intangibles costs that a customer must incur if they choose to switch from one service provider to another.
For example, if you were a customer of a bank and used their online services for years and then decided to change banks, there would be an additional cost of change because of the extra time and trouble you would experience in shutting down one account and starting up another. You would have to get set up on the other banks systems, figure out how to use their online features, and set up all of your bills for automatic payment. All of this is already done at your old bank and you may not have considered all of this effort when comparing the price between the two banks and the value you might receive from their programs.
If a 3PL is doing a good job of cultivating customer relations, they will make sure the customer is well aware of the cost of change. Service providers should point out all indirect, internal customer costs and normal external costs they would pay if they change providers. If you are a service provider, you owe it to your customer to point out all these different expenses. I have personally pointed out to customers the costs their systems department incurred during start up and similar internal, under the radar expenses they missed. Every time I have done this, my customer has thanked me because they hadn’t considered my points prior to my mentioning it to them.
In the world of outsourcing, the cost of switching from one provider to another can be very expensive, and could impact your customer’s customer. Changing service providers isn’t just about the lowest cost per unit. The soft costs of change can be very expensive and should be carefully considered when deciding whether to go with a new provider or stick with the existing 3PL. Remember the old saying “It’s the devil you know versus the devil you don’t know.” Just be sure that you consider all the cost you could incur in either case.
Alignment of Goals & Strategies Critical to 3PL Oursourcing Success
Companies outsource supply chain operations for many reasons. Some need quick expansion and don’t have the manpower nor the infrastructure in place to expand as efficiently as outsourcing. Others are looking to cap exposure to worker comp expenses, inventory shrinkage, or hiring costs when starting up a new operation.
All of this can be done by outsourcing supply chain operations to a qualified third party operator (3PL). However, the key to achieving the goals that justified the decision to outsource is to ensure you have level of service (LOS) measures, budgets, and the other metrics in your contract that will result in the desired financial results. These goals and the strategies used by the 3PL must be in alignment and support the customers goals and strategies. Contracts must be written to ensure that success for the 3PL is success for the customer.
Just about every outsourcing relationship that goes sour, does so because of one of three reasons. Often the relationship fall about because the contract terms were not in alignment with the original RFP and the final response from the winning 3PL. The outsourcing party wakes up one day and their costs are higher and their customer service is worse than before they outsourced. They call up the 3PL and they are told that more can be done, but it is out of scope and will cost more money.
Many companies, new to outsourcing, don’t include key metrics in the contract. Often they don’t have good benchmarking data for items such as damage rate, inventory shrinkage, annual inventory turns, and thru put numbers to ensure they are getting what they expected. These details have to be carefully spelled out along with who will be responsible for the associated costs if the benchmarks are not met.
Another reason outsourcing contracts fail is that the contract was not flexible enough to address the real world market conditions and one of the parties was put in an untenable position as a result. It isn’t a good contract unless it is flexible. Outsourcing agreements should include language addressing how costs will be paid based on a wide range in volume. Many companies use volume bands to calculate variable costs. Some companies use a fixed dollar fee for the provider. There are a variety of tactics one could use based on the individual business. The key is to have contract language that allows for a win/win scenario in a flexible market environment.
Finally, outsourcing relationships fall apart because of poor performance. There are times when the winning bidder just can’t perform at the level you need so you have to fire them. It isn’t like firing a bad employee, it closer to getting a divorce and can be just as painful and costly.
Many companies that outsource don’t seem to think about the details and what they are going to do if they have to fire the service provider. Make no mistake, terminating a contact with or without cause can cost millions. You need to think about what happens to the inventory, the capital equipment, the building, ongoing worker comp issues, shut down and closing costs. All of these and many more issues need to be considered and you must spell out who is liable for each issue under each scenario. Once you’ve decided to end the relationship, you could save yourself millions if the contract addresses the shut down process correctly and if the shut down process is management right.
There are many reasons to outsource. The key is to have a good contract that will protect everyone’s interest, achieve the original goals that drove the decision to outsource, and ensure win/win relationships between the parties. If not done properly, however, outsourcing will end up costing your company a lot of money, and it could ruin your career.
Reverse Logistics Pilots – How to Avoid Failure
Many companies decide they could reap many benefits if they develop their reverse logistics capabilities. Often, they decide to outsource this. It isn’t unusual for such a company to suddenly get cold feet, whether it is outsourced or not, when they see the price tag of the proposed return center.
Unlike transportation or distribution centers, executives often act like developing this complex part of their supply chain, that currently doesn’t exist, should be very cheap or free. In fact, often the very executives that would scoff at the notion of requiring a new truck fleet to have a three month pay off, will be the very ones to suggest the same for a returns center. When the internal champions of the return center aren’t willing to agree to such a high bar, they are often left with “proving the concept” prior to fully committing the company to re-engineering their returns processes . The real question for the executive that requires a proof of concept is “What are you really proving?”
Experience has shown that many companies that set up a pilot to test the “return center concept” end up abandoning the pilot within 12 months. Why? Return center pilots fail because they require the organization to be fully committed and that won’t happen when you are testing only a small subset of the total company. Pilots also fail because they must bear all the costs associated with systems design and implementation, building design and implementation, and employee recruitment and training; BUT they get very little of the offsetting saving and revenue from the existing corporate structure.
For example, let’s say you are a major retailer with 1,000 stores and you decide to run a reverse logistics pilot for 25 of them. Again, why are you running the pilot? Anyway, the typical ROI Calculation for a retail return center is something like:
ROI = (Increased Vendor Credit + Vendor Fees + Increased Liquidation + Disposal Savings + Reduced Store Wages) LESS (Added Transportation Costs to the RC + Systems & Building Cost + Labor & Processing Costs)
This ROI could be significant if all stores went to the program over a 90 day period. That retailer could expect less than a 12 month payback on their investment and significant contributions to profit the following year.
HOWEVER, with a pilot, this ROI model breaks down:
- The buyers can’t negotiate the vendor returns fees because neither the vendors nor the buyers want to try to maintain two different systems for crediting returns
- The retailer wont get the liquidation revenue because the salvage buyers won’t invest in a small, short term program and they don’t have enough time to really determine the value of the goods, so their bids are lower
- Transportation costs are inflated due to a lack of volume coming from few stores
- Systems design and implementation costs are basically the same for 25 stores or 1,000 stores
- Store ops will be very hesitant to reduce headcount because they know they will have to fight to add it back if the program gets scrapped and they don’t want to face the battle of sending somebody home for good
- Return centers take 90 to 120 days to get up to productivity levels and establish quality procedures, which drive up per unit costs in the short term
- If the return center is outsourced, the 3PL will struggle getting a fully committed, experienced staff because the better managers will want to stay put and avoid the risk of taking a job that could be eliminated in months
If you are thinking about building out a return center, do your homework. Look at the industry, the service providers, the volume and the many pro’s and con’s. Make your decision wisely but don’t waste your time and money on a pilot. Companies either have a compelling value proposition that they will commit to deliver or they don’t. Companies should either get committed or save their money they would spend on a pilot. If a pilot is required, have specific realistic goals that are agreed to by all internal constituents, including the executive leadership team. These goals should be built upon clear, specific financial expectations. A “pilot” return center will do little to tell whether your company will benefit from a return center or not, but it will cost a lot of money and help extend your resume’.
1st Quarter Review Best Practices for Returns Management
As the first quarter of 2010 comes to a close, it is time to review where your reverse logistics program stands. By now, the “Christmas Season” for returns should be finished and whether your returns operation is going to make budget this year has been determined. For the vast majority of reverse logistics operations, over half volume and processing expenses hit the books in the first three months of the calendar year. If an operation didn’t perform well during that time, it will be next to impossible to make up for it over the remaining nine months of the year. However, steps can be taken to make the most of the rest of the year and document learnings to help make next year a success.
Over the next two weeks, organizations should conduct a reverse logistics first quarter review. This review should take a look back at the first quarter results, record lessons learned, make note of where the operation is at the moment, and plan for the next three months activities. A best practice approach to this would to complete an SF-SWOT analysis. The following outlines the basic steps to a good analysis and first quarter review:
- Gather data for the following, the best you can. Do not wait until you have absolutely everything and estimates are acceptable. It’s like the old saying goes “If you wait until you are 100% ready you’ll never be ready.” Close is good enough but get all the details you can.
- Pull together a team to help gather and review components.
- Conduct the SF-SWOT analysis as follows:
- S – Successes: For the previous 90 – 120 days, document what went well, what you got right, what you want to make sure you repeat next year
- F – Failures: For the previous 90-120 days, document what went badly, what problems occured that you want to avoid next year, what actions do you NOT want to replicate next year
- S – Strengths: Looking at your current state, document where are you in great shape, what are the best things about your operations, what can you leverage going forward to build on to achieve your goals the rest of the year
- W – Weaknesses: Looking at your current state, record what gaps exist in your programs, what short falls should be corrected in order to avoid catastrophe the rest of the year
- O – Opportunities: Looking at the rest of year, note what is happening internally and externally that you can leverage to improve results and what actions you will take to ensure you make the most of the opportunity
- T – Threats: Looking at the rest of the year, analyze major events that will take place must prepared for, what internal threats to performance and results do you see, what external threats are out there that you need to act to avoid over the next few weeks
- Once the SF-SWOT analysis is complete, publish the results and conduct strategic planning meetings with the purpose of developing action plans to address the findings outlined in the analysis.
While the first quarter is the critical season for the majority of reverse logistics programs, taking time to review what happened, document lessons learned, and plan the rest of the year are critical disciplines that every reveres logistics executive must follow to ensure asset values and bottom line contributions are maximized. A goal without a plan is nothing more than a wish and hope is not a strategy. There are many things that are unknown when planning for returns but there are many opportunities that can be leveraged, threats that can be avoided, and lessons that can be learned if you take the time and put the effort into it.
Free Download – How to Keep Warehouses Union Free
Click on the image or the link be
low to download the March 2010 issue of Warehousing Forum, published by The Ackerman Company. Warehousing Forum is a leading supply chain newsletter that is recognized around the world as a great resource for supply chain executives. This award winning publication is dedicated to helping warehouse managers and their bosses improve productivity and manage more profitably with tips, comments and articles written by practicing professionals. If you are in supply chain management at any level, you will want to subscribe to this publication.
The featured article in the March 2010 issue discusses critical components to keeping warehouses and distribution facilities union free, and was written by Curtis Greve. Enjoy your free download of this thought leading publication.
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