CGT Inside News - 09/20/2006

Energizer Powers Global Expansion Despite Finite Resources

September 20, 2006 - Energizer and Office Furniture USA (a division of Chordus) -- two $5 billion-and-under consumer goods firms -- are positioning their respective companies to truly leverage technology judiciously. On September 28, 2006, join Mike Mormile, director of global manufacturing and supply chain applications, Energizer, and Gary Sweetapple, VP and CIO, Chordus, for a Web seminar titled "The Driving Force Behind Effective Growth and Global Expansion." Topics to be discussed include:

• How business process improvement and information technology enables enterprise efficiencies and contributes to growth
• How smaller organizations with finite resources are able to better serve customers with a better toolset -- better than if they had to create the toolset themselves.

Click here for more information and to register.

Unilever Boosts Global Security with Managed Firewall Service

Unilever awards BT a contract for the provision of a managed firewall service. The $19.7 million global agreement will run for six and a half years and follows the recent extension to its original seven-year service contract with Unilever. The new deal will involve BT taking over full management responsibilities for Unilever's existing estate of 256 firewalls spread across 68 countries. BT will transform Unilever's regionally managed firewall model into a single, consolidated global management structure in line with the rest of its networked IT services. "As an extension of our existing service contract, we have now opted to transfer the management of our firewalls to BT," says Geoff Thirlwall, vice president, IT services, Unilever. "Our decision was based on a desire to transform the management of the service in line with the rest of our IT portfolio and benefit from the added global security that BT will deliver through its standardized service."

Orangina Facilitate Better, More Profitable Innovation

To strengthen governance of the company's innovation process and increase the business returns from new products, Orangina Group, one of the largest soft drink producers in Europe, is deploying Sopheon's Accolade product life cycle management system. The group-wide implementation will encompass head-office sites and R&D facilities in France, Spain, Belgium and the Netherlands. "Accolade's ease-of-use, flexibility, and powerful reporting capabilities simplify the innovation process and, in doing so, they operationalize it," says Fergus Chapman, group marketing capabilities manager at Orangina. "As a result, we can concentrate on the innovation itself, and reduce the time spent on processes. Accolade enables us to focus on the 'what' rather than the 'how' of innovation."

LEGO Embraces Third-Party Product Development

The LEGO Group forms a third party licensing agreement, giving HiTechnic access to official LEGO MINDSTORMS NXT sensor housings in order to develop and market accessory sensors compatible with NXT that are complimentary to the look, style and function of the NXT toolset. This debut partnership represents the evolution of the company's commitment to community-driven innovation and open-source development surrounding the launch of its next generation robotics system. The third-party licensing agreement HiTechnic's sensors also will integrate seamlessly within the NXT software programming environment and are tested to the same high quality and tolerance standards as the LEGO Group's own manufactured products. "This partnership marks a new era in the LEGO Group's increasing collaboration with lead user innovators to deliver physical products that further enhance the potential of the LEGO MINDSTORMS platform," says Paal Smith-Myer, director, new business development for the LEGO Group. "We are excited about our collaboration with HiTechnic and look forward to working with them and future third parties to expand enthusiasts' ability to build and program robots that do what they want." LEGO MINDSTORMS NXT is a robotics toolset that provides endless opportunities for armchair inventors, robotics fanatics and LEGO builders ages 10 and older to build and program robots that do what they want.

Diageo Tests Ready-to-Drink Cocktails

Diageo reports encouraging results from its recently tested ready-to-drink cocktails in 12 oz. cans with the same alcohol content as most beers. According to Adage.com, retailers in the test market -- Tampa, Florida -- said the canned rum, vodka and whiskey cocktails were selling briskly in the test area. The test involves four brands -- Captain Morgan and Cola, Smirnoff Vodka and Lemon-Lime Soda, George Dickel Whisky and Cola, and Seagram's 7 American Whiskey and Lemon-Lime Soda. "They're selling very well and we're pleased," says Bob Gibson, marketing director for ABC Fine Wines & Spirits, a chain of 150 Florida liquor stores. Diageo has indicated the intent to expand the test to a larger geographical area, and to a fifth cocktail featuring Crown Royal whiskey.  

Jergens Adds 200 New Items to Solid Drive Spring Plunger Line

Whirlpool Unveils New Maytag Epic Innovation

Whirlpool Corporation announces the launch of the Maytag Epic Front Load washer and dryer. The Maytag Epic line is now available at all The Home Depot stores nationwide and will be sold at additional appliance centers and home improvement stores across the United States. "Five generations of families have trusted the Maytag brand to help clean their toughest soils and care for their most delicate washables," says Bill Thomas, senior category manager, Maytag Laundry. "With the new Maytag Epic line, we are building a product that lives up to the Whirlpool manufacturing standard and the Maytag brand credo of durability and dependability." The Maytag Epic line features a Smooth Balance Suspension System that works like shock absorbers to help reduce noise and vibrations. The washer's tilted stainless steel wash basket is constructed of super tough steel yet remains smooth to protect fabrics. The dryer's DuraCushion Dryer Drum offers a cushion finish that lasts for years, resists scratches and stains but allows clothes to gently glide off its surface without snagging.

Office Depot Rolls Out Electronic Check Acceptance

Office Depot provides TeleCheck's Electronic Check Acceptance service in more than 1,000 stores nationwide. Customers presenting checks at Office Depot locations will benefit from increased security and convenience as the company converts those checks to electronic transactions at the point of sale. The Electronic Check Acceptance program is designed to help reduce fraud while saving time and expense at both the customer contact and transaction processing levels. The TeleCheck service also eliminates image capture requirements and maximizes the percentage of checks eligible for conversion.

Foot Locker Streamlines POS Credit Card Transactions

Foot Locker integrates AT&T's Internet Protocol Frame Relay Network at corporate facilities and more than 4,000 stores in 20 countries in North America, Europe and Australia. The AT&T system provides Foot Locker with a single unified network that increases bandwidth and data speeds, enabling Foot Locker to streamline point-of-sale credit card transactions, enhance customer service and improve inventory management.  The network runs on AT&T's Multiprotocol Label Switching (MPLS) platform, provides disaster-recovery capabilities and a migration path to voice over IP (VoIP) services.

Forzani Improves Productivity

Forzani reports greater supply chain performance within just two days of implementing Manhattan Associates Integrated Logistics Solutions; specifically the Warehouse Management, Transportation Execution and Performance Management solutions. With the logistics system, Forzani optimizes warehouse layout and labor resources within its Toronto facility, streamlines outbound shipment processes and utilizes cross docking and put-to-store methods to speed the flow of goods. Forzani also is better able to track product, share information electronically with its trading partners and improve response times to stores.

Motorola to Acquire Symbol for $3.9 Billion
Wireless technology vendor Motorola plans to acquire point-of-sale and RFID vendor Symbol Technologies in a deal valued at $3.9 billion. Motorola, based in Schaumburg, Illinois, will pay $15 per share for Holtsville, New York-based Symbol, which has been struggling financially during the past several years. "Everything is going digital, and everything digital is going mobile," says Motorola Chairman and CEO Ed Zander. "This is especially evident in the way businesses are run today." Zander says the acquisition will bolster Motorola's enterprise mobility efforts.

TiVo and IRI Launch TV AD Research Services

TiVo Inc. and Information Resources Inc. (IRI) launch the IRI TiVo Consumer Insights Suite, comprised of two new services that provide advertisers and brand marketers with the ability to fully understand the impact digital video recorder (DVR) technology has on consumer viewing patterns and subsequent product sales. The services will also provide the ability to quantify the effectiveness of specific advertising campaigns and brand recognition programs in TiVo DVR households. Additionally, TiVo and IRI are expanding their existing relationship. Utilizing second-by-second analysis and tracking it to actual consumer purchasing decisions, the expanded relationship provides viewer and consumer insights from a new national DVR research panel combined with new media and message testing capabilities to fully understand and better leverage the evolving impact of DVRs.

Terra Technology Releases Real-Time Forecasting v3.5

Terra Technology announces the immediate availability of Real-Time Forecasting Version 3.5. This latest release improves forecast accuracy for large consumer products companies with complex global supply chains by delivering improved scalability, increased accuracy and enhanced ease-of-use. Key Enhancements of RTF Version 3.5 include:

-        Flexible modeling to accurately forecast for holidays in the United States and abroad.

-        The capability to analyze history for patterns that reflect promotions and derive promotional volume when no actual promotional data is available.

-        Allocation of a forecast for a generic item when more than one SKU is selling for that item at that time.

-        Easy integration with SAP, enabling implementation in 90 days for SAP users.

HighJump Acquires Global Beverage Group

HighJump Software, a 3M company, enters into a definitive agreement to acquire Global Beverage Group Inc. (GBG), a provider of delivery management solutions for the direct-store-delivery of consumer packaged goods. Terms of the transaction were not disclosed. GBG software helps route drivers from more than 500 consumer packaged goods firms improve merchandising, delivery and reconciliation of routes, which can lead to increased sales effectiveness and customer service. These solutions provide capabilities for specific markets, including soft drinks, beer, baked goods, wine and spirits, and snack foods.

VF Names Chief Financial Officer of VF Jeanswear-Americas

VF Jeanswear, a division of VF Corporation, names D. Paul Dascoli Chief Financial Officer. He succeeds Mark Thoma, who is retiring after a 33-year career with the company. Over the past 20 years, Dascoli has held a series of leadership positions with Thomasville Furniture, Revlon and Pepsico. He most recently served as executive vice president and chief financial officer for Thomasville Furniture Industries, and played a key role in leading Thomasville's commercial and residential furniture operations and business strategy. As chief financial officer of VF Jeanswear-Americas, Dascoli will report to Robert Shearer, senior vice president and chief financial officer of VF Corporation.

ScottsMiracle-Gro Promotes Head of Finance

The Scotts Miracle- Gro Company announces that David C. Evans is promoted to executive vice president and chief financial officer. He replaces Chris Nagel, who earlier in the week was named executive vice president of the North American consumer business. Evans, a 12-year veteran of ScottsMiracle-Gro, most recently was senior vice president of finance and global shared services, where he had finance leadership responsibility for all of the business units and shared services functions.

Moving Forward by Going Backward: Using Reverse Logistics to Cut Costs, Gain Competitive Advantage

By Bob Stoffel, senior vice president, Supply Chain Group, UPS

Another peak shopping season has come and gone. And like millions of merchants you prepare for a ritual as familiar as mistletoe, eggnog and New Year's resolutions: Returns.

In prior years, you've welcomed returns with as much anticipation as a holiday hangover. This year, however, it's different. You have a new process in place, one supported by a global shipping network and high-tech tools dedicated to managing the reverse flow of goods.

Now, customers returning one of your products have flexibility and convenience at their fingertips. They can download a return label from the Web and print it from their PC, have you e-mail the label to them, or contact a call center to request one. Once the label is affixed and the item ready to ship, they can arrange for a delivery driver to pick up the package at their home or office, or tender it at any number of "access" points such as drop boxes, service centers or storefront retail outlets such as The UPS Store.

As the package moves through the delivery system, your customer tracks its journey online in near real-time to ensure prompt delivery to their point-of-contact. Meanwhile, you have total visibility of the inbound shipment, alerting your staff and your vendors that a product is in the return cycle and to follow-up on any subsequent customer requests, such as being shipped a replacement item.

The bar-coded label on the return package captures key customer data that triggers a host of robust automated actions. You scan the bar code, which highlights instructions on how to properly dispose of the product either through repair, re-stocking, recycling or just simply throwing it away. The scan automatically creates an order of a replacement product, or it notifies the sales and accounting departments to issue a credit to the customer now that the return has been received.

In addition, the richness of the data embedded in the label gives you, your distributors and manufacturers a better idea as to why products are succeeding or failing, and if there are problems in engineering, manufacturing and distribution that need to be addressed.

By linking product return information to your back-end database, you reduce costs, improve efficiency and strengthen your customer relationships. For the first time, you have full control over what once was a fragmented, chaotic process. In synchronizing integration, speed and convenience—the pillars of reverse logistics--you are well on your way to transforming a necessary function into a competitive advantage.

Death, Taxes … and Returns!

In a perfect world, each product would be built flawlessly and resist obsolescence. Retailers would perfectly align inventory with customer demand, eliminating the possibility of overstocked items. Consumers would keep everything they bought, never experiencing "buyer's remorse."

In the real world, products malfunction or are defective from the start. Retailers over-order. Consumers, being human, change their minds. In the real world, returns are inevitable, and businesses must have systems in place to manage them.

This is especially true in the online space, where customers don't have the option of returning merchandise to a physical location. Yet in a UPS survey of the top 400 online retailers, more than 80% had no formal returns shipping program, leaving it instead to their customers to return products by their own means.

Though the returns issue seems to be amplified around the holidays, they are very much a year-round challenge. The Colography Group, Inc., a leading logistics researcher and consultant, projects that returns will account for 7% of all goods shipped within the U.S. each year. According to 2004 estimates from the Reverse Logistics Executive Council, the value of returned goods in the U.S. alone totaled more than $58.3 billion. It is difficult to obtain accurate data on returns in specific industries. However, it is believed that for apparel products, the percentage of returns is higher than average, while for electronics products, returns are lower than average.

So how does your business cope with returns? Do you consider it a nuisance—a "pain point" best to be tolerated or even ignored? Or do you view it as an opportunity to improve your operations and solidify relationships with customers and suppliers? Do you believe, as we do, that a convenient, frictionless returns solution is as pivotal to maintaining brand loyalty as any other part of your business?

Many top-tier firms treat returns management as a catalyst for enhancing the customer experience, differentiating from their rivals, and gaining market share. Indeed, some returns programs are designed to improve a product line through modernization and refurbishment. Others are at the core of a company's value proposition; the online video store Netflix has built a successful model around the ease of scheduled DVD returns, transactions that trigger the delivery of a subsequent Netflix product.

The "reverse logistics" discipline is not easy to master. Unlike traditional "forward" logistics, reverse logistics is wholly unpredictable. It is impossible to accurately anticipate the volume of returns, which merchandise will be returned, or the circumstances behind the decisions to return. No one produces or sells a product with the foreknowledge it will be sent back.

Returns policies differ with each company and, seemingly, with each situation, and there can be sometimes contentious debates over the party responsible for paying the shipping charges.

Visibility of returns remains a challenge. The Colography Group found in a 2004 study that, in about half of all returns transactions, the party accepting the returns knew an item was coming back but didn't know when it was scheduled to arrive.

Fortunately, the experts in handling outbound shipments have developed a range of solutions that standardizes and simplifies the reverse process, and provides a cost-effective means of tracking returns, managing costs and meeting customer expectations for B2B and B2C transactions.

Bringing it Together

A successful returns management strategy must appease stakeholders in and out of the organization. Adding value to your customer must be balanced with satisfying your internal objectives. Do you just want to control returns costs? Are you looking to increase traffic and spur sales by building a returns component into your basic value proposition, and are willing to invest capital to do that? How will you dispose of returned items? Will you repair and restock the items, return them to the customer or to your supplier, or throw them away?

At the same time, can you adequately address the conflicting agendas of your "gatekeeper" and CFO whose goals are to limit the number of returns in order to save money, with those of your sales and marketing executives—and perhaps your CEO—who may be willing to accept higher thresholds of returns traffic if it leads to more durable customer relationships and the potential for increased sales?

Your returns strategy must be unique to your situation. An electronics retailer returning products to multiple distributors will have different needs than an apparel retailer accepting returns from consumers. That said, the most effective returns programs have several common qualities, namely ease of use, convenience, flexibility, visibility and predictability.

Though I.T. is pivotal to developing an effective returns solution, it should complement the program and not drive it. Increasingly, vendors are coming to market with advanced technology systems to facilitate returns. At UPS, technology does not lead our discussions with customers. Rather, we analyze their returns patterns and work towards customizing an orderly, cost-effective process. Then we determine how we can leverage our I.T. toolbox to help implement the program.

Stories from the Trenches

Returns touch everyone in the supply chain, they are as prevalent in the B2B world as in the B2C world, and the challenges and solutions are as varied as the companies themselves.

A major catalogue retailer estimates that 10 percent to 15 percent of its items are returned each year. At one time, its fragmented returns program consisted of items stuffed in shoeboxes and torn bags bound together by duct tape that often covered the addresses. Today, the company's customers return goods in easy-to-use mailing bags complete with labels that enable outbound shipping and convenient tracking. The new system has shaved up to three days off return delivery times, embedded standardization into the retailer's processes to make its distribution centers more efficient, and improved customer retention by eliminating complexity from the returns function.

Another company photographs and sells photos of athletes. If a delivery is late, it is usually refused and returned. To avoid returns, the company uses visibility technology to see if an outbound shipment has experienced an exception in transit. If so, they immediately send another shipment. This keeps the photo pipeline full and customers happy.

A company that sells drive-thru headsets to businesses such as restaurants wants to get parts returned for repair and refurbishing. Once notified of a return, it ships out a replacement and within 48 hours requests that a UPS driver is dispatched to pick up the original item. From there, the company uses the visibility toolbox to verify that the product has been picked up and is headed back.

An auto brake parts manufacturer uses a "Returns on the Web" solution to handle its returns. The system provides a PC-printable, on-screen label that includes a list and color-coded maps of nearby UPS drop-off locations, color-coded maps of those locations, as well as relevant tracking information. The system allows businesses that route returns to multiple suppliers to manage the process with precision and better analyze returns data to capture key trends in customer behavior.

Conclusion

Returns are and will always be a cost center, and there is a significant price to pay for harboring an inefficient and manually driven process. This includes additional and unnecessary transportation costs by improper final disposition of the item, excessive inventory carrying expense, labor cost leakage and risk of human error, missed warranty windows and, above all, a sub-par customer service experience.

Few companies encourage returns, but they are a fact of life in running a business. Embracing the challenge of returns management, rather than avoiding it, is one of the traits separating the best of breed from the rest of the pack.