As C.H. Robinson continues to develop Reverse Logistics solutions for our client base, I see a wide range of client needs and capability requirements. There has been a strong trend in recent years to take a closer look at efficiently managing reverse logistics flows as shippers realize the positive impact a best-in-class process can have on their bottom line. Additionally, shippers are turning to Reverse Logistics programs to drive their sustainability initiatives forward.
Recently, a custom manufacturer of cargo protections systems and reusable dunnage (packing material that protects cargo) asked me to model their reverse logistics program. Reusable shipping units—dunnage, crates, totes, drums, kegs, reels, pallets, etc.—have been in use for many years and are particularly effective in equipment pooling orclosed-loop scenarios. The company showed me their product’s fiscal and sustainability benefits as well as the impressive reduction in cargo damage. While these benefits were promising, it became clear to me that the shipper (like many other companies) had one major challenge: How can businesses effectively keep track of their pool of reusable cargo and reposition it appropriately?
As more shippers evaluate the benefit of purchasing reusable shipping units, they are forced to develop collection programs for complex supply chain scenarios. The key to any effective reusable program is to create a cost effective collection strategy that eliminates lost units and ensures accurate refunds for returns.
If you are considering using reusable cargo, use these 5 ideas to build a more strategic retrieval process.
- Plan your pool effectively. Eliminate the stress of not having enough equipment on hand to meet supply by identifying the optimal quantity for the pool of equipment. This will require a detailed assessment of forecasted volumes, estimated lag time, receivers’ staging space, and return cycle time.
- Build a partnership with receivers. Receivers will see the benefits of a reusable program, but don’t overlook the fact that it will create some complications for them. For example, they will need to comply with collection and account for units. Find ways to incent receivers for their collaboration. Clearly define expectations to ensure a seamless recovery process and clean financial adjustments (if applicable).
- Create a structured sweep process. Efficient collection of units can make or break the fiscal viability of a reusable cargo program. While volume and density drive efficiency, it is possible to design sweeps and pool collection programs on smaller volume returns. As annual volumes ebb and flow, seek out a logistics partner with flexible, transportation services that can dynamically execute retrievals based on a variety of scenarios.
- Implement a communications hub. It is critical to create a centralized location for processing and granting authorizations to return reusable units. Whether the location is internal or outsourced, EDI, web-based or a call-center, this process enables receivers to request the collection of units when minimum thresholds are met. As a control mechanism, this authorization creates alignment with your return expectations, while adding visibility of the reusable cargo on the return journey.
- Create visibility. Knowing where your units are in the supply chain at any given time will help you sleep at night. Develop inventory visibility at four stages of your network: 1) on hand at the shipping facility, 2) in transit to receivers, 3) staged at receiver, and 4) in transit returns. Whether in your ERP or through a third-party website, creating visibility allows you to evaluate if additional sweeps or dynamic routings are needed. It also provides concise information to quickly validate any return credits involved in your programs.
In the end, it’s important to have a concrete plan in place to make the most out of your reusable cargo. This will help make sure the program is effective and has a positive impact on your bottom line. For more information on the financial benefits of reusable programs, check out this link.
Are you using reusable cargo? What challenges are you dealing with?
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