Kelli Saunders, Author at Morai Logistics Inc.

Industry Focus Week: Reverse Logistics

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We’d like to kick off April with our Industry Focus Week post on reverse logistics. You may have seen lots of news in the past little while about the benefits of reverse logistics, and how emphasizing strategies on reverse logistics is a good thing. But what exactly is reverse logistics? We thought that this month we would focus on answering that question for our readers.

What is Reverse Logistics?

According to The Council of Logistics Management, the official definition of reverse logistics is:

The process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal. More precisely, reverse logistics is the process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal. Remanufacturing and refurbishing activities also may be included in the definition of reverse logistics.

In layman’s terms, reverse logistics is essentially all logistics operations related to reusing products and materials. Contrary to normal logistics processes, which focuses on bringing products towards the customer (i.e. origin to destination), reverse logistics goes at least one step back in the supply chain. For example, having products or goods move from the customer to the manufacturer or distributor. The process of reverse logistics creates its own challenges, as certain factors can affect how goods can be taken backwards through the supply chain cycle (e.g. cross-border issues), hence the importance of creating a proper reverse logistics structure.

Looking at its most salient model, reverse logistics in the retail industry is the process by which customers return their products.

Why Is Reverse Logistics Important?

The importance of reverse logistics is mostly based on industry, but the average manufacturer spends 9-15% of total revenue on returns. It can be seen by certain companies as a hidden cost, but it can be a very real one based on industry and involves processes where vendors convert liabilities into either reduced liabilities or viable assets (i.e. it’s more than just warranty and basic logistics processes).

Industries involved in retail are obviously the most affected by reverse logistics risk management, as 95% of customers will not buy from a company if they have a bad returns experience. Thus, focusing on reverse logistics is an important, and sometimes unseen, customer service opportunity that many businesses have yet to properly leverage. US-based experts have suggested that companies with best-in-class reverse logistics capabilities average a 12% advantage in customer satisfaction, which leads to better retention and a higher rate of return (customers).

Process Improvement Strategies

Reverse Logistics Magazine released a great list of reverse logistics elements that can be modified and improved for optimizing the reverse supply chain:

Gate keeping
Compacting Disposition Cycle Time
Reverse Logistics Information Systems
Central Return Centers
Zero Returns

Remanufacture and Refurbishment
Asset Recovery
Negotiation
Financial Management
Outsourcing

They also highlighted the importance of updating warehouses with reverse gear. This essentially focuses on equipping warehouses with the capability to accept returns, process, repair, and replace products coming in through the reverse supply chain cycle. So if your company involves any form of reverse logistics, these factors can be the difference of having your end step (i.e. customers) experience improved.

That’s it for us this week! If you liked this blog post, why not subscribe to our blog? If you’re interested in what we do as a 3rd party logistics provider, don’t hesitate to check out our services (as expressed above, we are very pro finding you the lowest total cost!). We’re also in the twittersphere, so give us a follow to get the latest logistics and supply chain news!

Logistics Glossary Week for March 2014

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Spring is here! What better time to continue our end-of-the-month Logistics Glossary Week posts, to continue our mission to provide all who are interested in our industry to get savvy with our terminology. This month we’re going to continue our Border Crossing Logistics Terminology series!

Border Crossing Logistics Terminology – Part II

This month’s focus we’re going to be taking a more basic look at what cross-border logistics is all about and focus on the kinds of governmental initiatives that are involved in various cross-border logistics processes.

Cross-Border Logistics

Definition: The definition of cross-border logistics is pretty intuitive. It is simply any logistics processes that involves moving goods from one geographic boundary, usually separated by political entity (i.e. political entities or legal jurisdictions such as governments, sovereign states, federal states, and other applicable subnational entities.

As borders that separate these regions have their own system of governance, third-party logistics companies that specialize in cross-border logistics can take away any potential chaos with regards to compliance and the required documents to get your goods across from origin to destination.

North American Free Trade Agreement (NAFTA)

Definition: The North American Free Trade Agreement, or NAFTA, is an agreement between Canada, the United States, and Mexico. It was created in order to allow easier trade between the borders of each participating country through an ease of customs, regulations, and arguably most importantly: tariffs.

Because of the advantages that NAFTA offers to the participating North American countries, Canada and Mexico have been and currently maintain their place as two of the largest trading partners for the United States, and vice-vera.

Customs-Trade Partnership Against Terrorism (C-TPAT)

Definition: The Customs-Trade Partnership Against Terrorism, or C-TPAT, is a voluntary supply chain security program. Headed by the US Customs and Border Protection, it was launched in 2001 in order to improve the security of private companies’ supply chains with respect to terrorrism.

Companies who participate in the C-TPAT certification program undergo a documented process for determining and alleviating risks throughout their cross-border supply chain processes. The benefit to this program is that participating companies are deemed low-risk, and are eligible for expedited processing of cargo which in turn leads to fewer customs examinations.

Infographic: The Status of Women in the Logistics Industry

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International Women’s Day happened on the 8th of this month and we thought we would contribute a belated infographic for this week’s blog post. The logistics industry is notoriously known for being a Gentleman’s Club consisting of a primarily male workforce. Though that still exists today, companies have taken steps to balance the gender discrepancy in the workforce and women are slowly starting join logistics and supply chain companies at all levels.

The Status of Women in the Logistics Industry

If you’re interested in more digital content from us? Why not check out our White Paper on Mexico and third party logistics (3PL). To stay posted, feel free to sign up below:

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Industry Focus Week: 3D Printing

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There is a lot of talk these past couple of months on the implications of 3D printing and how it will change the face of the logistics and supply chain industry. This month we thought we would highlight the industry and shed some light into its development.

Widely practical, 3D printing is used primarily for prototyping and, more recently, distributed manufacturing. It is commonly seen in the following industries: architecture, construction, industrial design, automotive, aerospace, various engineering and medical industries, and fashion just to name a few.

What is 3D Printing, Exactly?

By definition, 3D printing is the process of making three-dimensional solid objects using a digital model. Also known as additive manufacturing, 3D printing uses a process called the additive process and carries out the process under computer control.

In the additive process, layers of material are laid down in different shapes. This is in contrast to subtractive processes in manufacturing, which is what is traditionally used to produce goods and involves the removal of material by various methods (i.e. cutting, drilling, carving, etc.).

The technology and concept of 3D printing is not a new idea. In fact, 3D printing technology has been around since the 1980s. The first working 3D printer was created by Chuck Hull of 3D Systems Crop. in 1984. It wasn’t until the early 2010s that companies started producing 3D printers for commercial distribution and use. This is partly due to a Moore’s Law type of progression; the development of the technology used in 3D printing has drastically impacted the price of 3D printers enough to be able to release it to consumer production.

How Will This Affect the Supply Chain?

Cerasis has released an excellent post regarding the impact of 3D printing particularly in inventory and logistics. The most interesting concept is that with the advent of 3D printers, the need to store finished products is nonexistent. There is no more need to store component parts before compiling the final product anymore; it essentially gets rid of the need to shelve or store products in warehouses anymore. This essentially collapses the supply chain to its most basic processes, which creates new efficiencies along the supply chain.

The 3D printing process can drastically alter the global supply chain and re-assemble it into a new local system. It can bypass the constraints of the traditional supply chain model: the need for low cost, high-volume assembly workers, real estate for stages of manufacturing and warehousing components, etc. Thus, the efficiencies of 3D printing impact the entire supply chain, from the cost to distribution and assembly to improving assembly cycle times.

Forbes released a post recently that suggests 3D printers essentially turn consumer products into digital content. The printers can already produce fairly detailed solid objects, though at this stage quite expensively. But according to Moore’s Law, and indeed looking at the history of 3D printing, prices have dropped significantly since the 1980s and will do so in the future. This could impact hardware stores and parts distribution services the same way e-books have impacted book stores.

Too Good to be True?

Tech Republic recently released a post suggesting that 3D printers are a potential double-edged sword and made some interesting points regarding what we should watch out for throughout the development of 3D printing as a process to be used by the masses.

The process of 3D printing itself, while efficient in many ways, are also not the most environmentally friendly. To start, they are energy hogs, 3D printers consume 50-100 times more electrical energy than injection molding and has a reliance on plastics. They are also known to pose health risks, especially with 3D printers used in the home. The emission from desktop 3D printers release unhealthy air emissions. There are also numerous issues on the corporate and legal side, involving potential national security risks, ethics and regulation, and corporate responsibility of products from 3D printed technology. So while 3D printing is something to look forward to, it is also something we should watch carefully.

Logistics Glossary Week for February 2014

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We’re ending February with our monthly Logistics Glossary week post. This focus is on maritime logistics terminology. Maritime logistics is essentially what it sounds like; it is the part of the supply chain that is primarily involved in the maritime environment. So anything involving the sea or ocean!

Maritime Logistics Part 1

Egyptians are commonly credited to be the first recorded instance of maritime logistics dating back to 3200 BCE. Transportation in those days were primarily dependent on wind, and stayed that way until mechanized ships (i.e. using steam engine technology) were invented and developed in the mid-19th century.

Fast forward to today, we now primarily use a diesel based engine and maritime logistics is a booming business, with about 90-95% of international trade being carried onboard ships of some sort. This post will focus on the different shipping terms you hear in the maritime logistics world.

Maritime Logistics Management

Definition: Maritime logistics management is the part of logistics and supply chain that plans, implements, and controls processes in the maritime environments (i.e. ocean or sea transport). These processes include, but are not limited to, efficient and effective flow of goods, services, and other related information based on customer or client needs.

Liner Shipping

Definition: Liner shipping a type of shipping involving high-capacity, ocean-bound ships that go on regular laid out routes and schedules. Currently, there are about 400 liner services that function today. They are commonly routed to do weekly departures from all the ports that each service calls. Ships that do this type of service are called liner vessels and are usually container ships and roll-on/roll-off ships. This type of transport is known to carry approximately 60% of the goods (by value) moved internationally every year.

Tramp Shipping

Definition: Tramp shipping is similar to line shipping in that it also involves high-capacity, ocean-bound ships. The main difference though is that tramp shipping doesn’t involve laid out routes and schedules; in fact, there’s no fixed routes, itinerary, or scheduling involved. Tramp shipping is advantageous because unlike liner shipping, tramp shipping options can be available at a short notice (or fixture) to load cargo from any port to any other port. This is great for customers that require specific shipping options that main routes from line shipping services may not offer, or if the route options do not make sense (i.e. are too convoluted).

Industry Focus Week: The Olympics and Logistics

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In the spirit of the games, we’ve decided to do our monthly Industry Focus Week on the Olympics. As many of you may already know the Olympics happens once every four years, alternating every two years between the Summer and Winter Olympics. The creation of the ceremony was inspired by the original ancient Olympic Games from Olympia, Greece back around 800 BC. Currently, it is governed by the International Olympic Committee (IOC), which was founded in 1984.

It is now a global event where the top athletes of every participating country meets to compete in a host city which changes every year. This obviously created many economic for the hosting cities, but present logistics challenges in many aspects leading up to and during the event itself.

This blog post, we’re going to take a look at the logistics and supply chain processes behind Sochi to give you a better idea of how a massive event like this can be pulled off from our industry perspective.

The 2014 Sochi Winter Olympics Logistics Challenges

The Olympics opening ceremony happened last week, and while it went off almost completely without a hitch, the task of turning Sochi into an Olympic venue is not without its challenges.

The Logistics of Building Sochi into an Olympic Host City

John Fritsche, the NBC Senior VP for Olympics Operations commented that the Sochi Olympics has been the most complex since his career began in 1979:

One of the things logistically challenging about Russia and Sochi is that from a marketplace point of view there is no Home Depot here, no Costco here, no city industrial base or any kind of base to draw from… We have to bring everything we need, as much as we can, and then bring it back to the States.

NBC reported that it would likely exceed $100 million in production costs. The majority of the problem lies in the fact that it is not very easy to get to Sochi. News has already spread regarding people getting to Sochi from around the globe having difficulties getting to the Olympic venue (i.e. it’s not the easiest to fly to, and the visa is over $200). But this doesn’t compare to the difficulties of getting materials into the city. Many of the goods for example, have to get routed through Istanbul, then across the Black Sea by boat in order to get to the destination.

Getting Goods Into Sochi

The Olympics in general is notorious for being one of the largest logistics nightmares when it comes to transporting goods on a global scale. Many packages will be sent from all over the world to a central location at the same time so that athletes, spectators, staff and media representatives get everything they need during the games. For a sample of the demographics, there are:

More than 7,500 Olympic, Paralympic, and respective team members attending
Over 25,000 volunteers helping out
Over 12,000 media representatives

All of the above-mentioned will need their tools or equipment, including extras (in case goods are faulty or damaged) for the entire duration of the Winter Olympics. Aeroloft and Russian Railways (RZhd) are the official cargo freight carrier and official freight services providers for the 2014 Sochi Winter Olympics this year, respectively.

Goods will be loaded into Russian Railway trains and shipped to one of two distribution centers, boasting 2,700 square metres of space to house all Olympic game-related goods and the other 8,400 square metres (IBC Warehouse) for all broadcasting equipment.

Warehousing Snow

A really interesting fact about the Sochi that you may not know is that it is one of the warmest locations ever selected to host the Winter Olympics. In order to help accommodate for this challenge, the Olympic ski village of Roza Khuntor developed the largest snow-making operation in Europe. They have 404 snow cannons ready for use, and in preparation for the winter Olympics, have saved 450,000 tonnes of snow from last winter. They’ve been stored in the largest snow warehouse ever made.

The end product that you see today is a great logistics success story that involved overcoming many challenges from our side of the industry. We hope that our reader who aren’t too familiar with logistics and supply chain now have better understanding (and hopefully a new appreciation!) of how we get your goods to where they need to be!

Logistics Glossary Week for January 2014

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We’re ending the first month of 2014 with our first Logistics Glossary Week post of the year. As you may already know, these posts focus on increasing your logistics and supply chain industry vocabulary as well as awareness about our industry. This month we’re going to focus on terminology that you might see at the border. This is Part I of our series on Border Crossing Logistics Terminology!

Border Crossing Logistics Terminology – Part I

This part will focus on the Importer of Record documents that are needed when crossing the border, for example an inbound shipment from the United States to Mexico. Now, depending on the border different documents might be necessary but this serves to give you an idea of what you would need to pay attention to.

Importer of Record

Definition: The Importer of Record is the person or company responsible for payment of duties and taxes and the maintenance of Customs records. For example, if your company was a US car parts manufacturer and wanted to ship to a car manufacturing plant in Mexico, you would be the Importer or Record and would need the following documents listed below.

Importer Tax ID

Definition: The importer tax ID is the identification needed for import duty purposes, where import duty is a kind of tax on levied goods which are being brought into the country. The duty to be paid depends on the country of origin of the goods as well as the type of goods. Rates can differ though, for example a standard rate could be 20%, but certain goods can be eligible for a reduced rate of 5% while some can have a no duty rate (0%).

Importer Product Specification

Definition: The importer product specification serves as a document that can be referred to when checking products at the border. This document allows the importer of record to define the custom product specifications of the goods that will be traveling across the border (i.e. the custom product specification group and product specification items to attach to any product). Attaching specifications with products need well-defined product specification groups and items for shipment security and risk mitigation practices.

Carta Encomienda Permits

Definition: The carta encomienda permit serves as the letter of appointment of the customs broker. The customs broker in charge of import operations must be able to present this this document (assigned by the importer of record) to Mexican authorities.

Other forms of documentation are needed, but we feel that they are pretty self-explanatory. These are the honourable mentions of what you need as an importer of record to cross the border: Voter’s registration, business registration, and address verification.

Logistics Focus: 3 Things to Explore this Year

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The world of logistics is a dynamic and constantly evolving industry; while some major pressures and worries of last year carry over onto this year, there are always new trends of focus for the industry as a whole all along the supply chain. This week we’re going to reveal three trends that we think the industry will be taking a closer look at this year.

These particular areas of focus are unique, as we’ve mentioned there are areas in the logistics industry those still needs to be addresses, such as the need for particular talent along the supply chain (e.g. truckers). These issues on the other hand, stem for studies and events (like changes in the industry with regards to consumer demands and/or technology) that have motivated companies to exert effort into improving.

1 – It’s All About Risk

During the second half of 2013, there was a surplus of articles addressing the need for companies to pay more attention to supply chain risk and to take steps in mitigating said risk as a way to address logistic challenges such as the 24th annual State of Logistics report predicting slow growth.

Many disasters struck last year, urging supply chain executives to tackle things like tsunamis, floods, and hurricanes. A survey by the American Productivity and Quality Center (APQC) suggested that while all this talk was happening, companies are struggling to address the issue effectively. About 83% of respondents reported that in the past year, they were caught off-guard by unexpected supply chain disruptions. We expect that efforts will be taken by affected companies to come up with ways to properly mitigate the effects of such large disasters. To see the white paper on this issue, click here.

2 – Returning the Private B2B Marketplace

Spend Matters released a post last week predicting that the private B2B marketplace will return in the logistics industry this year to accommodate for a supply chain revolution. The private B2B marketplace began in the early 2000s:

Independent electronic B2B public marketplaces gave birth to the software to run them, which then gave birth to the brick and mortar companies that wanted to control their own destinies to use such software to run industry consortia marketplaces. But, they found the technology lacking in deep support for much beyond things like reverse auctions, simple directories, and equally simple catalogs and order management.

Because of new technology needs and the realization that deeper support was needed for these complex processes, these marketplaces died off. But there is a strong chance for their return as these types of companies have begun to think more broadly about the extended supply chain and technology. Thus, there is a hint at the return of the marketplace with the transition into cross-industry supply chain Platforms as a Service (PaaS).

3 – Sourcing Hub Implementation

Research & Development (R&D) Magazine also released a blog post last week suggesting that the ‘Sourcing Hub’ could create a more efficient supply chain. Two papers co-written by University of Illinois expert Anupam Agrawal. He explored how the lack of communication between the big players at the beginning and end of the supply chain spectrum does not allow for gaining efficiencies in costs, design, and materials. Agrawal proposes a supply chain sourcing hub as a potential solution for this issue and defines it as:

… A collaborative center involving the firm, its suppliers and raw material suppliers as a mechanism for capturing and deploying sourcing knowledge of the raw material—would be beneficial.

In this way, Agrawal suggests that buyers and suppliers can congregate and evaluate what is best for all parties involved. It will be interesting to see if companies will be partaking in efforts to organize a trial sourcing hub in order to see how well it will perform.

3 Logistics and Supply Chain Infographics to Kick off 2014

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We hope that everyone has had a great start to the year so far! Now that we’re getting close to halfway through our first month, we thought we would feature some great infographics that we thought would motivate you for a great start to your year in the logistics and supply chain industry.

1 The Supply Chain Job Hunt

If you or anyone you know is looking to get into the logistics and supply chain industry. Here’s a great infographic that gives you the breakdown from how people in the industry maintained their position and what they thought about the current job market. Not surprisingly, in-person networking and word of mouth were the most common ways to land a position, but thankfully online job sites and postings from the employer’s sites show great outcomes as well. This is a great sign as it shows that our industry is adapting to today’s trends in recruitment strategies.

2 – The Struggling Supply Chain

Capgemini released an infographic on the struggles along the supply chain processes in preparation for the holiday season. It’s no surprise that the same challenges carry over for this year: a lack of talent and processes among key challenges.

3 – The Top Gadgets of 2013

A great way to move forward is to look back and see what’s been happening, and our last Industry Focus Week post on Hardware Technology showed that this coming year gadgets are the thing to look out for. We’re personally keeping an eye out for both wearable technology and miscellaneous gadgets! What are you looking forward to seeing developed?

Industry Focus Week: Hardware Technology

https://morailogistics.com/industry-focus-week-hardware-technology/

Our team at Morai Logistics hopes everyone has had a great holiday season! We decided to kick the year off our blog by focusing on the logistics and supply chain industry that is predicted to radically shape the face of the industry for 2014: Hardware.

Both Forbes and Director of the MIT Media Lab, Joi Ito, have deemed that 2014 is the start of the tech industry, especially the start-up crowd, to move away from the cloud and digital product and services and to move onto concrete real world devices that we can interact with.

While this presents a new challenge for these start-ups and veteran tech companies, primarily due to considering factors that haven’t been looked at thanks to the rise of digital services blooming in the tech market, the logistics industry can rejoice! Many potential opportunities are opening up for the logistics and supply chain companies, predictively those in 3rd party logistics, due to the need for these new hardware devices to be sent out to consumers. Warehousing and transportation services are looking to be in demand for the tech industry for 2014 and onward as these new hardware ideas come into fruition.

The Opportunities

There are a couple of factors that have made entrepreneurs in the tech industry strive for manufacturing devices and indeed the first and foremost is the increase in the practicality of computing devices. As can be seen in most of our pockets and purses, we currently are surrounded with an extremely powerful computer that fits in the palm of our hands. If anything is a great example of today’s advancement in hardware technology, one need not look further than that. Our cell phones have reached a point where we really can use it for most of our digital needs and conveniences.

Another potentially strong factor that has given rise to new ventures in hardware and straying from software is the fact that a lot of start-ups really tried to jump on the app bandwagon. Nowadays we are nearing app saturation and a culture has been created within the community where users are starting to become more conservative when it comes to downloading new apps. This hard resulted in a downward spiral as app developers need to feed themselves and have resorted to creating in-app purchases and reserved ad space which decreases the quality of user experience.

Thus developers now have taken to hardware, as it is assumed that hardware is something that should be paid for by consumers. It makes the work that the developers put in much more predictable with regards to their profitability.

The Challenge

It seems that while these opportunities have presented themselves for the logistics and supply chain industry despite the predicted slow growth in the industry for the coming years, it isn’t without some challenges.

The primary obstacles that these new tech companies are facing are where to manufacture these goods. China seems to be the standard option because of the readily able workforce and experience in tech development, but it seems more and more that nearshoring is the way to go. Places like Mexico offer an equally ready workforce and is much closer to the majority of these tech startups (primarily US). Meanwhile, manufacturing hubs in within the US itself are starting to trend as well.

The biggest concern though is logistics. Our industry faces a major problem of staff shortage when it comes to transporting goods. Nowhere is that more present that with our trucking workforce, as recent statistics have shown that 17% of the current truck driving population is under 35 and a larger proportion is close to retirement. Thus, should the demand present itself, our industry will have to come up with solutions to get these new digital goods across.

On a lighter note, the advent of 3D printing might have an impact on the way devices are manufactured in the future. Thoughts?