November 2001 | Commentary | Supply Chain Technology

Many Happy Returns

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Recent events have compelled many businesses to narrow their focus on specific components within the supply chain. But in terms of product recalls, the potential impact a product defect might have on other manufacturing, distribution, and transportation processes demands that companies take a broader view of the supply chain.

This past year, several widely publicized, heavy-duty recalls involving tire and vehicle manufacturers shed greater light on this dilemma. But recalls present difficult challenges for any company, regardless of product. These challenges include:

  • Recalls are almost always untimely.
  • Recalls may occur one at a time or on a massive scale.
  • They may have a marginal effect on the bottom line, or an effect close to disaster.
  • They can influence just about every link within the supply chain.
  • Recalls involve a complex paper and product trail from worldwide sources through worldwide resources. The paper trail must clearly reflect and give visibility to the product trail. Otherwise, what can be a very dreadful problem becomes nearly an invincible problem.
  • Recalls can mean re-manufacturing, repairing, or destroying the product. Each entails work, money, and time. The latter may bring a string of government regulations and concerns from the Consumer Product Safety Commission.

While recalls can be daunting, help is available. One new enterprise, Returns Online Inc., is in business to help manufacturers through the complex recalls process. The company offers help in financial management, logistics infrastructure and crisis management, as well as governmental compliance and consumer communication and response program development.

Returns Online offers this service through a three-part effort: 1) consultation 2) information technology and 3) physical logistics. The company not only attends to the recall paper trail, but the product trail as well.

Returns Online operates a National Returns Center in Covington, Ga., where workers inspect and sort all recall items, and follow out the manufacturer's disposition requirements.

Shipping partners include FedEx for expedited packages and Roadway Express for LTL and truckload shipments. The U.S. Postal Service handles returns from home consumers: "If the consumer is required to return a defective product, a prepaid shipping label may be printed from the web page, and scheduled for pickup directly from the consumer's home by the U.S. Postal Service," says Shannon Hauser, Returns Online CEO.

Costs and Information

Are there particular bottom-line advantages to manufacturers using Returns Online services?

"Absolutely," says Hauser. "As an outsourced provider, Returns Online has systems and facilities especially tailored to meet the specific needs of returns management. This specialization, coupled with economies of scale that only an outsourcer can provide, result in significant bottom-line savings for a manufacturer."

For instance, Returns Online's highly automated facility allows it to process a package within hours of receipt. This reduces inventory hold times, reduces asset depreciation, and allows the manufacturer to enjoy increased liquidation value.

"Information is also an often overlooked and critical link in the reverse supply chain," Hauser notes. "Returns Online's system carefully tracks and analyzes trends in customer return feedback, product quality, and vendor performance. Properly analyzing this data can improve sales and reduce operational efficiencies."

Despite heightened security since Sept. 11, Returns Online did not have to change its processes at the Covington National Returns Center. "Returns Online has always taken precautions to protect its personnel as well as the contents of its National Returns Centers," Hauser says.

To that end, access to all areas of the National Returns Center is controlled through electronic proximity access badges. All warehouse space is monitored by security cameras and captured on videotape. National Returns Center personnel are thoroughly screened prior to an offer of employment, including a drug test and background check. The facility is also equipped with a controlled access high-security processing cage created for high-value item processing and storage.

"During this difficult time, Returns Online has kept in close communication with its shipping partners and customers," Hauser says. "The company has taken special precautions in restricting visitor access and has trained employees to watch for suspicious-looking packages."

Returns Online expansion plans include building additional facilities in the United States and abroad as volume justifies. The company will either dedicate the facility to a large customer, or customize it for a particular industry—consumer electronics or industrial products, for example.

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