Edition 74
Titanic Reverse Logistics Mistakes
by Gailen Vick, Founder & Publisher, RLA Standards Committee

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Titanic Reverse Logistics Mistakes

It has been 103 years since the Titanic sank on its maiden voyage from England to the U.S.

Anyone in their right mind would never repeat the errors that occurred during this tragedy where more than 1,500 passengers and crew lost their lives on April 15, 1912. Yet in the Retail industry I see companies making errors that have been previously documented in the Reverse Logistics Processes.

It’s interesting if you research the structural design of the Titanic, it was designed to take a head-on or side collision of the side double-walls without sinking but no one thought about sub-freezing water effects on the rivets and the cost-cutting programs that resulted in low quality steel being purchased that would lead to a catastrophic failure of the ship’s compartment interior.

Just as the Titanic didn’t plan for sub-standard rivets; was your supply chain planned with Multichannel programs in mind? How about a collection of return materials that represents 7-10% of the very supply chain that was designed with JIT delivery? And of course, who would have projected the level of consumer demands that are being placed upon e-tailing today. Oh, don’t forget extended Return Policies and Registry Gifts programs!

Daring Feats of Collision
HMS Titanic – Start up 1908/failed 1912 – 1 Super Luxury Liner
Circuit City - Start up 1949/failed 2008 – 2nd Largest Electronic Retailer - 567 Superstores nationwide

Documentation Before Collision and After the Sinking
Radio Shack - Start up 1921/Files for Chapter 11 protection 2015 - 4,297 US stores, 274 stores in Mexico, additional 900 locations independent dealers - chain left the UK 1999, Australia 2002 and Canada 2004 (RL not centralized)

Walgreens - Start up 1901 - forecast reduced by $1.1 billion (no ERP visibility for RL)

Target – 2014 chain left Canada 133 Stores in Canada, close 11 locations in USA (RL extended over country borders)

Tesco - Start up 1919 – pulled out of the USA in 2013, 2014 closed 43 UK stores (Senior Management with limited RL visibility)

Most retailers have done a lot to fortify their main objectives to reinforce their supply chain and marketing. Yet finance misunderstand or are totally oblivious to the process of reverse logistics.

With a similar panic on the deck of the Titanic, many retailers are reinforcing their extended returns policies yet they don’t realize the slicing effect of their business just like when the Titanic hit the iceberg; extended returns policies have major impact on long term profit.

Many retailers are sinking today even though they haven’t hit their final destructive force. Their reverse logistics processes has been festering and created such a huge cost in its ghostly outcome.

Retailers must have Long-Range Binoculars
1995 Walmart invests a in Reverse Logistics operation department, representing a 2.9% Savings
2005 Best Buy announced a Reverse Logistics Group

2012 The Home Depot announced a Reverse Logistics Group

2014 Companhia Brasileira de Distribuição - Adjusted EBITDA, grows 19.7% to R$5.4 billion

2015 GreenDust - LG signs up 2015 GreenDust a retailer in India with Reverse Logistics material only - Growth of 300 plus stores

1. The wireless operator aboard the Titanic ignored six iceberg warnings the ship received the day of its collision. Is your operations ignoring Reverse Logistics warnings?

2. The iceberg that sank the Titanic has been floating around the North Atlantic for about 3,000 years. Are you ignoring the oblivious? Everyone knows the term RL, but is anyone managing the navigation to prevent a Reverse Logistics collision.

3. Although the Titanic had four smoke stacks, only three were operational. The fourth was for show as the Titanic’s designers thought it looked better. Is you Green Initiatives/Zero Carbon foot-print for show or a PR spin? Are you aware of the cost saving that comes from a solid RL process?

4. April 14, 1912, 11:40pm – The Titanic hits the iceberg. Lookouts first see the iceberg and alert the bridge. April 15, 1912, 12:20am – The RMS Carpathia receives distress calls and heads to the site to help. It arrives at 3:30am, one hour late. Notify other departments & shareholders early, don’t ignore those that bring RL issues to your attention.

5. April 15, 1912, 12:45am – The first lifeboat is launched with 28 people on board out of a capacity of 65. Ironically, the passengers on board the Titanic, were scheduled to undergo a lifeboat drill the same day the ship struck the iceberg. The drill was canceled, not because of the accident, but by the captain. Changing policies in RL can have long term catastrophic impact. Know your resources during any important financial development and don’t overact too hastily.

Gailen Vick, founded the Reverse Logistics Association in 2002. His market research found that over $750 billion was being spent annually on Reverse Logistics in North America alone! Uncovered where thousands of 3rd Party Service Providers (3PSP) that provided services to OEM/ODM, Branded and Retail companies! Additional research showed that there wasn’t any common thread between any of the 3PSPs other than competition. ‘There just wasn’t a forum for the OEMs, ODMs, Branded and Retail companies to discuss ‘best practices’ for Reverse Logistics.

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