Technologies That Are Impacting the Future of Logistics

Leif Revere

Director, Distribution Systems at Genesco

Learning Objectives

The Covid pandemic rapidly changed retail logistics. From supply shortages, in-transit inventory stuck on trailers, to eCom order explosion, the industry changed almost overnight. And it shone a bright light on an underserved area in supply chain - reverse logistics. The presentation will take you through business drivers to fortify reverse logistics, the search for a solution to handle/grow the area, and what the future holds.


Key Takeaways:



  • Business drivers to update reverse logistics processes

  • Solution search

  • What the future has in store


"By June of 2020, most of our stores had reopened, but there was a huge backlog of returns and exchanges that had been shipped to our distribution center. "

Leif Revere

Director, Distribution Systems at Genesco

Transcript

Hello, my name is Leif Revere. I’m the Director of Distribution Systems for Genesco Incorporated. As you can see on the nameplate slide, Genesco is made up of several divisions, our largest being our journey’s division with the footprint of nearly 1200 stores within the US and Canada. Our company is based in Nashville, Tennessee. My team is responsible for the distribution systems in four of our distribution centers in the greater Middle Tennessee area.


What I want to talk with you all about today is the impact of COVID had on our reverse logistics, specifically where we were, and talk about the direct impacts on our returns processes, the business driver for change, what our existing processes were with reverse logistics, what solutions that we looked at to enhance our reverse logistics, the approval process, and the stakeholders that we reached out to to discuss and get approval for implementing a new reverse logistics process, and some of the future ideas, along with our short term initiatives, some of the future things that we would like to do in the reverse logistics space to differentiate us and set us up for the future.


Like many retailers, in March of 2020, we had to close all of our stores and adhere to the shelter in place. We closed all of our stores within our Genesco divisions. Our DC did remain open. They were considered a central business, so they remained open. We shipped record ecom volume out of our distribution centers during the times that all of our stores were closed. Since our stores were closed, our only option for shipping product was from our distribution centers. In the past, in our journeys division, for example, we were about 50:50 sourcing for our ecommerce orders between our stores and our district centers. Obviously, with all of our stores closed, we were only able to ship ecom volume for our district centers. Again, we set records during the shelter in place.


The impact on reverse logistics was while our stores were closed, the only options our customers had to return or exchange product was to ship it back to our distribution centers. Our DCs got inundated with returns. By June of 2020, most of our stores had reopened, but there was a huge backlog of returns and exchanges that had been shipped to our distribution center. To add to that mess, we started our store closings pretty abruptly. We had thousands of cartons that were in transit. So shipments from our distribution centers to our stores, transfers among our stores. We also had ecom orders from our bogus orders going to our stores that were all caught up in transit. We had to deal with that product coming back to our distribution centers.


My team actually had to create a program to track that product since, systemically, it was assigned to our stores. We had to hold it, track it, and be able to trace it and send back to our stores once they reopened. So that muddy the waters in our distribution centers, along with our record amount of returns that we were looking to process.


Our Executive VP challenged me and my team to streamline our ecom process, so our DCS could get our customers back their money for returns and get their exchange orders shipped more efficiently. That’s when I started my reverse logistics journey. Our existing process is—I think, the key word here is no—there was no visibility to inbound customer returns, no staff planning, no ability to measure volume. Basically, our returns team and our distribution center opened up the back of the truck. There could be one carton or there could be a thousand. Again, no visibility to what product was coming in, no way to staff for that product. We also had manual processes to update the DCs and host systems after the product was inspected. There was no user interface, no integration, no specific hardware. From an IT side, obviously, the solution that we had in place was not scalable, and again, not leveraging any technology.


The other challenge that we had is, since we were dealing with manual processes, there was only a select number of resources within our DCs that could actually process returns due to access and availability to get into multiple systems to process returns. So really, a cumbersome process and not efficient. I interviewed several reverse logistics providers, again, looking for a seamless solution, something that had growth capabilities. We’ll talk a couple of slides and slides in the future on some things we want to look look at. But also, was looking for some provider that had a familiarity with retail customer returns, wanted to make sure that people had that familiarity. In dealing with retail specific, again, not manufacturing, warranty, and all the other areas that you can get in and reverse logistics.


After interviewing several reverse logistics partners, we landed on reverse logic. You can see their value proposition here. They offered a quick implementation and config, and also the ability to upgrade and update their systems. A key here that third bullet, there were cloud hosted, web based, which was also important to lock into our current websites in our various divisions. They offered an in house services team, which I was able to talk to with detailed questions about the integration and the API’s. They had a nice, rich experience. They had a lot of experience, but also a rich website, which had the look and feel of our websites for multiple divisions. They only deal with reverse logistics. So they were very familiar with the business drivers. Also, you’ll see in the future they’ve got the ability to expand as reverse logistics expands.


I added this to talk about the approvals. As you can see, and in your company, I’m sure it’s the same reverse logistics touches many departments. This was a several months of getting approvals, also doing demos with multiple teams within Genesco just because of reverse logistics and the impact that it has on multiple teams. So I started with our operations teams. Our DCs wanted to make sure that the return process that was proposed was efficient and would work and give them some of the information that they were lacking.


Then, we move to our ecommerce team. Again, I talked about reverse logics and their ability to their website and how it played very well with our website, but wanted to ensure that the look and the feel wasn’t something totally different. So we check that box. Accounting wanted to make sure that, since we were looking to automate the processing of returns, there was no information or anything that our accounting team needed from this return system to ensure that that process is seamless, and again to our main business driver of our customers getting money back and getting their exchanges processed faster.


From a data management side, we needed to ensure that reverse logic kept our data secure, since it was customer information, to ensure that they weren’t putting information out or publishing information or selling our information to to other vendors. So we were able to work with our data management team. Obviously, legal wanted to ensure that everything from a legal standpoint was covered. Our host systems wanted to ensure that they could produce the information needed for reverse logics to display our order information, and ensure that whenever a return was executed, that our host systems could subscribe to within process returned files from reverse logics.


This was probably our key stakeholder in the process, our call center in the past is have been the only process for our customers to actually execute returns. Previously, our customers were required to call in to our call center to get a return label. Over the years, we’ve migrated from that, but our customers have grown accustomed to calling our call center. So we wanted to ensure that our call center could use the information in reverse logic to coach our customers, but also that they could see tracking information, which is one of the benefits that reverse logic is giving us. So a customer could see where their return was in the reverse logistics process.


The final stakeholder here is our store operations team. We wanted to ensure that, since now that our stores are open, we encourage our customers to bring their returns in, so we can do a swift exchange in our journeys division, for example. We wanted to ensure that we weren’t going to impact that by pushing our customers to only return product and not exchange it in our stores. So we’ve got that flexibility with with reverse logics.


I’ve noted here some of the future things we’re looking to do. This is the fun part. Obviously, the couple of phases that we’re looking at is to stand up reverse logic, hook it to our website, give the information to the customer so they can execute their returns, print their return labels, and give visibility to our RDCs as to what’s coming back to them so they can staff appropriately. Then, the integration that in a phase two that will take place to all of our host systems, including our accounting system to ensure that the customer gets their refund back quicker, or if it’s an exchange, they get the information to create another order. That can be shipped out to the customer to reduce that amount of time that they don’t have their product.


A couple items that we’re looking at for the future, and one of the benefits that reverse logics gave to us. First is cost of goods analysis. We want to compare the value of an item to what it cost us to process a return to determine if it makes financial sense to actually have the customer return that item or would it make more sense, since it would cost us more to process the return, to have the customer keep that item and donate to a homeless shelter or the various charitable organizations that deal with providing shoes for homeless, etc. That’s an item that reverse logics will give us that capability. We’ll be able to determine what it’s costing us to process returns and look to do that in the future.


The second item here. This is using an image scan, comparing that using machine learning to a library of images for that particular product to determine if the product is indeed 100% eligible for return. Also, getting the customer’s conditional refund based on that scanning, comparing using machine learning and AI, comparing that information to ensure that the product is truly in resellable condition. We could verify that once it got back to the DC so that’s exciting. That’s also kind of leads into our next potential future.


This is a bit of a far out idea. It will require revisiting with our stakeholders, but leveraging our shipping networks. If a customer has SKU, a SKU a doesn’t fit him, but I need SKU and it fits me, rather than having that customer returns QA to our distro center us to process it, put it away, repack it, just have that customer ship SKU to me. So print that return label with with my address. Obviously, we would have to put some parameters around that and ensure that our customers understand, and obviously the receiving customer is taking a little bit of the risk. This is something that I feel that as [inaudible] job reverse logistics moves and changes with the proliferation of ecommerce orders. This could be something that we could start with and be a pioneer in the area of reverse logistics. So I’m excited about this potential.


The final item here from the future is using a heads up display. I’m showing our partner Zebra, their heads up display, again, allowing for hands free for our processors. Again, back to the image scan to ensure that when a processor within our distribution center picks up an item, they can take a picture of that item in a couple of different poses. Compare that to the item library, and verify that it is truly a resalable item. Again, hands free, but also leveraging machine learning to compare images to speed up the returns.


So I’ve gone through our process of reverse logistics, and how we’ve migrated through the various areas and levels. We’re very excited about the future of reverse logistics. If you have questions or comments about reverse logistics in your company or want to compare, discuss what you’re doing, and how we proceeded on our journey and what we did, feel free to email me my email addresses listed here or you can reach out to me on LinkedIn. I think I’m the only [unintelligible] reviewer in LinkedIn. I appreciate your time today. I look forward to hearing feedback. Good luck on your reverse logistics journey.


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