Speed, Visibility and Control for Improved Profits

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Speed, Visibility and Control for Improved
Profits Grant Woolf ClearOrbit
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Agenda

1. Company Overview
2. Hidden Costs of Returns
3. Solutions
4. Oracle Strengths and Weaknesses
5. ClearOrbit Returns Solution
6. QA

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Company SnapshotClosed-loop, bi-directional
goods movement across the value chain

• Founded in 1994, headquartered in Austin, Texas
• Customers include over 275 leading manufacturers
  and distributors
• Deployed globally at thousands of locations
  serving tens of thousands of users
• Solutions in
• Supply management collaboration
• Mobile applications
• Manufacturing execution
• RF barcode printing applications
• Returns management (new in 2006)
• Technologies that leverage enterprise investments
• Profitable and growing

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The ProblemHidden Costs of Returns

• There are up to 12 times the number of
  transactions involved in the returns process than
  to sell the product in the first place. (AMR
  2004)
• Improperly handled returns erode 30-35 of
  potential profits. (Gartner 2004)

Warranty repairs
Return Credits
Write-offs
Buy backs
Cycle count discrepancies
Manual reconciliation
Administrative labor
Freight costs
Excessive inventory
Reserve forecasting
Facility overhead
Customer Service contacts
100 billion in goods returned each year
Claims liabilities
Metric reporting
Aberdeen Group 2006
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Overall Reverse Logistics Costs as Percent of
Sales
Source Revisiting Reverse Logistics in the Customer-Centric Service Chain, Aberdeen Group, September 2006
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Hidden Costs of Returns Management

1. Hidden Labor Costs
2. Grey Market Items
3. Lack of visibility
4. Inability to forecast accurately
5. Credit reconciliation
6. Poor response time

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1. Hidden Labor Costs
Customer
Asset Mngment
Customer Service
Finance
Sales
Traffic
Rcvng Whsing Repair

• Warranty policies
• Service contracts
• Product rules
• Credit rules
• Advance replace
• Special customer needs

• Record of RMA
• Financial impact
• Process, approval rules
• Debits
• Problems found in Receiving
• Ability to reconcile
• Write-offs

• Account management
• Ineligible returns
• Revenue recognition
• Margin protection
• Special programs
• Quality impact
• Return rate forecasts

• Carrier control
• Non-contract rates
• Transit damage claim recovery
• One-off shipment issues
• Inability to track, route effectively

• Facility and labor planning
• Priority conflict
• Very manual effort
• Owner-ship issues
• Exception Handling
• Internal visibility

• Repair ship back
• Replace
• Credit
• Invoice
• Float stock
• Resale
• Scrap and reclaim value
• Green needs

• Return policies
• Customer-specific issues
• Product eligibility
• Credit timing issues
• Warranty support
• Perception

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2. Grey Market Items

• Even if warranty is controlled by serial number
  or other unique identifier - if company ships
  large volumes its very difficult and time
  consuming for manual lookups
• Return requests approved in one geography may not
  stop product from moving to another processes
  may not exist to capture associated, unbudgeted
  costs
• Product sold into specific markets may not be
  visible if service is requested in another
• Product designated as scrap may re-appear for
  warranty but not be easily recognized in manual
  operations
• Product sold to jobbers or liquidators for sale
  off-shore may appear for warranty/service and not
  be recognized in manual environment

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3. Lack of visibility

• Customers want visibility to status of return
  requests if no information readily available,
  customers will call/email customer service and
  sales teams
• If a request falls inside of standard policy or
  purchase agreements but is from a customer on
  credit hold, returns may be approved when they
  should not be
• If warehouses/returns centers are not aware of
  incoming returns, then valuable resources may be
  pulled away from new product sales, or other
  revenue generating activity
• If the reason for return is not known, testing
  and other unnecessary effort will be involved
  at point of receipt
• Discrepant or non-conforming product will
  continue to be a costly
  problem unless factual information can
  be presented to design, quality,
  marketing and other teams

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4. Inability to forecast accurately

• Detailed historical information about returns may
  be trapped in local Excel spreadsheets and
  databases
• Sales staff is often asked to provide forecasts
  for reserves but not given good returns
  information
• Return requests approved but not valued or
  matched against receipts prevent good accruals
• Return requests processed in one quarter but
  received in another may create problems for
  executives meeting SOX requirements
• Lack of detailed return reasons and lack of
  corresponding verification at receipt may hide
  serious marketing or quality issues
• Lack of awareness of returning product that can
  be used for service parts float stock may result
  in purchase of new product

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5. Credit reconciliation

• Since large customers often calculate their own
  credits and take a debit on next payment this
  is a very labor intensive problem
• Since debits are taken before return is received,
  finance team is unable to match/reconcile
• When product is received, any discrepancies will
  involve customer service, finance, sales, etc
• Many customers require Proof of Delivery before
  accepting a difference in the credit amount
• Fiscal year-end or end of quarter reconciliation
  often involves negotiating with the customer
  and splitting the difference
• Continued inability to prove case on the part of
  the supplier invites customer abuse

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6. Poor response time

• Manual return request processing and validation
  cause delays in approving or
  rejecting return requests and
  frustrates customers
• Delays in validation and approval result in
  multiple contacts from the
  customer, affecting their perception
• Discrepancies caught in receiving cause delays in
  communication to finance and to customers
  about returns issues
• Manual resolution of discrepancies is
  time-consuming and may be inconsistent and
  inaccurate
• Difficult reconciliation processes result in
  delays and additional reconciliation needs
• Slow and potentially confused service levels
  affect customer retention

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The Biggest Problem

• Nobody owns the problem!

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Solutions

• Get customers, vendors, 3PLs, repair depots, and
  other 3rd parties looking at the same data
• Access method and content driven by roles
• Simple implementation and integration drives
  adoption
• Dont make partners transact in multiple systems
• Leverage Your ERP and CRM systems where you can
• Supplement your ERP and CRM where they fall short

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How do the solutions stack up?
ClearOrbit ? ? ? ? ? ? ?
CRM ? ? ? ?
3PL ? ? ? ? ? ?
WMS ? ? ? ? ?
Repair ? ?
ERP ? ? ? ? ?
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Oracle Applications for Returns

• Strengths
• Strong integration with inventory
• Basic Request and approval
• Integration with finance
• Internal Repair Depot
• Integration with Order Management
• Weaknesses
• Integration with 3rd parties
• Gate keeping
• Routing and manifesting
• Exception Handling
• Material Tracking (outside of inventory)
• Dispute Resolution
• Disposition and value recovery of returned
  material

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Enterprise Returns Manager from ClearOrbit

• Revenue and profit management, not just material
  movement
• Control and visibility for the entire returns
  process
• Automated management of
• Customer relationships
• Financial decisions
• Up-sell opportunities
• Product dispositions
• Discrepancy tracking
• Regulatory compliance
• Environmental impacts

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ClearOrbit System Architecture
ClearOrbit Enterprise Returns Management
ERM Application Server
End Users -Customers -3PLs -Internal
ClearOrbit Web Pages
ClearOrbit Web Services
Excel Integration
Workflow Engine
Rules Engine
End User Systems -WMS -ERP
XML Integration
Carrier i.e. FedEx
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ClearOrbits Enterprise Returns Management
Request
Route
Receive
Disposition
Recovery
Phases
Reconcile, Dashboard Intelligence
Visibility

• Web-based RMA entry
• Eligibility validation
• Automated manual RMA approval/rejection
• Email alert/confirmation
• Dynamic user interface

• Return unit receipt
• Manual RMA creation
• Resolve discrepant lines
• Containerized dock receipt
• Scanner data capture
• Outside processing

• Configurable workflows via Visio
• Rules-based disposition
• Asset history
• Warehouse document generation
• LPN processing
• Advanced exchange

• Destination determination
• Manifesting
• Packing
• Label generation
• Inbound ASN's
• Shipment tracking
• Pickup request
• Shipment Optimization

• Asset allocation
• Return routing
• Cross dock
• Auto-scrap
• Intelligent fuzzy match
• Match-up management
• Auction

Key Activities
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ERM Release 4.1bRequest RMA - Customer
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ERM Release 4.1b Search RMAs Return Management
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ERM Release 4.1b Receive
Item Level Detail
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ERM Release 4.1b Dashboard
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ERM Release 4.1b Scorecard Drill Down
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QA