Returns are never easy to handle. That's why having a good strategy and maybe even a partner can help bring order to one of the supply chain's most chaotic processes.
David Maloney has been a journalist for more than 35 years and is currently the group editorial director for DC Velocity and Supply Chain Quarterly magazines. In this role, he is responsible for the editorial content of both brands of Agile Business Media. Dave joined DC Velocity in April of 2004. Prior to that, he was a senior editor for Modern Materials Handling magazine. Dave also has extensive experience as a broadcast journalist. Before writing for supply chain publications, he was a journalist, television producer and director in Pittsburgh. Dave combines a background of reporting on logistics with his video production experience to bring new opportunities to DC Velocity readers, including web videos highlighting top distribution and logistics facilities, webcasts and other cross-media projects. He continues to live and work in the Pittsburgh area.
Let's face it—returns are messy. No one really wants to deal with them. They take away from what we really want to do in supply chain—move products forward. No one really wants to back up.
Returns also cost money. Reducing that cost and making the most of a difficult situation is the goal of every well-performing reverse logistics operation.
"With returns, you're working against the clock. The longer a product sits in storage and the more touchpoints it receives, the less value you may recover," explains Ryan Kelly, senior vice president of sales, strategy and communications for Genco, a FedEx company. "It's imperative to have clear and efficient disposition logic in your returns processes and easy access to secondary markets."
What has historically made returns such a messy proposition has only been intensified by the omnichannel revolution. In the past, returns typically came from one source. If you were a retailer, most products were sold in a store, and items were returned to the same store. Similarly, a catalog operation would ship products to a customer, and returns would be shipped back to the seller's distribution center.
Those once-delineated lines are blurry now. Products can originate from a number of different sales channels—online, a store, a catalog operation, a third party, and so on. Some of these items can be ordered through one channel—for instance, online—and returned through another channel, such as a retail store. Managing this kind of diversity makes reverse logistics more complicated than ever.
The percentage of returns has also grown with the advent of e-commerce. "In the Internet age, returns have been driven to a much higher rate—two to three times higher than with a brick-and-mortar store," says Tony Sciarrotta, executive director of the Reverse Logistics Association, an organization of companies and other players involved in returns management.
Sciarrotta says that products sold in a brick-and-mortar store are returned 8 to 12 percent of the time. With e-commerce purchases, the returns rate jumps to 18 to 25 percent. Returns tend to run particularly high for online clothing and shoes purchases, where a customer might order several different sizes to assure a fit and then return all but one.
Handling this kind of volume can be challenging, but if done well, returns can actually benefit a company by providing an opportunity for positive interaction with customers. Returns can also be a valuable source of information that a company can leverage to optimize its supply chain.
"Returns, often considered a problem, are actually a valuable resource for gaining insights that can be used to improve the customer journey," says Stef de Bont, founder and CEO of 12Return, a company that specializes in returns management software. "If done well, returns can really be turned into value for you and your customer."
ALL RETURNS ARE NOT CREATED EQUAL
Part of what makes reverse logistics so difficult is that not all returns are handled the same way. The determination of how to treat a return largely hinges on the item's condition, where it is in its lifecycle, and the reason why it was returned in the first place.
Products in the early stages of their lifecycles include those that are returned simply because the customer changed his or her mind. Items returned to a store in perfect condition can be re-entered into inventory and put back on store shelves. Often, though, product is returned with damaged packaging. (Sometimes this is not the consumer's fault, as the packaging for many items must be destroyed simply to open them.) In these cases, the product will need new packaging or a change to the existing packaging, which might require it to be sold at a discount.
Other products in the early stages of their lifecycle are returned because they are damaged or not working. In these cases, the items need to be evaluated and, if possible, repaired. In some cases, the products may be returned to stock as refurbished goods. In other instances, the products may have to be sent back to the original manufacturer for replacement.
Mid-cycle items are those that are returned for warranty issues. These typically need to be replaced or repaired and then returned to the customer. Retail stores generally do not handle these sorts of claims, but certain distribution centers will. In some cases, the repairs may be done at the facility; in others, the items will be returned to the manufacturer.
End-of-life returns are those where the product is beyond repair. When possible, these items are typically broken down into component parts. The individual parts may be reused for refurbished goods, or they may be recycled. In all cases, the goal is to recover any value from the product before it's tossed in a landfill.
All of these instances present an opportunity for retailers to interact with the customer. Because the customer already has a reason to be displeased with the product, the returns operations' challenge is to provide superior service to retain that customer's loyalty. Such quality service often means crediting the customer's account immediately upon making the return. It also means providing a fast exchange, regardless of the reason for the request.
3PLs TO THE RESCUE
Due to its complexity, returns management is typically not a core competency for retailers and distributors. Companies must have the operational capacity to process the returns quickly and the IT infrastructure to credit the customer and to track the resolution of the claim. That's why many companies turn to a third-party service provider (3PL) to handle returns for them.
"A 3PL has the knowledge to handle the mess," says Norm Brouillette, vice president and general manager of technology and healthcare at Ryder System. Ryder performs returns management services for clients in a number of markets.
Genco's Kelly concurs. "Companies can benefit by managing returns with a reliable 3PL because reverse logistics requires dedicated resources and expertise to handle. This holds especially true for companies within the healthcare, retail, and technology industries, as regulatory compliance and hazardous material disposal require special consideration," he says. "An experienced 3PL can also provide valuable industry insight and best practices from across varying industries to develop better ways to handle logistics challenges."
Using a 3PL also gives customers the flexibility to modify their returns processes without a major investment in infrastructure and equipment, according to Matt Ennis, vice president of business development and client solutions at Yusen Logistics, another company that provides returns management services. "As product sourcing patterns change [such as the selection of new suppliers, new locations, or new channel options] to feed the forward supply chain, so must the reverse supply chain change to accommodate these shifts," he says. "If a company relies only on its internal network and associated resources, it limits itself to what it can do alone and how quickly it can react to these changes." He adds that using a 3PL offers companies a low-risk way to test new ideas and processes for handling their returns.
Many 3PLs specialize in handing returns of specific categories of products, such as electronics, bulk products, clothing, or food. One of these is PlanITROI, a Denville, New Jersey-based firm that offers a full range of reverse logistics management services geared to the higher-value IT, consumer electronics, and small appliance markets. Among the company's clients are Acer Computers, healthcare electronics manufacturer HoMedics, and headphone maker Sol Republic.
"Our biggest value-add is that we manage from the first user to the next user without a lot of hands in between," says CEO Paul Baum. "We will also handle all of the ins and outs of the [transaction], including taking over the manufacturer's warranty," he adds.
Once a store or manufacturer receives a return, it ships the item to PlanITROI for processing. Baum says that 70 percent of the returns his company receives are a result of buyer's remorse and arrive in unused or barely used condition. Unopened product is classified as "A-stock" and returned to the retailer or vendor to be placed back into their inventory. (Depending on the arrangement, some retailers will handle these returns internally instead of shipping them to PlanITROI.)
Products that have been opened need to be tested. If they pass muster, they're sold as recertified goods, or "B-stock." Baum says there is actually more demand than supply for recertified products, as they typically cost less than new ones and have been checked over at least twice.
Less than 5 percent of what PlanITROI receives requires repairs. About 70 percent of these simply require reloading or updating the product's software to function properly. Only about 1 percent of returns have physical damage. In most of these cases, PlanITROI assumes the manufacturer's original warranty and makes needed repairs. It then sells the items as refurbished goods, often to secondary markets rather than through the original retailer. Such goods are commonly sold on sites like walmart.com, staples.com, and newegg.com.
Refurbishing is not always an option, however. Some manufacturers and retailers choose not to sell refurbished goods. In this case, and when the products are determined to be BER (beyond economical repair), the components are harvested for use as replacement parts. Parts that cannot be reused are broken down further to their base materials. Plastic, glass, magnets, aluminum, and other metals are sent to recycling operations and refiners. PlanITROI actually has a division that oversees the recycling of these materials so they can be turned into future goods.
WANTED: A LOGISTICS SERVICE PROVIDER
For companies that opt to take the 3PL route, selecting the right partner is key to the arrangement's success. But how do you find a provider that will handle your returns accurately and efficiently, while making certain your customers are satisfied? We asked several experts for advice. What follows are their recommendations and suggestions.
First of all, be sure that the company you select has experience in handling your type of products. "You don't want to be the beta site," warns Bob Lieb, professor of supply chain management at Northeastern University in Boston.
As with PlanITROI, there are companies out there that specialize in specific product categories, such as electronics, food, and clothing. Find a company with experience handling your full range of products. For instance, if you sell washers and dryers, you need a partner with the capacity to handle large, bulky items. Price should not be the determining factor in choosing a partner. "Don't just look at a quote," says Gailen Vick, founder of the Reverse Logistics Association. "Find a partner that understands your total business."
Second, look at the company's financials. Many companies are getting into this lucrative field, but do they have a solid business model and the capital, facilities, IT infrastructure, and other resources to back it up?
Another key consideration is the provider's ability to track the real-time status of each return. "Visibility into the return is very important to our clients' customers. They want to see that credit issued quickly," says Ryder's Brouillette. Sciarrotta of the Reverse Logistics Association agrees. He says the trend is to provide credit to the customer immediately upon issuing a tracking number, even before the product is received and evaluated. The view is that it is better to lose a product than a customer. "You can't put procedures in place that negatively affect 99 percent of returns for the 1 percent that is damaged or fraudulent," he says.
Next, agree in advance with your partner on specific performance metrics. Be sure both parties understand who is responsible for what and who is responsible for the costs associated with each process. You don't want surprises.
Access to secondary markets is also important. If the product cannot be sold as new, does the provider have a network to dispose of the products, either as recertified, refurbished, or recycled items? "One of our customers uses our services because it doesn't want to see its returns put in a landfill," says Brouillette. Ryder's capabilities to break down and recycle components were a big draw for the environmentally conscious client, he explains.
In some cases, a manufacturer may not want its products sold in the secondary market because of concerns about diluting its brand's image. "And some retailers may not want their products to be resold at all, as it might impact their other sales channels," says Vick. He notes that in these instances, they might prefer that their goods be given to charities. It's best to determine in advance which channels should be used to dispose of specific goods.
Regardless of which partner a company chooses to manage its returns, establishing a good working relationship is critical to long-term success. Keeping communication lines open can help reduce both the risk and the mess, while assuring many happy returns.
Samsung's total recall
As of Nov. 7, 85 percent of all the Galaxy Note 7 "phablet" smartphones sold in the U.S. had left U.S. consumers' hands, according to Samsung Electronics, the maker of the device that was recalled in September and discontinued in October after repeated incidents of the phones catching fire due to overheated batteries. To encourage customers to return the remaining phones, Samsung said at the time it would issue a software update that would limit the phone's ability to charge beyond 60 percent power. Virtually all of the returned phones had been exchanged for new devices, Samsung said. The recall covered 1.9 million phones in the U.S.
The stunning chain of events that within two weeks turned what was arguably the most anticipated product launch in Samsung's history into a $5 billion debacle and resulted in a black eye to the company's reputation has seemingly run its course. If Samsung can take any solace, it's that the returns process itself appears to have been competently handled, according to Irv Grossman, a pioneer in the design of reverse logistics programs for the wireless communications industry and executive vice president of the Americas for Atlanta-based Chainalytics, a supply chain engineering and consulting firm.
In a phone interview, Grossman said Samsung has shown evidence of a fast response to product issues by matching the products with their owners, a process known in the reverse logistics trade as a "precise recall," because there was already so much information connecting the customer to the phone. The returns effort likely was aided by the wireless carriers, whose level of involvement was much higher than it would normally be in a consumer product recall, Grossman said. The vast majority of U.S. phones were returned to the carriers because that's where most of the devices were bought. Neither Grossman nor Chainalytics was involved in the recall.
In published reports, Samsung described the use of a special fireproof kit that would have allowed customers to return the phones via air directly to the manufacturer. However, shortly after the recall, the U.S. Department of Transportation issued a ban on carrying the phones aboard a commercial aircraft or classifying them as cargo. Instead, the returns have moved via truck. Samsung U.S. executives did not respond to requests for comment on this story.
In some customer returns scenarios, manufacturers could refurbish the defective items and sell them back into secondary markets. Given the nature of this recall and the adverse publicity surrounding it, that is unlikely in this case. The Note 7 is too unstable to be sold as new or nearly new, Grossman said, and will either be harvested for parts or recycled into metal.
For a while, though, the phones will sit on a warehouse shelf in a stable state until Samsung determines how to dispose of them.
The independent airfreight handler Hong Kong Air Cargo Terminals Ltd. (Hactl) has found a way to green up its operations and keep folks hydrated at the same time. The company recently announced that instead of sending old staff uniforms to a landfill, it had upcycled them into 5,000 plastic cups.
Old uniforms often end up in the waste stream because they’re made ofblended fibers, which are typically difficult to recycle. But through Hactl’s “Zero Waste Uniform Upcycling Project,” polyester fibers from the old uniforms were recycled through processes like melt-granulation into raw plastic granules that were then used to manufacture recyclable cups.
“In Hong Kong, the aviation industry, like many industries, provides uniforms for front-line staff. Dealing with old uniforms is an important environmental issue,” Hactl Chief Executive Wilson Kwong said in a release. “We hope that through this project, we can break through traditional limitations and recycle old uniforms to achieve ‘zero waste upcycling’ and reduce the burden on landfills, while encouraging the industry to contribute toward a circular economy and sustainable development.”
The initiative is part of the company’s overall efforts to curb waste. Hactl launched its “Green Terminal” sustainability program in 2018 and has committed to achieving a 75% waste recycling rate by 2030.
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Transcript
About this week's guest
Dennis Moon is chief operating officer of Roadie. He has served in executive management positions in both public and privately held companies over the past 15 years, including as executive vice president for Medovex Corp., a medical device and technology company, and chief operations officer for JCS, where he assisted in the sale of the company to a private equity fund and remained COO of the JCS Division for Correctional Healthcare Companies. As COO, his responsibilities included supervising the day-to-day operations and maintenance of over 50,000 monthly clients, over 200 city, county and state contracts, 70 physical office locations, more than 400 employees and over 1.8 million financial transactions per year.
Prior to his career in executive management, Moon served in the U.S. Army as an intelligence analyst and combat engineer with TS/SCI Clearance. He holds a bachelor’s degree from the University of Central Florida.
David Maloney, Editorial Director, DC Velocity 00:01
Delivering Halloween. Forecasting technology trends. And is pallet handling the next robotic frontier?
Pull up a chair and join us, as the editors of
DC Velocity discuss these stories, as well as news and supply chain trends, on this week's Logistics Matters podcast.
Hi, I'm Dave Maloney. I'm the group editorial director at
DC Velocity. Welcome.
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As usual, our
DC Velocity senior editors Ben Ames and Victoria Kickham will be alone to provide their insights into the top stories of this week.
But to begin today, Halloween is just a few days away. The holiday has grown over the years to be the second or third most popular holiday, depending on which survey you trust. So, it's basically right up there with Christmas and Thanksgiving. Making sure that deliveries of all the decorations and treats get to their destinations on time is a big task, and to find out what's involved in all of that, here's Victoria with today's guest.
Victoria.
Victoria Kickham, Senior Editor, DC Velocity 01:35
Thanks, Dave. Our guest today is Dennis Moon, chiefoperating officer for crowdsourced delivery platform Roadie. Welcome Dennis.
Dennis Moon, Chief Operating Officer, Roadie 01:43
Thank you.
Victoria Kickham, Senior Editor, DC Velocity 01:45
Yeah, thanks for joining us today. I think most of our listeners are familiar with Roadie, but can you just give us a quick overview of the company and its role in the supply chain?
Dennis Moon, Chief Operating Officer, Roadie 01:54
Absolutely. We've been around since 2014. Roadie is a logistics-management and crowdsource delivery platform. We're also a UPS company, and our role in the supply chain is to offer businesses fast, flexible, and asset-light logistics solutions in the last mile.
Victoria Kickham, Senior Editor, DC Velocity 02:10
Terrific. So, as Dave said, supply chains are gearing up for this Halloween season. Retailers are busy getting orders out to people. How does demand for all those costumes, decorations, and candy affect supply chains?
Dennis Moon, Chief Operating Officer, Roadie 02:24
It really kicks off the peak season for us, and as we've been doing this for a while, it gets a little bit different every year, but what we're seeing is a lot of retailers are kicking off their peak season at the same time as Halloween. So, as we can see, and you probably have noticed, more and more sales events and promotions are kicking off earlier and earlier into the season, so I think it's really good, because we're able to take the momentum that we start for Halloween, continue it on to delivering for people right into peak, and it also really helps with that last-minute Halloween rush that a lot of people have. I would just say the other thing is that, you know, consumers, and us as consumers, we're just really getting used to following the promotions more than we are following the event, so we've been seeing that over the last couple of years.
Victoria Kickham, Senior Editor, DC Velocity 03:08
Great. Thank you. Along with all of that, so Roadie has a partnership with Spirit Halloween, which is a retailer that's certainly at the forefront of dealing with these particular peak-season challenges that are happening right now. Can you describe the partnership and how it works?
Dennis Moon, Chief Operating Officer, Roadie 03:23
Yeah, I'm really excited about this one. Spirit Halloween is North America's leading Halloween retailer, and we provide same-day delivery from spirit Halloween's online stores across the United States. So same-day's available in more than 800 Spirit Halloween retail locations, allowing their customers to receive their items quickly and conveniently, just like they would with any other delivery. But Halloween fans have access to hundreds, if not thousands of SKUs in that same-day marketplace, and we're just really excited, as I said earlier, to be able to start propelling ourselves as we enter into a really big peak season.
Victoria Kickham, Senior Editor, DC Velocity 03:59
And I think you said — how many stores are you doing this in?
Dennis Moon, Chief Operating Officer, Roadie 04:02
Eight hundred Spirit Halloween retail locations, and this is the first time they've offered it. So, it's new to them and it's new to us, so we're just really excited about the opportunity.
Victoria Kickham, Senior Editor, DC Velocity 04:09
Yeah, I'm very familiar with the store, and that sounds new to me, so... .Is Roadie working with otherretailers on similar solutions designed to help manage this Halloween demand?
Dennis Moon, Chief Operating Officer, Roadie 04:19
Yeah, you know, one of our most notable specialty retailers, and one of the bigger customers during Halloween, is the Home Depots of this world. And as everybody knows, they've got a really, really good selection of Halloween decorations that I see in my neighborhood every day, and being able to deliver some of those really big yard decorations has been super cool for us, and we've been doing a lot of it this Halloween season.
Victoria Kickham, Senior Editor, DC Velocity 04:46
So, what trends are you seeing in same-day delivery service in general? How are technology advances, for example, things like AI, affecting the industry?
Dennis Moon, Chief Operating Officer, Roadie 04:56
Yeah, you know, [I've] been doing this for a while, and just, every year, more and more retailers create or have same-day as just standard expectation for online shopping. It's pretty surprising. Going back 10 years, no one did, not many people did, and they just really didn't have it on its radar. So, the adoption rate is accelerating. Everyone feels that they must have same-day delivery to compete, and retailers have really found that just the same-day model gives them that competitive edge. It increases revenue, and it's good for them, it's good for their customers. We did a survey recently where we conducted, it found 80% of companies reported an increased revenue with same-day delivery, so it really is starting to prove itself. To answer your question about AI's impact. It's helping optimize delivery routes for us. It balances delivery capacity. We're using it all over the place, from customer support all the way to helping drivers make decisions on what's the most economical route for them, what's the best route, what's the best offer that they should make — so, just giving them all the information. And making sure that we're as transparent as possible, utilizing all the AI technology that we can behind the scenes so that drivers can make a good decision. It enables our retailers to anticipate demand. So, as we think about, we've got a bit of demand going into the Halloween season, but it's going to get really, really hectic with a compressed peak as people who follow UPS know, it came out yesterday, you know, Carol Tomé talked about it: 17 business days between Thanksgiving and Christmas. So we haven't seen that compressed of a peak since 2019, which means all of the supply chain is just going to have to really, really work well together to get things to people right before the holiday. And AI is going to be a big part of it as we implement it more and more in different facets of our business.
Victoria Kickham, Senior Editor, DC Velocity 06:47
Looking ahead to the holiday peak — we've touched on that throughout this conversation — how large a role will this crowdsource delivery model play in helping businesses manage all those last-minute holiday deliveries? Just sort of a general perspective on that?
Dennis Moon, Chief Operating Officer, Roadie 07:02
Yeah, it's a great question, and every year, we become a bigger and bigger part of it. Consumers are looking for same-day, fast deliveries,crowdsource platforms like Roadie, we play a really big part, and part of that is probably because we're seeing more and more retailers, the big retailers, need to move product closer to customers. So, there's a sense of forward distribution coming out of the brick-and-mortar stores, where, in years past, everything would come out of a distribution center somewhere else. So they've got to have the product in the store, and we've got to get it to their customers fast, which is just really, really growing every single year, especially in some of the biggest retailers that everybody knows that have the best deals when it comes to Black Friday, Cyber Monday. A vast majority of that volume is coming from the stores now, where it used to come out of their distribution centers.
Victoria Kickham, Senior Editor, DC Velocity 07:51
Dennis, anything else on this topic you want to mention as we gear up for Halloween next week, and looking further ahead to holiday peak?
Dennis Moon, Chief Operating Officer, Roadie 08:00
I would reiterate that it's going to be a short, compact, and hectic peak. As I said before, it was 27 days between Thanksgiving and Christmas, 17 business days, which we haven't seen in quite some time, and this year, more more than ever, fast delivery is going to be critical. It's going to making sure people have it in hand, they have it wrapped, they have it ready, because we don't want to leave people wondering, will my package arrive on Christmas Eve or Christmas morning? But the other thing, as I mentioned earlier, is to combat this, we're seeing a lot of retailers pull forward. We're seeing a lot of events take place prior to Black Friday, whereas it used to be Black Friday Cyber Monday, were the big Super Bowls of our year. Some things are kicking off early in November. Some things are going to have really, really good sales and events that go on all the way through the month of November and into early December, so I think the retailers are smart. They're trying to identify, they can't get everything done in that very, very condensed window, so let's go ahead and spread it out over a longer period of time. And the consumers are smart too, because they're just looking for, you know, really good deals on what they need to purchase for this peak season. So, the last thing I'll just say is that a lot of it will take place online. More and more and more of Black Friday, Cyber Monday is becoming an online event, and according to International Trade Administration, e-commerce in the U.S. is growing an annual rate of 11.22%, and the global marketplace is expected to reach 5.5 trillion by 2027, so it's just showing us the data to support that we're in the right space, and people are utilizing e-comm more and more every single year.
Victoria Kickham, Senior Editor, DC Velocity 09:35
That's certainly true. We see that, in, I think, in our work and in our lives here, so... . Thank you, Dennis, very much for joining us today. We appreciate your insight.
Dennis Moon, Chief Operating Officer, Roadie 09:45
Thank you guys for having me. Have a great day.
Victoria Kickham, Senior Editor, DC Velocity 09:47
Thank you. We've been talking with Dennis Moon of Roadie. Back to you, Dave.
David Maloney, Editorial Director, DC Velocity 09:51
Thank you, Dennis and Victoria. Now let's take a look at some of the other supply chain news from the week, and Ben, you wrote this week about a forecast for technology trends. What can you tell us?
Ben Ames, Senior News Editor, DC Velocity 10:05
That's right. You know, as we near the end of the year, many experts throughout the logistics sector take this chance to make some forecasts and predictions for 2025 that may seem like a long way away, but we're halfway through the fourth quarter already, so now's the time to plan, and one of the first ones that I saw came this week from Forrester, the technology analyst group. Forrester pointed out that 2024, to no surprise, has been a particularly challenging year for companies, especially in asset-intensive industries like manufacturing and transportation. That's because those asset-intensive industries and businesses quickly feel the pain when energy prices rise, when raw materials become harder to access, or when borrowing money for capital projects becomes more expensive. And all of those conditions arose in 2024, so that forced some of those leaders — again in manufacturing and transportation — to focus even more than usual, on managing the costs and improving efficiency, to find that balance point. All this was According to researcher Paul Miller, who's vice president and principal analyst at Forrester.
David Maloney, Editorial Director, DC Velocity 11:16
Well Ben, there certainly were a lot of supply chain disruptions this past year. Did the report say whether they felt 2025 would be any easier on supply chains?
Ben Ames, Senior News Editor, DC Velocity 11:27
Well, it did say, and unfortunately they are forecasting that it will not be all that much smoother. Forrester's latest forecast doesn't anticipate any dramatic improvement in the global macroeconomic situation for 2025, but it does anticipate several ways that companies will probably adapt. So, for 2025, Forrester predicts that over 25% of the big last-mile service and delivery fleets over in Europe will have become electric across the continent. So, between the different nations, they are analyzing parcel delivery firms, utility companies, even local governments that operate large fleets of small vans over relatively short distances, and so, for all those sorts of applications, electrification is an opportunity both to manage costs and to lower carbon emissions. In a second analysis of what we were likely to see, they said that probably less than 5% of the robots that we see in factories and warehouses will be walking. We might have seen a lot of recent headlines — I've written some of them myself — about some rise in two-legged robots that are now able to be designed. Forrester says that the compelling use cases for two-legged robots are less obvious than supporters suggest. Specifically, they said that those kind of robots, they might have a wow factor, but they probably don't have the best form factor for addressing the industry's dull, dirty, and dangerous tasks, which, that's a frequent way of describing the type of assignments that go to robots. And finally, that the third look forward at 2025, Forrester said that car makers, automakers are going to make significant cuts to their digital divisions, sort of admitting defeat after having invested billions of dollars industrywide to try to build the capability to design all those connected platforms and digital features that we see in modern vehicles. Instead, the future of mobility will be underpinned by sort of ecosystems of various technology providers. So, it won't — a vehicle won't necessarily be reliant on the same large automaker that made the car itself to also make the digital platforms on the inside of it.
David Maloney, Editorial Director, DC Velocity 13:53
But those really do look like some interesting trends. I guess we'll see how it all plays out in the coming year.
Ben Ames, Senior News Editor, DC Velocity 13:59
Yeah, absolutely I hadn't thought of the car one. I think we all touch base with that, probably daily, and it's interesting to try to figure out who's making the stuff.
David Maloney, Editorial Director, DC Velocity 14:09
Certainly is. Thank you. Ben.
Ben Ames, Senior News Editor, DC Velocity 14:11
Glad to.
David Maloney, Editorial Director, DC Velocity 14:12
And Victoria, as robots continue to make inroads into our distribution centers, there's one area that's just now getting a little bit of love from those robots. Can you give us the details?
Victoria Kickham, Senior Editor, DC Velocity 14:23
Absolutely, yes. So, I recently wrote about the continuing trend toward implementing warehouse robotics and discovered that there's a bit of a shift happening in where many warehouses are applying the latest technologies. A lot of companies have been focused on applying robotics to picking tasks as a way to handle accelerating e-commerce orders.We saw this trend really gain steam leading up to 2020, and then, of course, during the pandemic years. Many of those early automation gains are bearing fruit, so some companies are shifting their automation focus behind those picking lines, so to speak, and applying robotics to bulk handling, particularly pallets. I spoke to a handful of robotics vendors recently about the reasons behind this trendand what they are seeing in terms of how warehouses are using pallet-handling robots.
David Maloney, Editorial Director, DC Velocity 15:09
Victoria, what's driving that shift to moving towards more bulk handling?
Victoria Kickham, Senior Editor, DC Velocity 15:14
Well, one reason is that this is a labor-intensive process. Bulk items like pallets are moved by people with human-operated equipment, for the most part, and there are a lot of different movements of pallets throughout the warehouse. Workers are often moving them up and down, side to side, from receiving to storage, from storage to shipping, and so forth. So it's an area that's ripe for automation in many ways. But it's difficult to automate all of those pallet moves within a warehouse, so the trick is finding the processes within your facility that make the most sense to automate. Some facilities may benefit from using AGVs or AMRs to transport pallets between destinations; others could apply forklift AGVs to move pallets in and out of storage; and there are also robotic pallet shuttles, which can move pallets into and out of dense storage racking as part of a larger system. Now, all of these productshave been around for a while, but there's much research and development going on, making them better, smarter, more effective, and also in developing pallet-handling robotics that work in concert as a system. Really, what I learned is that this is very much about relieving pressure on labor and keeping goods flowing through the warehouse.
David Maloney, Editorial Director, DC Velocity 16:24
Yeah, because of those labor needs — and I think that's going to be still a growing problem — we will see more robots plying their trade and handling those heavy loads. It just makes a lot of sense.
Victoria Kickham, Senior Editor, DC Velocity 16:33
It certainly does.
David Maloney, Editorial Director, DC Velocity 16:35
Thank you, Victoria,
Victoria Kickham, Senior Editor, DC Velocity 16:36
You're welcome.
David Maloney, Editorial Director, DC Velocity 16:38
We encourage listeners to go to dcvelocity.com for more on these and other supply chain stories. Also check out the podcast Notes section for some direct links to read more about the topics that we discussed today.
And we'd like to thank our guest, Dennis Moon of Roadie, for being with us today. We welcome your comments on this topic and our other stories. You can email us at
podcast@agilebme.com.
We also encourage you to subscribe to
Logistics Matters at your favorite podcast platform. Our new episodes are uploaded on Fridays.
Speaking of subscribing, check out our sister podcast series,
Supply Chain in the Fast Lane. We have a 10-episode series currently playing on the state of logistics. Check out Supply Chain in the Fast Lane wherever you get your podcasts.
And a reminder that
Logistics Matters is sponsored by Zebra Robotics Automation. Are you tired of overpriced, underutilized autonomous mobile robot fulfillment solutions that drain your profits? It's time to switch to Zebra Robotics Automation. Their cutting-edge Zebra Symmetry fulfillment solution is engineered to reduce your cost per unit and give you that unbeatable competitive edge. Don't settle for less. Maximize your profits with Zebra. Discover the future of fulfillment at zebra.com/fulfillment.
We'll be back again next week with another edition of
Logistics Matters. Be sure to join us. Until then, have a great week.
Business leaders in the manufacturing and transportation sectors will increasingly turn to technology in 2025 to adapt to developments in a tricky economic environment, according to a report from Forrester.
That approach is needed because companies in asset-intensive industries like manufacturing and transportation quickly feel the pain when energy prices rise, raw materials are harder to access, or borrowing money for capital projects becomes more expensive, according to researcher Paul Miller, vice president and principal analyst at Forrester.
And all of those conditions arose in 2024, forcing leaders to focus even more than usual on managing costs and improving efficiency. Forrester’s latest forecast doesn’t anticipate any dramatic improvement in the global macroeconomic situation in 2025, but it does anticipate several ways that companies will adapt.
For 2025, Forrester predicts that:
over 25% of big last-mile service and delivery fleets in Europe will be electric. Across the continent, parcel delivery firms, utility companies, and local governments operating large fleets of small vans over relatively short distances see electrification as an opportunity to manage costs while lowering carbon emissions.
less than 5% of the robots entering factories and warehouses will walk. While industry coverage often focuses on two-legged robots, Forrester says the compelling use cases for those legs are less common — or obvious — than supporters suggest. The report says that those robots have a wow factor, but they may not have the best form factor for addressing industry’s dull, dirty, and dangerous tasks.
carmakers will make significant cuts to their digital divisions, admitting defeat after the industry invested billions of dollars in recent years to build the capability to design the connected and digital features installed in modern vehicles. Instead, the future of mobility will be underpinned by ecosystems of various technology providers, not necessarily reliant on the same large automaker that made the car itself.
Regular online readers of DC Velocity and Supply Chain Xchange have probably noticed something new during the past few weeks. Our team has been working for months to produce shiny new websites that allow you to find the supply chain news and stories you need more easily.
It is always good for a media brand to undergo a refresh every once in a while. We certainly are not alone in retooling our websites; most of you likely go through that rather complex process every few years. But this was more than just your average refresh. We did it to take advantage of the most recent developments in artificial intelligence (AI).
Most of the AI work will take place behind the scenes. We will not, for instance, use AI to generate our stories. Those will still be written by our award-winning editorial team (I realize I’m biased, but I believe them to be the best in the business). Instead, we will be applying AI to things like graphics, search functions, and prioritizing relevant stories to make it easier for you to find the information you need along with related content.
We have also redesigned the websites’ layouts to make it quick and easy to find articles on specific topics. For example, content on DC Velocity’s new site is divided into five categories: material handling, robotics, transportation, technology, and supply chain services. We also offer a robust video section, including case histories, webcasts, and executive interviews, plus our weekly podcasts.
Over on the Supply Chain Xchange site, we have organized articles into categories that align with the traditional five phases of supply chain management: plan, procure, produce, move, and store. Plus, we added a “tech” category just to round it off. You can also find links to our videos, newsletters, podcasts, webcasts, blogs, and much more on the site.
Our mobile-app users will also notice some enhancements. An increasing number of you are receiving your daily supply chain news on your phones and tablets, so we have revamped our sites for optimal performance on those devices. For instance, you’ll find that related stories will appear right after the article you’re reading in case you want to delve further into the topic.
However you view us, you will find snappier headlines, more graphics and illustrations, and sites that are easier to navigate.
I would personally like to thank our management, IT department, and editors for their work in making this transition a reality. In our more than 20 years as a media company, this is our largest expansion into digital yet.
We hope you enjoy the experience.
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In this chart, the red and green bars represent Trucking Conditions Index for 2024. The blue line represents the Trucking Conditions Index for 2023. The index shows that while business conditions for trucking companies improved in August of 2024 versus July of 2024, they are still overall negative.
FTR’s Trucking Conditions Index improved in August to -1.39 from the reading of -5.59 in July. The Bloomington, Indiana-based firm forecasts that its TCI readings will remain mostly negative-to-neutral through the beginning of 2025.
“Trucking is en route to more favorable conditions next year, but the road remains bumpy as both freight volume and capacity utilization are still soft, keeping rates weak. Our forecasts continue to show the truck freight market starting to favor carriers modestly before the second quarter of next year,” Avery Vise, FTR’s vice president of trucking, said in a release.
The TCI tracks the changes representing five major conditions in the U.S. truck market: freight volumes, freight rates, fleet capacity, fuel prices, and financing costs. Combined into a single index, a positive score represents good, optimistic conditions, and a negative score shows the opposite.