Today the US Supreme Court found that the two member National Labor Relations Board did NOT have decision making authority over matters brought before them under the National Labor Relations Act. The decision handed down in the matter of NEW PROCESS STEEL, L.P., PETITIONER v.NATIONAL LABOR RELATIONS BOARD gave Big Labor it’s biggest set back since Reagan was in the White House.
Because of partisan bickering that has been going on since the Clinton administration, the five person National Labor Relations Board has struggled to maintain three permanent members and hasn’t even come close to having the full five member board as designed by the National Labor Relations Act. Since the Obama administration has been in power, the NLRB has only had two members for the majority of the time. During the first year of the new administration, over 600 decisions were handed down that reversed many NLRB rulings and administrative directives that were put in place during the Bush years. As you might expect, these decisions were pro labor and anti business by a wide margin.
Today’s ruling by the Supreme Court seemed to nullify those decisions. These cases will now have to be reviewed once again, once three or more members are on the board. This increases an already growing case back log by a significant amount. The end result will probably be much like the world of labor was during the Bush administration. This decision will also empower the conservative, pro-business elements because they will now have to have a seat at the table if the Democrats and pro-labor folks ever want a decision to be made by the NLRB again.
Score one for business.
In today’s Podcast Curtis Greve shares three tips that can help improve returns processing; improve relationships with key vendors, suppliers, and liquidators; and increase the bottom line contribution of your reverse logistics program.
Do you know how to eat an elephant? One spoonful at a time. Curtis will share his experiences and time tested best practices that will help you improve, one step at a time.
Like Alan Weiss says “If you improve 1% everyday, in 70 days you will be twice as good.” Here is three percent to help get you started.
The Reverse Logistics Podcast
Today I am launching my new web site under the new company name of Greve Consulting, formerly known as Metreks. The focus of my practice is to help companies develop their returns management, aka reverse logistics capabilities. Viewers will find a lot of useful information on returns including the Reverse Logistics Podcast, which will feature industry leaders from the world of reverse logistics, and my blog which is packed with articles and information to help service providers, manufacturers, retailers, and liquidators make more money.
Register to get the blogs sent to your desktop automatically or save www.GreveConsulting.com as a favorite on your browser. Your comments, questions, suggestions and feedback are encouraged. I will use your feedback to improve the value delivered from the site.
Check in from time to time to see what is new. For example, you might want to check out The Cost of Doing Nothing. This is a form you can fill out to find out how much opportunity you and your company have in developing your reverse logistics capabilities.
Whether you call it returns management or reverse logistics, it’s all about improving returns and maximizing profits. I hope you enjoy the new site and get a lot of value out of GreveConsulting.com.
Click on the image or the link below to download the March 2010 issue of Warehousing Forum, published by The Ackerman Company. Warehousing Forum is a leading supply chain newsletter that is recognized around the world as a great resource for supply chain executives. This award winning publication is dedicated to helping warehouse managers and their bosses improve productivity and manage more profitably with tips, comments and articles written by practicing professionals. If you are in supply chain management at any level, you will want to subscribe to this publication.
The featured article in the March 2010 issue discusses critical components to keeping warehouses and distribution facilities union free, and was written by Curtis Greve. Enjoy your free download of this thought leading publication.
Many companies that undertake development of their reverse logistics capabilities, aka returns processes, often find an unexpected benefit that can drive significant dollars to the bottom line. What’s that benefit? The ability to support guaranteed sales agreements.
Guaranteed sales agreements are buying deals between manufacturers and retailers, or similar B2B relationships, where the party selling the goods, agrees to take back any unsold units over an agreed to amount, after an agreed date. An example of this would be if the maker of a hot new toy were to make a deal where the retailer to buy one million units for the Christmas season, but the retailer can return the unsold quantity over five hundred thousand units, after the first of January.
Manufacturers like this idea because they get a big sale and they have product on the shelf. If it is a hit, they maximize sales and avoid out of stocks. The retailer’s love the idea because they have hedged their bets. If the item is only half as hot as the seller said it would be, they are protected and can return the unsold portion. The buyer has protection against excess markdowns if the sales are lite and he has plenty of product if sales are strong.
The special returns process used for unsold goods under a guaranteed sales agreement is call the “recall process”, “marketing returns”, “merchant returns”, or similar name. Regardless of what you call it, it is the returns process used to remove unsold goods from the buyer’s supply chain and return it to the sellers supply chain.
Many companies do not take advantage of guaranteed sales options because they do not have a well developed reverse logistics program to handle the flow of goods coming back. Companies depend on the recall process embedded in their reverse logistics program to ensure compliance through out the chain. With a well defined recall process, the parties have control and the checks and balances in place to ensure that both the retailer and the manufacturer can properly control and account for the goods flowing back to the original manufacturer.
Today, many leading retailers and manufacturers rely on the recall process to hedge their bets and maximize profits. The volume of “recalled goods” flowing through a return center, can be 50% or higher of total volume in the reverse pipeline. In weeks following Christmas, recall goods can be as high as 90% for some.
Manufacturers use their recall processes to transition from season to season. This is especially cost effective to companies whose manufacturing is offshore. Many famous name brand manufacturers use guaranteed sales agreements and recall processes to go from having packaging with Christmas trees to packages with Easter Eggs, repackaging the same product but with relatively little additional expenses, minimal time delays, and significantly reduced lead times.
The key to leveraging guaranteed sales agreements for both manufacturer and retailer is a reliable reverse logistics program. For many executives that are the sponsor behind developing reverse logistics processes in their companies, they often don’t realize this until well after they have finished the hard work of developing their returns capabilities. For them, finally, they get a pleasant surprise for all their hard work and efforts.
As the first quarter is coming to a close many companies are happy to see the volume of returns slow down to a more reasonable rate. Some are happy to be finished with processing peak volume while others are wondering how they will ever get caught up.
There is one truism about returns, regardless of whether you are talking expensive hi-tech gear or a plastic toy and that is that returns don’t get better with age. In fact, for hi-tech equipment you can count on loosing 10% in value about every 30 days. What this means is that you must have a strategy to turn your inventory in less than 30 days in order to maximize the value of the goods in your reverse pipeline.
Strategy? Many executive responsible for returns processing never think “strategy”. They just kind of know what is going to happen and they hope they survive. As the old wise man said “Hope is not a strategy.” Without a well thought out plan, that is flexible, the chances of maximizing the value of the inventory flowing through your reverse pipeline is slim. What is the “Value of Inventory” in a reverse logistics pipeline? Here is a simple formula that captures the idea:
Returned Asset Net Value = (Original Value X Recovery %) – Total Cost to Process
So why does the value drop on returned items so quickly? First, goods flowing through the reverse pipeline are handled an additional 8 to 10 times which adds a lot of wear and tear on the items. Second, returned goods generally aren’t packaged and transported with the same high quality outer packaging, pallets, and protection like similar new goods. These goods are often shipped without packaging at all and are not stacked on neat pallets, with standard Ti-Hi arrangements that help secure the freight during transportation. As a result, this stuff get beat up. Many manufacturers will tell you that a lot of their returns are fine when they enter the reverse logistics pipeline in the back of their customer’s store, but by the time they receive and finally process the goods, it is barely recognizable in some cases.
Another factor is obsolescence caused by technology improvement and age. For example, a few years ago one of my facilities was receiving Apple iPods. We were processing these iPods and selling them on the secondary market for about 50% of original value. Right in the middle of the returns season, Apple introduced a new iPod that was much improved over the previous model we were handling. Overnight, the value on the secondary market dropped from 50% to 30 % of original value. The asset recovery buyers knew that in 60 days their current market that justified paying 50% on original retail would drop dramatically as demand for the newer model grew.
It is for these reasons that when it comes to reverse logistics timing is everything. However, in order to get the most out of returned assets, a strategic plan of action must be developed that addresses the following key variables:
- Volume - Peak returns volumes can be between 30% to 150% higher than an average month and can include additional recalled items, return to stock goods and other asset profiles not normally processed. Estimated volume, type of returns, profile of the assets and disposition are critical pieces of information to know in order to properly plan.
- Space – temporary space will be needed to handle higher inbound volumes at the start of the season and then used for holding outbound surges as the volumes are processed.
- Labor – additional shifts will be needed which will require hourly labor and additional management. Many often forget they will need more trained supervisors, who will require more time to get up to speed.
- Disposition Partners – Communicate expectations to liquidators, recyclers, and others you ship to so they understand your plans and the volumes they will need to be ready to receive. A word of caution on dealing with liquidators: don’t expect a liquidator who barely pays for product in normal times to be able to pay three or four times as much during the first quarter when their sales are down. You will need to qualify, inspect, and select other buyers to keep your asset recovery product flowing.
- Red Flags – Develop metrics to be used to monitor inbound, processing, and outbound activities. Have a plan of action if the key metrics get out of tolerance. For example, you might track inbound trailers in your facility and set a metric of 12. If you see there are more than 12 trailers coming in, the action will be to rent one storage trailer from company X for every trailer over 12.
Remember, the biggest difference between a normal distribution center and a reverse logistics operations is that in the latter, you don’t know what you are going to get until you open the door. In a warehouse, you have somebody placing orders and you know how much you are going to receive and when it is going to get there. Not so in a return center. The key to building a good plan to deal with returns is to build in flexibility. You have to be able to increase or decrease each component based on what is going to come in the door and you won’t know that until it gets there. Simply hoping the flow is smooth and things work out is asking for trouble and will cost money.
Reverse logistics is like other functions in a supply chain. In order to optomize performance you must have a goal but like the old saying goes “A goal without a plan is just a wish.” For the average company, returns are over 8% of assets and the average company spends between 9% & 14% of revenue on these returned assets. That is a lot of money to leave to chance. Developing a strategic plan of action focused on maximizing the value of all assets flowing through the reverse pipeline is crucial to your companies success.
There are only six possible dispositions for any item in a return center, whether it is a can of soup or an expensive computer. Do you know what they are? Do you understand how the disposition of the item impacts the value received for an asset and how that determines the cost of processing? You will after you listen to this podcast.
The Reverse Logistics Podcast
With REPUBLICAN Scott Brown winning the Senate seat formerly held by Ted Kennedy, will the person filling the seat kill EFCA, the pro-labor bill authored by his predecessor? Business people across America hope so. One thing is for sure; Senator Brown killed the filibuster-proof Democratic majority. How ironic!
Senator Brown’s election will have a huge impact on Washington and raises a lot of questions. Is this the final nail in Big Labor’s coffin? Is EFCA dead, this time for good? Is health care dead? Does this mean that Obama will have to learn to deal with Republicans this year and grid lock next year? The Democrats had a “full house”. They seem to have blown the opportunity they had. Obama and the Democrats seemed unstoppable but it is clear the tide is turning.
EFCA is not dead. There are a number regulations the Democrats could pass, without going to the floor, to pay labor back for their work in the campaign and with health care. These regulations would provide most of the benefits that labor is looking for. That is probably the safest route for the Democrats to take. It would pay their debt to Big Labor and it would keep them out of the headlines as supporting labor’s big payoff. The head of the AFL-CIO threatened the Democrats last week that they had better deliver in the first quarter if they want any help in November.
Today’s results clearly proves, they gonna need it!
If your business is a target of a union, you could be hiring “union plants” or “seeds” and not even be aware of it. Many business owners are shocked when they find out that it is perfectly legal for a person who is on a union’s payroll to apply for and get hired by a target company, for the sole purpose of organizing that company’s employees. The fact is that it happens every day.
If you are a business owner, how can you avoid hiring a union plant?
The first thing you should look at is your application. Make sure that you have room for and require information, including wage rate, position, etc. for up to five previous employers. At the bottom of the application you should have appropriate language that states the applicant can be fired if they lie on the application. A good example of this would be:
Information to the applicant: References may be checked. If you have misrepresented or omitted any facts on this application, and are subsequently hired, you may be discharged from your job. You may make a written request for information derived from the checking of your references. If necessary for employment, you may be required to: supply your birth certificate or other proof of authorization to work in the US, have a physical examination and/or a drug test, or to sign a conflict of interest agreement and abide by its terms.
I understand and agree to the information shown above:
Once you have the completed application, you should do a background check to verify that the person was employed as stated on their application. As you go through the applications, after the background checks are completed, watch outfor people who have significant gaps in employment, have worked for companies that had organized workers, and people who’s wages were 15% or higher than the job for which they are applying.
If you hire temporary workers, make sure that you have a good discussion with the temp agency. The temp agency should use similar screening processes as well. Many companies us temps as a way to “screen” applicants for long term employment. If a temp is a “plant”, they won’t wait for full time status to get going on their real job of organizing and union card signing.
Even if you are the target of a union, there are things you are not allowed to ask an applicant, some of topics include:
- Sexual orientation
- Religious affiliation
- Race or nationality
You should have a working knowledge of the following federal laws:
- Title VII of the Civil Rights Act of 1964, which covers the subject of discrimination or harassment on the basis of race, religion, sex or creed
- The Age Discrimination in Employment Act of 1967
- The Americans with Disabilities Act of 1990
- The Family Medical Leave Act of 1993
Hiring is a critical part of every organization. Getting a union organizer hired is one of the most effective union tactic to literally get their foot in the door. You have to have good, prudent, hiring practices to ensure you don’t fan the flames of an aggressive union within your workforce.
Every day, when an employee goes to work, they are asked to do a lot of things. They have their normal job but are often asked to help out someplace else in the operations or do some extraordinary task, like help with inventory or go to a safety meeting. When supervisors ask employees to follow through on their requests, supervisors expect a timely positive response followed up by action.
Employees expect the same thing. When one of your employees asks you a question, they expect a timely response. Workers are smart enough to know that they may not always get what the want but they do expect an answer.
One of the biggest mistakes a manager can make is to ignore or forget to get back with an employee on a question they have asked. When this happens the employee will feel like you don’t care and they aren’t really very important to the operation.
If this happens too many times, you can be sure that the employee will find somebody who will get them answers and who treats them like they are important. Unfortunately, it will either be another company, after you’ve trained them, or a union organizer who will make them feel very important.
If an employee asks you a question, tell them the answer to their question, if you know it. If you don’t, write down the employee’s name and the question they asked and then tell them when you will get back to them with an answer. The longest you should ever take to get them an answer is the next business day.
If you have to go up the ladder to get an answer, get back to the employee and give them a status update and a realistic estimated time when they can expect an answer. Then, stay on it. Your job is to champion the issue for the employee. They are depending on you.
You must establish an expectation that employee requests and questions will get answered in a timely manner.
Treat employee questions like you would treat questions from your boss or your most demanding customer. In other words, treat the employees like you would want them to treat you.