Distribution notes 7.18.18

1. SCLA Distributionpeergroup post conference call – 7/18/18 notes
Call attendees:
RolandBassily, McKesson
AllisonFinerfrock,FergusonEnterprises
KeithHelferich,Ph.D.,CalvinCollege
Fernando Juarez,TailoredBrands
Todd Titsworth,TailoredBrands
ChrisvonRautenkranz,FergusonEnterprises
AmyThorn, DBMAssociation
Amy – To bringeveryone uptodate on the innovationlabandwhatthisgroup wouldlike todowiththatportion.We
wantto take the topicsyoudiscussedasa peergroup andcome upwitha way to presentthatto provide youwithafew
nuggetstotake awayfrom SCLA 2019 to implement. Youmaybe doingincrediblynoteworthythings. We’dlike toknow
whatyou are doingthatyou are reallygoodat. We mighthave somethingwithinthisgroup thatwe couldpresenttothe
largergroup.The feedbackthatIreceived - workforce retention,automation, reverselogistics. Wasthere something
else mentionedorthatneedstobe captured? We’re takingnotesonthe call today.
Roland– We had gooddiscussionandtriedtoboil itdownto a few takeawaysandtie the themestogether.One of the
mainthemeswasworkforce retentionandtalentdevelopment.A bigpartof itis turnover. Noteveryone isexperiencing
it,but those of us withmakeshift(2nd
shift) operationsare experiencingmore turnoverbecause people don’twantto
workthat schedule. We talkedpotential solutionslike more automationforthe workonsecondshift.Also,talent
development–give people agoodreasonto stay at the companyand developthose youhave ratherthanneglectingit
so theylookforopportunitieselsewhere.Give employeesapathwaytosee how theycan move up or develop
themselveswithinthe organization.Anotherisreachingoutto the local communitytoexpandthe diversitywithinthe
workforce.If youhire withinthe communitythereismore ownership. Retentionanddevelopmentwere the main
takeawaysforthat.
Keith– Great summary.Thankyou.
Roland– Anotherisreverse logisticsasitrelatestoecommerce.Amazon etc.have seta trendwhere youcan return
anythingyouwant.Dealingwithreturnsisthe redheadedstepchildfor DCsandorgs w/product cominginand out.It’s
usuallysittinginadark cornerof a warehouse andpeople don’twanttomeasure itormesswithit. There’sa lotof
moneysittingthere. Forexample, I have $5 millionof unsalable merchandise sittingthere.Theyare notcalculatingthe
cost of returns,not measuringthe product.It’sa lotof lostvalue atthe end of the day.
Keith– The increasedvarietymakesthe returnprocessmore difficult.Goodsummaries.Thankyou.
Amy – Doesanyone onthe phone have a bestpractice to share or shouldwe seekoutafew companiesthatspecialize in
returns/reverse logistics? TailoredBrands,yougetatremendousamountof productback,isthis an areayou feel that
youhave a handle onthat youcouldcontribute whatyoudo inthe retail space?
Fernando - How do we compare,benchmark,etc.? The returnprocessisdealtwithinthe DC. Somebodyhastobe doing
somethinggoodoutthere.We’dlike tounderstandhow theydoitandhow we can improve uponit.
Todd – We have tonsof returns(damaged,call backsonclearance,etc.).We go through1 million+unitsperyear.We
have technologyinourstores,conveyorsystems,etc.butnothingonthis. We findanemptycornerand start sortingit
manually.We have notinvestedanythinginthatside.
Chris- I’dlove to see what’soutthere besidespassingitoff toa thirdparty.
Todd – We’ve done thatin the past andtheydon’tdo anythingdifferentthanwhatwe do. I can’t thinkof anyone out
there withautomationonthat.

2. Amy – I knowcompaniesthatspecialize inthisarea.You’re notlookingtogive thisoff toa thirdparty but you’re looking
for someone to come into showhowyoucan automate anddo thisbetter in-house?
Fernando – Yes,bestpracticesin-house.
Amy – Do youfeel thatyouhave a bestpractice inreverse logistics?What isit?Are youwillingtoofferitup andshare
your story?Do any of you feel thatthatthisis an areayou are startingto geta handle on?
Allison–To Chris’point,we’re lookingtooutsource it.There’slittle value inwhatwe canturnaround.That’spart of our
challenge.If someone partlyinstallsitanddoesn’twantitwe can’tdo much withit. We’re lookingtooutsource.
Chris– It’slike makingthe bestworstdecision.
Keith– Can we utilize the SCLA website tofindoutif anycompaniesfeel theyhave bestpracticesinthisarea? Maybe
the academicsshouldbe doingmore inthisarea.
Amy – We have createda LinkedIngroupforeachpeergroup. You are able toconnectwitheach otherand share
information. We willinvite othersfromyearspasttojointhe conversation.Thisisaclosedgroup – onlySCLA members.
I’dencourage youto become a memberof thatgroup. You can postarticles, share experiences,etc. The groupismeant
to be there as a resource and safe environmentforyou.That’sthe intent. We can’tsolve all of the problemsinthe lab
nextyear.Soundslike thisisaunanimousissue.
Roland– That’s safe to say.
Amy – I’dlike toask eachof youto share withme the following:
1) How youare handlingthiscurrentlywithinyourcompany?
2) Whichcompanies have youusedinthe past? Were theyhelpfulornot?Thisis confidential information.
For the benchmarkingportion, Fernandoplease come upwith afew questionsaroundthistopictoanswer.We will start
that comparisonof howeveryone isdealingwiththis.
Keith– I’mwillingtohelponthe benchmarkingpiece.Anythingwe canlearnwill be valuable.It’sacomplex,difficult
issue. Seldomdopeople knowthe cost.It isgettingworse andwill before itgetsbetter.
Amy – Please helporganizethat.
Keith– Fernando,please come upwithsomethingandsendtome to review.We’ll keepitsimplebutwe wantto gain
some informationonthe issues.Dowe thinkit’ll getworse? Canwe impactthe returns?How can we deal withthem?
Roland– We do a good jobof tracking our unsaleablestuff.I can sendyoua few bulletsof the metricswe keeptrackof
internally.
Keith– Great.Many companieshave aformal processof reviewingthe returns –can we resell it,disposeof it,recycle it,
etc.I’d appreciate thatinformation.
Amy – That’sthe ask.We’ll sendoutnotesalongwith todos. Let’skeepthe conversationgoing. Whenisagoodtime to
reconvene?Let’scontinuetobe a support forone another.Isthere anythingyou’dlike toaddtothe agendaforthe next
call?Thiscan turnintoan ongoingdialog,aself-helpgroup.Don’tbe shy.Sendinanyideas.CopyAmyPattonas well on
any emails. Thankyouforyourtime.We appreciate yourefforts.I’mexcitedabout wherethe peergroupeffortsare
going. The peergroupexperienceswere the highestrankedinthe historyof the SCLA.We are onto a winningformula.
Nextconference call:Wednesday,September5th
at 4:30 PM Eastern (1:30 PM Pacific)