The changing world of the entertainment business and it's impact on Returns Logsitics, presented by Guy Meisl at RLCON 2013 in Prague. RLCON 2013 organised by QuaDimension Events.

1. Returns Logistics in the
Entertainment World
Why and How
by
Guy Meisl

2. Optimising European Returns Logistics
in the entertainment business
• A review of Studio strategy and the new world
• Understanding the changing nature of customer
requirements
• The impact of forecasting and availability on
returns
• Our Solutions
Returns costs 3 times standard outbound cost
Michael R Blumberg 2013

3. Client Strategy
• Studio Consolidation
– Studios with 5 year joint distribution deals across
Spain, Italy, Belgium and Mexico
– Disney - Where next

4. Client Strategy
• Disappearing countries
– Belgium, Holland and Luxembourg
• French speaking territories being subsumed into France
business units
– Consolidation of Scandinavia
• Single sku developments for the four countries
– Portugal, Poland and Switzerland
• Gone wholesale....

5. Client Strategy
• The wholesale model
– Lower control
• Reduction of margin and turnover
• Less promotional activity
– No structure and costs
• No sales team
• No distribution operation
• No support infrastructure
• Possibly no returns

6. The New World
• Download and Streaming
– SKY TV
– Visual Unity
– Tesco Blink Box
• Tablets & Phone power At peak times, 33% of the US
internet capacity is used by Netflix
– 4G network (100Mb/sec)
• No physical media No returns
Nielsen’s new definition
of “Zero TV” households

7. The New World
• New brands, new solutions
– 1.7billion downloads of Angry Birds
• Phone, tablet, console and PC
– The worlds biggest video network
– Independence from the Studios
• No physical product

8. Customer demands
• Monster retailers
– I want 100% SOR
– I want 90 day payment terms
– I want a little pink bow on every box

9. Forecasting
• Impact of the unknown
– What goes out may come back!
– Send out too much and it will come back
• Sales management
– Promotional opportunities
5
• Cinema success 4
3
Or failure! 2 Forecast
1 Actual
0
John Adele 21 The Skyfall
Carter Artist

10. Availability
• On shelf
– Stockholding and depth of display 26 Weeks
– Range and SKU count
– Income per metre
• On time
– Release schedule management
16 Weeks
• Wholesale, Grocer, Independent
• On return
– Speed and lifecycle
10 Weeks

11. Holistic solutions
Holistic - Concerned with the whole rather than
separation into parts (Oxford English Dictionary)
• Consolidation and Optimisation
– Reduce operating costs
– Increase productivity
• Client and Customer management
– Information, information, information
– Support and propositions

12. Consolidation
• Reduce operating sites
– Example in Spain
• Floor space
+30% Saving
• Equipment
• Management
• Flexibility
• Material
• Further opportunities in other territories
-40% Volume

13. Consolidation
• Questions to be resolved:
• Single European profit centre • Increased transport costs
• Expert team of staff and • Longer lead times
management • Higher investment
• High productivity • Social costs
• Good ROI on assets • Write downs/offs
• Automation viability • Cross client IT solutions
• Stock optimisation • More coordination
• Opportunities for other
income

14. Optimisation
• Using existing methodologies
– Process mapping
• What is value add
• What steps can be removed
– Lean style challenges
• DMAIC
• 5 Whys
• IGAD
• WWWWH
Etc. Etc. Etc.

15. 5 Whys’ Actual Example
• Why is the rework cost so high
 Because all product is de-shrinked & re-shrinked on return
• Why is everything de-shrinked & re-shrinked
 Customer requested it to be done
• Why did the customer request it
 No trigger to differentiate between pristine/rework status
• Why could we not differentiate
 Historical IT limitation client’s system
• Why can’t we develop the WMS to use multiple statuses
 Already actioned from a separate project

16. Optimisation
• Identify sortation opportunities
– High sku count
• Possible automation
• Multi level sorts
– Low sku count
• Manual/Scan solutions
• Sort to display
• Sort by colour

17. 3PL Support
• Multiple 3PL partners across Europe
– Best practice proposals
– Cross client workshops
– Bonus Malus schemes
– Detailed measurements of cost and time
• Solution identified in Europe rolled out in UK
with substantial savings
££ £
£

18. Optimisation
• Identification of the Clients role
– What are the decision points for product life
Define an overstock Faulty sortation
Rework potential
Cost of Rework or Recovered value calculations
Rules matrix
Write off before or after sortation
Timescale and definition of write off stock
Total cost of product

19. IT Systems
• Support (Or lack of it)
• Measurement tools
• Integration of IT and project teams
• Continuous Involvement and Improvement
• Co-operation

20. Holistic solutions
• Client and Customer management
– Information, information, information
– Support and propositions

21. Client Management
Returns Breakdowns
• Information on returns % 23%
9%
• What comes back and why 19%
• Use of data to provoke discussion 58% 10%
• Successful challenge to sales management to cut VAS
• Financial impact of over allocation
• Reduction by 10% on outbound
• Reduction of 10% on returns without sales impact
• Commercial agreements High SLA/KPI = High Costs
• Capacity and service balance
• Results of analysis on stock movements
• Rework, scrap, faulty and pristine

22. Client Management
• VAS
– Customisation
• Security, price, bar code....
• Variants
• Rework used to enhance value
– Multi packs
– Split packs
– Additional products
• Different solutions by territory

23. Client Management
• Review of Stock Holding options
– Dual stock
• Rework Cost of storage
• Pristine Excess inventory
– Autorework
• Automatic rework Unnecessary rework
• The agreed process is a balance of stock
management options
– Dependence on an IT solution

24. Key Results
• Systemic ability to identify stock and its status
• Clear transmission to the client systems
• Actions and status pre and post sortation
• Scrap on receipt
• ‘Hold’ awaiting decision
• Auto destruction criteria
• Breakdown of boxsets
• Measurement points

25. Customer demands
• Monster retailers
– I want 100% SOR Clarity on cost
• No risk for the customer structures
• Who pays the extra costs Support accurate
• How to support sensible scale outs allocations
– I want 90 day payment terms
• Out, back and refurbished before payment!
• Lifecycle impact
– I want a little pink bow on every box
• How do we recharge the extra costs of
customisation
Total cost of ownership
calculations

26. Customer Opportunities
• Cross studio differences
– Why A and not B
– Masterbag
– ECI Turnaround Client support
• Transport costs from us is key
– Studio consolidation IT Alert
– Minimum returns quantity
– Weight or box charges
– Weekly/daily pick up
– SLA/KPI

27. Customer Opportunities
• Finance
– Deduction or credit No need for speed
• Cost of customisation
– Increased sku count
– Storage costs Finance team support
– Refurbishment

28. Its all about co-operation
and co-ordination
“The cheapest return is no
returns at all”

29. Top 5 Steps
1. Develop a clear RL strategy that is integral to the business
 What, when and how
2. Senior management support (particularly Finance)
 Total cost calculations
 Payment terms and the cost of money
3. Stakeholder commitment and cross functional support
 Top down, bottom up, partners and clients
4. Understand and be able to measure current levels of
productivity, quality and efficiency
 What are the key metrics
 Defects and root causes
 Benchmarking cross site/division or industry
5. Supply the tools to ensure the success of the strategy
 IT, time, people and material