Supply Chain is leveraging technological advancements to deploy sophisticated Supply Chain Networks & Solutions. Whether it is RideShare, Internet of Things, Drones, Artificial Intelligence or Autonomous vehicle, Supply Chain is making the most out of these disruptions.

1. Is Short Term Delivery
Impacting Customer Returns?

2. SUPPLY CHAIN FACTORS
COST SALES
INTRODUCTION
Without question, there are numerous
obstacles in the digital market, but,
Supply Chain is intriguingly turning all
of those obstacles into stepping stones!
Supply Chain is leveraging technological
advancements to deploy sophisticated
Supply Chain Networks & Solutions.
Whether it is RideShare, Internet of
Things, Drones, Artificial Intelligence
or Autonomous vehicle, Supply Chain is
making the most out of these disruptions.
A decade ago, Supply Chain was mostly
concerned with cost-cutting strategies.
The Multi-Channel Wave brought about
the opportunity to sell across various
channels at once, thus impacting the total
sales volume. This shift allowed business
leaders to see Supply Chain from a
“sales” lens instead of just a “cost” lens.
OVERVIEW
While Multi-Channel is certainly helping
businesses with the “Buy Anywhere –
Fulfill Anywhere” slogan, it has its own
list of problems. A few caveats of multi-
channel are higher returns, loss of sales,
locked capital investment on excess
inventory, and loss of profit on returned
items. The biggest concern, however, is
that the one side shows a positive trend
in sales while the other side paints a very
different business performance picture.
Multi-Channel presents a complex
situation and the solution can be found
with a holistic approach. There is no
solution other than facing “the beast”.
The “beast” we refer to here is none
other than “Customer Returns”. Adding
to this complexity, businesses are taking
on new initiatives such as Same Day
Delivery (SDD) and Next Day Delivery
(NDD) to meet customer expectations
and competitor pressure.
MULTI - CHANNEL
Multi-Channel is becoming a common
prerequisite in this digital world.
Businesses should start riding the
“Multi-Channel Wave” as soon as
possible. A business must prepare their
infrastructure, vendors and IT team to

3. DIFFERENCES BETWEEN FORWARD
AND REVERSE LOGISTICS
Forward Reverse
Product Quality Uniform
Disposition Option Clear
Routing of Products Unambiguous
Forward Distribution Costs More Easily
Understandable
Pricing of Product Uniform
Inventory Management Consistent
Product Life Cycle Manageable
Financial Management Issues Clearer
Negotiation Between Parties More Straightforward
Type of Customer Easy to Identify and Market to
Visibility of Process More Transparent
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Product Quality Not Uniform
Disposition Not Clear
Routing of Products Ambiguous
Reverse Costs Less Understandable
Pricing of Product Not Uniform
Inventory Management Not Consistent
Product Life Cycle Less Manageable
Financial Management Issues Unclear
Negotiation Less Straightforward
Type of Customer Difficult to Identify and Market to
Visibility of Process Less Transparent
face this challenge and equip them to
handle customer returns. If a company
does not map out returns in their
standard delivery procedures, SDD will
be hectic and possibly even catastrophic
to their business.
Unlike the Multi-Channel Wave, Multi-
Channel has time to figure out if they
should offer SDD or not. If a business
decides to offer SDD, they need to
determine how much in incremental
sales volume it brings to their business.
They should clearly map out current
sales, net profit, SDD sales, net margin
loss, and how these impact the other
side of their business. SDD needs
investment and precise execution
strategies on all levels. If not, it could
result in catastrophic failure and end up
impacting current elite customers, brand
image and even revenue.
RETURNS IN
MULTI - CHANNEL
Businesses that offer Multi-Channel must
have the required infrastructure and
business processes in order to contain the
“returns beast”. This is fundamental in
making SDD a success.
1. Efficient Reverse Logistics
Supply Chain: Unlike Forward
Logistics, Efficient Reverse Logistics Supply
Chain has numerous challenges and a greater
potential to hurt the bottom line. Investing
in Reverse Logistics projects must be part of
Multi-Channel growth initiatives. Successful
Reverse Logistics Supply Chain should
contain these features:

4. A. Plan & print return labels with tactical endpoints to collect returned goods at lowest
cost when store return is not available.
B. Enable Quality Assurance workflows to determine the returned goods quality and
decide the disposition pool to trigger relevant workflows.
C. Endpoints which generate return receipts should have the capability to include the
stock back in the “Open to Buy” (OTB) pool (non-damaged goods) in real time.
D. Can track returned products volume & locations.
E. Can enforce Short-Shelf-Life on seasonal products to take precedence in fulfillment
rules to enable faster resale.
F. Set stronger KPIs to monitor return logistic performances.
2. Global Inventory Pool: Some companies track inventory by channels for ownership (P&L).
There are some downsides when we don’t have a holistic view. It can lead to unwanted capital
spending and excess inventory.
A. Allocating inventory to specific channels leads to lost sales, stock-outs and overstock
situations. Listing inventory as “company owned” instead of “channel owned” will
alleviate this problem.
B. Deploy efficient fulfillment rules across channels to track OTB units and shortages.
3. Captivating Cost & Policies: Research
shows that customers tend to buy products online
when businesses offer free shipping and returns.
Although it is not economically possible to give
free shipping for same day shipping customers, a
business can offer flexible return options. This will
influence a buyer’s decision to continue and prevent
cart abandonment and lost sale situations.
A. Pushing the return cost to consumers
with entitlement to receive a shipping
refund from original purchase.
B. Having a lead time return policy permits consumers to get full refund and increases
resale opportunity on full price.
$ $
$

5. SAME DAY DELIVERY STRATEGY
• Pilot Program: It is advisable to run a pilot program to better understand consumer
buying patterns, return habits, demographics, product lines and financial margins.
• Consumer Demographic: Without a doubt, SDD makes sense in larger cities for
affordability and proximity reasons. Businesses must fill their fulfillment centers and
stores with the proper inventory and resources to keep up with the demand without
impacting mainstream orders for in-store customers.
• Product Lines: It is proven that edible items such as Chinese takeout and pizza are
prone to be delivered in shorter delivery cycles and are successful when it comes to
customer returns. Recently, Amazon enabled a 2 hour delivery schedule for liquor in
specific zones. On the same line, consumable products such as groceries, emergency
items, seasonal gift items and impulse purchases can be considered for SDD. Businesses
can offer SDD on product lines where consumers order yet minimally return items.
Also, high margin items like jewels or other “emotional” gifts (such as flowers) are good
SDD products.
• Technology: Identify favorable warehouses or stores to equip with necessary
technology gadgets and access to global solutions to execute SDD smoothly.
• Investing in Gadgets:
‫ڤ‬‫ڤ‬ RFID - Real-time inventory
‫ڤ‬‫ڤ‬ IoT – Track Carriers, Carrier performance &
Order Progress status
‫ڤ‬‫ڤ‬ Investing in software solutions, such as:
• Seamless integration with critical systems
• Order management solutions
• Store picking solutions
• In-House or 3rd party order dispatch &
tracking solutions
• POS Solutions

6. • Initial Cost: The Initial cost must
be inherited by a business. But, in the
long run, consumer loyalty will comp
this price tag. Once a consumer base
is built, small membership programs
can be explored, as consumers are
willing to pay in exchange for short
term services. Partnering with 3rd
party vendors can be considered for
standard shipping.
• Returns: While consumers will
certainly welcome free returns in
SDD, it would be a huge undertaking
for the business. They can strategically
offer this for products where they have
higher margins. That way, it will not
offset their net margins. They can
also combine with lead time returns
policies to take advantage of resale
opportunities to further reduce the
risk.
RETURNS IN SSD
Although SDD has a net profit impact,
it presents a good opportunity to help
a business. If a business does their due
diligence and offers SDD targeted-geos,
product lines and tactically derived SDD
cost & return policies, it has the potential
to reduce customer returns, increase sales
volumes and improve overall revenue.
Both Amazon & Adidas have proved
that SDD does impact reduced customer
returns.
CONCLUSION
As long as a business has good reverse
logistics supply chain solutions and
mechanisms to track inventory in global
level in reverse to channel level, they
can assume they have the infrastructure
in place to manage returns effectively.
However, they should continue to
improvise their forward & reverse as per
consumer expectations and competitors
move. Once they cross that stage, they
can assess if SDD is the right path for
their business. They should be ready
to invest on technology to make SDD
reality and reduce returns.
References:
• Returns- The Ticking Time Bomb of Multi-Channel
Retailing
• http://www.supplychaindigital.com/scm/supply-
chain-40- adidas-and-amazon-re-write-rules-supply-
chain-management
• How to Avoid the Perils of Same-Day Delivery
ITOrizon Team
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