Granular data and timely feedback allow owners of reusables to establish a constructive dialogue with retailers to drive positive change.
If you want to stop losing your reusables, start by giving them a voice. This advice was central to the presentation by Rehrig Pacific’s Kaley Parkinson, delivered at the Reusables Learning Center at PACK EXPO Las Vegas 2015.
Reusable asset theft is a big problem – to the tune of $500 million annually, or more. And as always, it is somewhat of a good news/bad news story. In spite of the losses, which range from $80 to $100 million for the dairy industry alone, not to mention a 30 percent annual shrink for the baking industry, companies typically have no inclination to abandon their preference for reusables. It is a solution that still makes the best sense for them both environmentally and economically, and so they reluctantly accept the “Black hole” of asset loss and theft as a cost of doing business.
“There can be a perception in the marketplace that all the calculations (about saving money with resuables) don’t mean anything because I am going to lose them anyway,” said Parkinson, Director, Applied Technology Sales and Business Development for Rehrig Pacific. “That’s not true. Reusable asset loss has a relatively small impact.”
Collectively, however, the problem is significant and warrants attention. One of the problems is that people oftentimes do not know how big of a loss problem they or the extended supply chain are experiencing. Too many companies accept asset loss as simply a cost of doing business, with the obvious exceptions being the pooling companies such as CHEP, IFCO Systems, and Tosca, where effective asset management is critical to the viability of their businesses. For other companies, it is all too often a big problem, but managers often can’t articulate with any certainty its magnitude, or where the actual pain points are located.
“I am not going to tell you we can stop people from stealing things that have value,” Parkinson said. “If things have value, people will steal them. I can tell you that Al Capone is not going to knock over the grocery store to get the reusable assets inside. They aren’t that valuable. They steal them because no one cares about them. It is a crime of opportunity and they are there for the taking.”
When reusable containers are emptied at retail locations, those retailers typically don’t own those assets. They have received the goods and they are oblivious to the value of the reusables. “That apathy and lack of accountability carry over to the folks who are on the dock doors,” Parkinson observed. “It takes up space. What am I going to do with it?” Reusables end up being stored outside and create the opportunity for theft.
What can be done, Parkinson stated, is to change your own behavior and that of your supply chain stakeholders with respect to reusables. If they are not left outside, then they are not going to be stolen. Thieves, he noted, target handlers of reusables rather than the owners, because they know that apathy exists in terms of accountability at the end location.
The first step in solving the problem, according to Parkinson, is to give the reusables a voice and to let them tell their story. “The technology exists to let your assets tell you where they are going, how long they are gone, and if they have come back.” The result will enable not only decreased loss but increased velocity and other opportunities such as linking to inventory information.
Corrective action starts with finding the right technology, which may be a relatively inexpensive barcode system, if each asset is being handled, or an RFID system if multitudes of assets are being handled and it is inefficient to scan each one. The key is to understand the application and make the best business decision.
By the creation of tracking data, the opportunity is created for the sales team to have a meaningful, informative conversation with retail customers about the specifics of the asset loss, rather than an exchange that is really devoid of actionable information and which in all likelihood will end up becoming accusatory in tone.
“If you don’t understand the problem, you are never going to solve it,” Parkinson stated. Without an effective feedback loop, change is difficult to effect. Ultimately, he noted, that feedback allows stakeholders to shine a light down the “black hole” and begin the process of change. It allows them to have a fact-based discussion about total supply chain cost, and how to reduce it. While customers may not be paying for lost assets directly, the cost ultimately manifests in other ways, such as being bundled into cost, or resulting in other inefficiencies such as production or delivery delays because of asset shortages.
Ultimately the goal of such conversations with customers is that their operational staff will be guided to better safeguard reusables and not leave them exposed to theft.
The good news, Parkinson noted, is this is not just theory. Rehrig Pacific has successfully adopted such an approach in conjunction with customers. In one case involving seven Pepsico facilities, RFID tagging and tracking of reusables, in conjunction with the other steps itemized above, resulted in a 25 percent loss decrease in the first year. In another case involving Dr. Pepper Snapple, asset loss was curbed by 50 percent in just the first three months.
“We are not going to stop bad people from doing bad things,” Parkinson concluded. “What we recommend is controlling what you can control so you can make meaningful changes with your trading partners. Use what you have, give it a voice, and I guarantee it will pay back.”