Reverse logistics—the processes involved with handling products returned by customers—is often overlooked during supply chain planning. As a result, it is frequently a source of waste, because companies lack Lean procedures for handling defective, damaged, mislabeled, or incorrectly shipped items when customers return them.

Recently, businesses have started paying more attention to their reverse logistics processes as a result of a greater focus on supply chain sustainability—a function affecting the environmental, risk, and waste costs of supply chain and logistics networks.

Reverse logistics exists in manufacturing, wholesale, and retail distribution and store operations, and must be managed as efficiently as possible, because returns can have a significant impact on the bottom line. In fact, returns—which affect four to five percent of consumer electronics sales, and up to half of sales in the publishing industry—reduce the average profitability of retailers and manufacturers by up to four percent.

RETHINKING REVERSE LOGISTICS

Facilities that do not develop Lean procedures for returning, processing, repairing, and replacing products may create considerable waste. Efficiently managing the reverse logistics process, however, improves profitability and adds value for customers.

To reduce waste in distribution centers' reverse logistics procedures, pay close attention to movement and processing, which can be major sources of inefficiency and waste.

Consider facility layout, item flow, and worker movement. Workers must be able to sort and break down returns with minimal travel, so make sure all necessary information, tools, replacement packaging, and other materials are nearby.

Process and activity charts can be useful in this analysis.

BUILDING A LEAN RETURNS PROCESS

The actual returns process can include your company's return policy (which can be generous or strict), Return Merchandise Authorization (RMA) procedure, operations outsourced to third-party logistics (3PL) providers, and technology tools. All these factors can have a tremendous impact on whether your returns process is efficient and Lean.

When developing your reverse logistics process, consider the following factors:
 
     Prevention
               Use Lean tools such as Quality at the Source to minimize returns.
 
     Financial incentives
               Avoid processes—such as charging returns back to the sales department—that cause RMA delays.
 
     Core competencies 
              If your company lacks reverse logistics expertise, consider outsourcing this function to a 3PL that can                   manage  it efficiently.

  Suppliers
             If you are a wholesaler or retailer, review the returns handling terms you have established with your vendors.
         
     Cycle times
             Evaluate the entire returns process—starting with the customer, RMA procedures, and
             reverse logistics network—to identify potential sources of waste.
 
     Technology
             Invest in the right tools to help you control and measure the reverse logistics process.

A well-planned reverse logistics operation can be a win-win proposition, because it fits well with today's increased focus on sustainability, reduces costs, improves your company's reputation, and satisfies customers.

Ultimately, it can be used to establish a competitive advantage for your business.

Parts of this column are adapted from Lean Supply Chain & Logistics Management (McGraw-Hill; 2012) by Paul A. Myerson with permission from McGraw-Hill.

 

The European Union will offer to lift tariffs on nearly all goods imported from the United States as part of negotiations towards the world's largest free-trade deal, sources said.
 
The offer would be made on Monday, a week before face-to-face talks between EU trade chief Karel De Gucht and his U.S. counterpart Michael Froman in Washington, they said.
 
The European Commission, which handles trade issues for the EU's 28 member states, will tell the U.S. how far it is willing to open its markets, while US officials are expected to do the same. Officials familiar with the EU's proposal have said the EU will offer to lift 96% of existing import tariffs, retaining protection for just a few sensitive products such as beef, poultry and pork. "This is just the first step, but it sends a message that no sector will be completely shielded from liberalisation," said one person involved in preparing the EU offer. Two other European officials confirmed the offer.
 
Tariffs between the U.S. and the EU are already low, and both sides see greater economic benefits of a transatlantic accord coming from dropping barriers to business. However, professor Dan Hamilton, executive director of the Centre for Transatlantic Relations at John Hopkins University in Baltimore, said tariff reductions would make a difference, given the size of the EU and U.S. markets – 815 million people.
 
"Just reducing tariffs would be worth five times the U.S.-South Korea trade deal, and that was a big deal in the U.S.," he said during a recent visit to Brussels, referring to a deal that went into force in March 2012.
 
The U.S. and the EU are seeking to seal a trade deal encompassing half the world's economic output, hoping it can bring economic gains of about US$100 billion a year for both sides. Monday's exchange of market access offers will happen simultaneously so that neither side has an advantage over the other. The swap marks the first concrete step since negotiations were launched in July, although offers can change during trade talks.
 
Officials close to the offer exchange said the EU's proposal was split into four categories. First, Brussels would offer to drop 96% of tariffs on the understanding that Washington would reciprocate.
 
Two transition categories would be proposed for a further 3% of goods, with periods of three and seven years until tariffs are dropped to allow EU industry to adapt. Those categories could include commercial vehicles and some agricultural products.
 
In the final category, sensitive products would remain protected but the U.S. would be granted enlarged quotas. Last year, the EU agreed to allow in an extra 45,000 tonnes of beef from Canada and a U.S. allowance is expected to be at least double that.
 
The EC declined to comment. One EU official said the commission was preparing the exchange of offers for next week.
 
All moves to lower the cost of trade are seen as beneficial for companies, particularly carmakers with U.S. and European plants such as Ford Motor, General Motors and Volkswagen. EU cars imported into the U.S. are charged a 2% duty, while the EU sets a 10% duty on U.S. cars. Including even higher duties for trucks and commercial vans, the burden for carmakers amounts to about US$1 billion every year.

Source:  (South China Morning Post)

Bruce White, CCS
Manager, Customs
Fraser Direct Logistics
100 Armstrong Ave, Georgetown ON  L7G 5S4
Direct: 905-877-4411 Ext 230 | Fax: 905-877-2053
This email address is being protected from spambots. You need JavaScript enabled to view it. | www.fraserdirect.ca

Partners in Protection (PIP) member

Canada's government has been on a tear of late in negotiating bilateral and regional international trade and investment deals.

In the past two years alone, Canada has signed or concluded four free trade agreements (FTAs) and 14 foreign investment protection agreements (FIPAs), while multilateral negotiations at the World Trade Organization (WTO) have ground to a halt (save for a recent trade facilitation deal). Canada currently is negotiating or in exploratory discussions for another 16 FTAs and 10 FIPAs—among them, agreements with the European Union, China, India, South Korea and Japan, as well as negotiations for the massive Trans-Pacific Partnership.

These are new-generation trade deals. Rather than focusing on traditional goals—such as reducing customs duties and other trade-distorting practices at the border—they address more subtle trade barriers beyond the border, such as cumbersome technical regulations, insufficient protection of intellectual property rights, and unfair terms and conditions in government procurement. They also seek to reduce barriers to trade in the services sector (including the cross-border movement of people) and to protect foreign investment against discrimination, expropriation and unfair treatment.

It's all part of what our federal government claims is the "most ambitious trade expansion plan in Canada's history." Whether or not these deals meet such lofty expectations remains to be seen—but Canadian firms should not ignore these developments. In fact, any business with export aspirations should factor these developments into its decision-making process and long-term strategy.

Here are three reasons why you should keep on top of the government's trade-related wheelings and dealings:

1. Trade deals reduce barriers for SMEs

The negotiation of new FTAs or FIPAs, or the expansion of existing treaties, reduces trade barriers and creates new geographical and product market opportunities for exporters. Although the U.S. remains our most important target market by far and will always play a significant role in our export profile, new opportunities in other markets in the EU, China and other high-growth developing countries hold significant promise for Canadian firms seeking to diversify. In negotiating these deals, the Canadian government is following the old "if you build it, they will come" strategy.

2. Trade deals give you ammunition

These agreements provide effective tools to deal with everyday market access or competitive issues facing your company. These deals impose binding obligations on Canada and its trading partners. When government action impedes international market access, favours competitors at your expense or results in the expropriation or loss of your operations in a foreign jurisdiction, FTA or FIPA dispute-settlement mechanisms can provide a remedy.

Enforcement of FTA commitments usually is on a government-to-government basis. This means that in order to challenge a foreign measure that's harming your company, you would approach the Department of Foreign Affairs, Trade and Development Canada (DFATD) to take up your cause. In the case of a problematic Canadian measure, you would approach the other FTA party government...

3. Trade deals aren't always good news for everyone

Contrary to the tone of overly positive government press releases, these treaties are not always a bed of roses for all Canadian companies. These deals usually are reciprocal, which means that in order to get market access, Canada has to give up something. You need to be aware of—and plan for—the potential negative impact of these agreements on your business. A high Canadian tariff, for instance, or a favourable technical requirement that has protected your domestic market from foreign competition can be immediately removed as a result of Canada negotiating an FTA or complying with an unfavourable FIPA ruling.

Canadian importers also get caught in the crossfire in a trade dispute when Canada retaliates against a country that has failed to comply with the directions of an FTA or WTO panel. An ongoing example of this is Canada's proposal to impose a 100% surtax on various products imported from the U.S. because of the U.S.'s refusal to remove its country-of-origin labelling requirements on meat products sold at retail, a measure that Canada had successfully challenged before the WTO. Companies with no involvement in that dispute or even in the agri-food sector could be hit with significant cost increases on their imported materials and components if Canada follows through on its proposal. That's just one example of the unintended consequences of a trade deal; these things aren't always shiny, happy news for everyone.

Education is your friend in export-related matters, and the good news is that there are many things you can do—even with limited resources—to monitor trade agreements more diligently:

• Get up to date on Canada's existing FTAs and FIPAs and the state of current negotiations.

• Follow trade policy reviews conducted under these agreements—the WTO's Trade Policy Review Mechanism, for instance, provides a regular overview of potential trade barriers among all WTO members.

• Make your views known. The Canadian government is open to hearing from companies that have an interest or view on an FTA or FIPA under negotiation, or on proposed retaliatory measures, either through formal consultations or otherwise...

• Pursue FTA or FIPA enforcement. When facing harmful or discriminatory government measures, trade action under FTAs or FIPAs—or even just the threat of doing so—can lead to the withdrawal of the offending measure. Reporting the barrier to DFATD, alerting the relevant FTA partner or demonstrating a basis for a FIPA claim against the government can yield effective results.

As trade and investment deals continue to proliferate, Canadian companies should have mechanisms in place to ensure that these developments are reflected in their strategic decision-making process and their business-planning systems.

To read the entire Profit Guide Report, CLICK HERE>>>

The article was written by John Boscariol, a partner and Leader of the International Trade and Investment Law Group at McCarthy Tétrault LLP.

Bruce White, CCS
Manager, Customs
Fraser Direct Logistics
100 Armstrong Ave, Georgetown ON  L7G 5S4
Direct: 905-877-4411 Ext 230 | Fax: 905-877-2053
This email address is being protected from spambots. You need JavaScript enabled to view it. | www.fraserdirect.ca

Partners in Protection (PIP) member

 

Many U.S. companies underestimate the complexity of shipping to Canada, thinking of it almost as an extension of their own country.

Geographic proximity, shared language, and common culture leave the impression that sending goods across the border should be a breeze.
Yet increasingly stringent security mandates, bureaucratic customs requirements, and a battery of taxes, tariffs, and fees can result in shipments being delayed at the border, subject to penalties, or even denied entry.

Whether you are bringing Canadian goods into the United States, exporting to Canada, or managing cross-border customer returns, it's vital to understand some key aspects of both U.S. and Canadian customs processes.
To start, any business sending goods to Canada must obtain a business number from Revenue Canada for tracking all tax and financial transactions. That number must be included on all forms and paperwork, and is the tip of the iceberg in terms of compliance.

The Canada Border Services Agency (CBSA) also requires shippers to:
 Pay all taxes, including federal and provincial sales taxes, and applicable duties and tariffs.
 Determine proper harmonized tariff code.
 Complete numerous forms, including a Cargo Control Document, NAFTA certificate of origin, and cargo manifest.

Canada recently introduced a new eManifest portal, which requires all carriers to submit an electronic accounting of incoming shipments prior to arrival at the border. The eManifest requirement is still in an "informed compliance" period, but CBSA will start to impose fines for non-compliance once that period ends.

STATESIDE REQUIREMENTS

Similarly, the process for importing goods into the United States is bureaucratic and technical, and in many ways mirrors the Canadian process.
A telling sign on the U.S. Customs and Border Protection Web site warns, "Importing goods without researching entry requirements in advance can be a costly experience."

In addition, each country implements border security programs intended to track the contents of shipments arriving at their borders.
The good news is that each government offers "trusted shipper" programs to help facilitate compliance, and minimize the likelihood of shipments being delayed at the border.

These programs—the Free and Secure Trade Program, administered jointly by the United States and Canada; CBSA's Partners in Protection and Customs Self Assessment programs; and the United States' Customs-Trade Partnership Against Terrorism and air cargo Certified Cargo Screening Program—are a tremendous help, but require participants to undergo an arduous application process.
If it seems like there is redundancy in these processes, it's because there is. Businesses on either side of the border have been asking for relief, and the two governments have pledged to find efficiencies where possible. But any changes are sure to come slowly.

With more than $600 billion in goods crossing the U.S./Canadian border every year, it has never been a better time to consider integrating an export/import component into your business. Thousands of businesses are already finding success in cross-border sales. But as you make your plans, be sure to include a viable process for border compliance.

Source:
Inbound Logistics:
John T. Costanzo
Purolator International, Inc.

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