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Q&A: Demystifying reverse logistics with new tracking solutions (Includes interview)

Returns come with additional financial burden such as restocking expenses and inventory losses. And, because 41 percent of customers buy items with the intent to immediately return, brands need to develop a new game plan in order to save time, money, and fuel.

There is a solution for logistics managers in terms of managing reverse logistics: low-cost nanotechnologies are a simple solution.

Scott Fletcher, President and CEO of LocatorX explains how nanotechnologies provide insight into the full lifecycle of an item and how they can help brands streamline and simplify the reverse logistics supply chain.

Digital Journal: How are return deliveries costing businesses?

Scott Fletcher: Return deliveries are a major problem for businesses and can turn into a costly situation. For an online retailer, it’s one of the bigger challenges they face in terms of the cost associated with processing a return. Once an item makes it back to the retailer after a return, they are tasked with verifying that the item has come back intact, with all of its proper parts and accessories, and with no damage. All of these things must be assessed before the item can be restocked. Take the case of retail giant Amazon – returns were being processed and the cost of items were refunded when in reality, the return shipment only held dirt – carefully portioned out to have the same weight as the intended item.

Some online retailers don’t actually process and restock the returned item – they simply go into a stockpile of miscellaneous items and are palletized for resale in bulk. This leads to a loss of control over the fate of the returned item – pallets are auctioned off, and then the buyer is able to sell in whatever format for whatever cost they desire. Retailers and manufacturers no longer have a say in what channels this item can be sold, quality control over the condition of the item, or even the price it can sell for. This leads to increased gray market activity and counterfeit items.

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DJ: Why do some businesses find reverse logistics so challenging?

Fletcher: Go to any retail store and you will find shelves, shopping carts, or boxes full of “go-back” items ready to be re-stocked. These stores bear the burden of checking item quality, making sure these goods haven’t been tampered with and still include all necessary parts and pieces. For online stores, they have the added responsibility of getting products all the way back from the consumer in one piece, and then determining what condition the product is in to be resold.

The re-entry point into the supply chain is fraught with error, fraud, and vulnerability. Customers may, intentionally or not, fail to put all the components of a product back into the box. Whether it’s a missing screw that makes assembly impossible, or shoelaces from luxury sneakers, the recipient of the returned item is now tasked with replacing that piece – or reselling the product at a lower price due to its imperfect state. Even damaged packaging can deem an item unworthy of resell. Additionally, it can be extremely difficult to verify the authenticity of an item when it comes back from a return. Retailers need to make certain they haven’t been duped by counterfeit parts or products.

DJ: How can nanotechnologies provide a solution for this returns process?

Fletcher: Nanotechnologies provide a solution for the challenging field of reverse logistics by allowing a track and trace feature on individual items. Through the convergence of a number of technologies, we are now at a size and price point that allows track and trace of almost any physical item. Much the same way that GPS allows you to track and trace a car, tractor trailer, or high-value pallet through shipment, this new technology will allow smaller items to receive the same level of insight that was once reserved for larger, costlier items. Nanotechnology brings this ability to a price and scale that it is now feasible for virtually any item.

DJ: How does the technology work?

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Fletcher: The technology works through either a QR code or chip-in-label technology that is applicable to virtually any product size. This technology can be accessed through a physical scan, from a device such as a smart phone, or radio frequency, such as NFC or Bluetooth. Collecting this data using LocatorX’s certified event log provides a basis of trust. Knowing that the information collected is supported by a secure framework allows manufacturers, retailers, and consumers to know that their data isn’t going to wind up in the wrong hands and won’t be tampered with along the way.

DJ: Has this type of technology been tested out with real-world examples?

Fletcher: Our technology has been tested through a pilot program with a large CPG firm. It is also currently in use with a number of commercial applications in the commercial market.

DJ: What types of data can be collected?

Fletcher: Data collected includes track and trace location data, helping to identify where a product is and where it has been so far. Information is also collected from environmental sensors, including temperature and humidity, providing better insight into whether a product has been kept in proper conditions throughout transit. Information can also be gathered from customer data and product usage, allowing companies to see more detailed information about their target audience.

DJ: What can brands do with the collected data?

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Fletcher: Brands can use the collected data to better manage their supply chain, leading to reduced counterfeiting, theft, and diversion. This will lead to reduced supply chain costs all around. Additionally, brands can enhance customer engagement and experience through better usability and more accessible product information. Consumers will come to expect a product to have this feature, allowing them to learn more about everything from product safety and allergen information to rebates and promotional items.

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