By Vikas Argod, Manager, Chainalytics |
The dairy industry estimates that it loses $80 million per year due to stolen milk crates. So severe is the problem that the International Dairy Foods Association set up an entire website dedicated entirely to keeping milk crates in the dairy supply chain. But the dairy industry isn’t alone in its quest to locate these missing items.
In fact, all types of products are transported and stored using assets that are valuable and durable enough to be used multiple times, called returnable transport items (RTIs). These RTIs can include things like the totes and pallets used for electronics, gas cylinders, and even beer kegs. When RTIs are not returned, suppliers experience shrinkage — and the cost can be staggering.
Suppliers employ various strategies to combat this expense and increase the likelihood RTIs will be returned safely. One of the most common and simplest solutions is to charge deposits or rental fees for RTIs to encourage returns, but this can be highly unpopular with distributors who are not keen on paying manufacturers for the right to sell their products. It also creates strong competitive disadvantages for suppliers, not to mention accounting nightmares. Alternative tactics like creating a pull flow for empty assets also yield disappointing results.
Does that mean RTI shrinkage has to just be written off? No. Inexpensive and efficient real-time asset tracking is available using technology to enable asset returns. But technology is only an enabler; effective RTI management relies on having the right team in place and following five guidelines to optimize results. Click on the image below to start a slideshow that reviews the steps in detail:
The visibility provided by tracking assets enables long-term capital cost savings and shrinkage reduction, while eliminating expedited shipping for RTIs. A nice side effect is the data provided through tracking these assets can power intelligence that identifies trends, improves service and achieves higher order fulfillment scores. And not having to ask customers for a security deposit is worth its weight in gold.