2022 Katzscan Newsletters

From murder hornets to cyber pirates.

If it wasn’t for my belief that “murder hornets” and “cyber pirates” are pretty good names for punk rock bands, I would be smiling more than cringing at the latest supply chain threat per the article in front of me on July 4, 2022 from Brendan Murray at Bloomberg. 

(The article has nothing to do with murder hornets and their threat to the bee population, which is in-and-of itself an agricultural supply chain problem.  But let’s face it: murder hornets sound bad enough on their own.)

The article points out the problem with cyber take-overs of shipboard software systems on cargo vessels.  You know: the kinds of ships that we all rely on to transport cargo containers all over the world, notably from Asia (specifically: China) to US ports.  

In consideration, ships are like companies on the water: they have to have their own software systems that run the ship’s enterprise applications: navigation, steering, propulsion, plumbing, electrical, etc.  

Legacy systems being enabled with sensors and monitoring systems - then connected to satellite systems - are vulnerable to hacking due to a lack of security protection.  Replacing these legacy systems will take time and financial resources.  In the interim, the ships are open to cyber-attack and takeover.  Just imagine the damage if a hacker took control of a cargo vessel as it approached a port of call. 

Just like land-locked enterprises, maritime companies need to upgrade their systems and connect their hardware and software resources for efficiencies, visibility, and competitive advantages.  But in doing so, there will be gaps that will leave them open to cyber-attacks that, I think in some ways, create an even greater risk to supply chains than what we have currently.  

How maritime companies navigate these new and treacherous waters remains to be seen.  But cyber piracy needs to be taken seriously now, before real damage is done. 

My supply chain fraud – www.supplychainfraud.com – book and business model highlights how companies can leverage existing, tried-and-true supply chain systems, (e.g., ERP, EDI, barcode labeling and scanning) and the transactions they produce to not only analyze supply chain performance, but to also detect and reduce internal and external supply chain fraud. Even with legacy systems, this business model has effectiveness and return-on-investment. 

Both short-term fixes and long-term solutions have their place in remedying problems. The mistake is complacency, doing nothing, and thinking that the problem will just go away on its own, or passing the problem to someone else. 

As a New Year resolution, resolve to tackle your company’s tough software and operational problems next year. And know that I’m here to help when you need it. 

Happy Holidays and Best Wishes for the New Year. 

E[C]TL

Software system migration projects – notably, ERP (Enterprise Resource Planning) projects – don’t come around that often. As such, they are rare opportunities for companies to take an introspective look at themselves, to examine the current state, and to ponder and plan for a preferred future state. 

The future state positioning examines technology, business operating procedures, and the foundational data upon which information used to analyze the business is established in the ERP system. 

The last aspect there – data setup – is a project in-and-of itself. It can, and typically does, begin with the data that exists in the current ERP system. The common term for the migration of data from one system to another is ETL – Extract, Transform, and Load – but that acronym is, in my view, inaccurate as it leaves out an important step: Convert. 

The extraction of data from a legacy ERP system has nothing to do with whether the replacement ERP system has been sourced or selected. Can all of the entity (e.g., customer, item, supplier/vendor) data be extracted in its entirety from the legacy ERP system? Can all of the transactional data (e.g., sales orders, purchase orders, invoices, work orders) be extracted from the legacy ERP system, at least as far back as an historical record is necessary? 

Not only can all of the data be extracted from a quantity of records perspective, but can all of the data fields in the records be accessed, or are some of the data fields problematic? 

Once the data is extracted, representing the current state of the company, how would the data be converted to represent a preferred future state? Should customers be grouped differently? Should finished goods be categorized along different attributes, some of which may not currently exist? Again, converting the data has nothing really to do with the new ERP system. In fact, if the new ERP system cannot handle the future state requirements you have identified in the converted data, it is not the appropriate system for your company, and better that you understand this before you make the purchase commitment. 

The data transformation process takes the converted data and modifies its record format to be acceptable to be loaded into the new ERP system, data-mapping on a field-by-field basis and also ensuring that your data fields fit into the new ERP system’s data fields, e.g., by type (numeric to numeric, character to character) and length. 

The load process tests the data transformation and checks how your data actually looks once installed into the new ERP system. This is an opportunity to perform some actual transactions using your uploaded data, to see how your data mapped when viewed from the perspective of the new ERP system’s user forms. 

Too many companies that I encounter do not consider the data migration as a separate project, and they don’t consider the Conversion step within what should be the E[C]TL process. Extract and Convert are independent from the selection of the new ERP system; Transform and Load are dependent upon the selection of the new ERP system. 

If your company is considering a new software system – ERP, talent management, or other – make certain that your data migration project is planned and properly positioned to support your software project. Don’t wait to purchase your new software and then start the data migration project, because then it’s too late, and you may find that your new software is not the best choice for your company’s future. 

Are contract clauses compromising your consultants’ quality?

It is my responsibility to present to prospective clients a reasonable document (a.k.a. a contract) that establishes our business relationship: what I will and will not do for them, and what they will and will not be responsible for to me. If the prospective client cannot sign this one-page, plain-English agreement, then they are not right for me. 

(Note that this is not a statement of work; this is simply a document that creates the business relationship between their company and my company.)

As an independent consultant, I am not opposed to working with/through other consulting firms. What I am opposed to is when those firms – on behalf of or instead of their clients – attempt to take ownership of my intellectual property – and the associated moral rights – as if they have any stake in what I have created. 

Inasmuch as employees of companies and government agencies forgo any copyrights and ownership to their employer on what they create on the job, as an independent consultant, I am somewhat different. I have no problems with the end-client owning what I exclusively create for them (e.g., documentation, analysis) on an assignment in a royalty‑free, non‑exclusive, non‑transferable license agreement. But that is where it ends. 

The master consulting firm does not get to own or profit from my work, especially alleviating me of any rights – moral or other – to what I have created or any derivation thereof. Nope, not going to happen. 

As businesses seek out relationships with consulting firms, are they sure that they are getting the best or most experienced consultants that they are being billed for? Or, are they simply getting the consultants who did not read the complex legal jargon and requirements of the contracts that they were signing as they were onboarded to the firm? Or did these consultants read and agree to something that they didn’t really understand? Or worse, after agreeing to what they understood, are the consultants holding back what they are producing for the opportunity to use what they are developing elsewhere, thus not delivering the best that they could be? 

In a prior newsletter of mine (May 2021) I wrote about how General Motors changed its anti‑creative policy with its suppliers to embrace more innovation. GM realized that its suppliers were withholding critical technological advances because they were being beaten up on costs. After GM changed its abusive policies, suppliers opened up their creativity secrets to GM. 

My – and any consultant’s or consulting firm’s – intellectual property is part of our/its “secret sauce” … the thing that makes us want to get hired and solve problems. I am rather transparent in what I know: 60+ US national and international presentations, 40+ US national and international articles, 3 published business books (each with its own website) that are listed on my main website (this one). 

No one gets to own what I know except for me. My clients have an ownership right to what I exclusively develop for them, but the intellectual property and moral rights that go along with it belong to me, especially as an independent consultant who makes a living based on learned experience and the knowledge that I bring to problem-solving. That’s why companies hire me. That’s why that company hired me. And that’s why the next company – and the companies to follow – will hire me.

Consulting firms who want to engage with expert independent consultants like me would do well to dispose with the abusive and obstructive intellectual property clauses that their own executives would be unlikely and unwilling to sign at their own legal counsels’ advice. (Both my own attorney and my contract manager are rather appalled at what some firms attempt to get people like me to agree to.) In a commoditized world, unique talent is one of the telltale attributes separating one firm from another, and is a key selling point.  

If your business is uncertain that the consultants or the consulting firm you hired is “all in” with the knowledge and experience and the product that they are delivering for your company, you probably should have done a “supply chain” review of their contracts with their consultants to ensure that there was no restriction as to what your company would be the work product beneficiary of.  

If customer loyalty is built upon trust … 

Based on statistics presented in the January 2022 issue of Inbound Logistics magazine, a Deloitte report indicates that corporate executives are investing money in preventing an erosion of trust on different fronts, probably the two which are from the inside and the outside. 

Apparently, 95% of consumer product companies with a high consumer trust level are the more resilient companies. 

But if customer loyalty is built upon trust, what is trust built upon? 

Slick marketing and advertising? Cool logos and graphics? Celebrity endorsements? 

In my opinion: No, no, and no. 

What trust is ultimately built upon is transparency and openness, something that a lot – too many – companies struggle with greatly. 

Companies exist to make money and, if public, are beholden to their stockholders. But sacrificing both short-term and long-term trust for quick cash is a poorly conceived business transaction. The old adage is still relevant: it costs more money (5 to 10 times more) to acquire a new customer than it does to retain a current customer. And a great customer referral costs you nothing. 

In my first book, Detecting and Reducing Supply Chain Fraud (Gower/Routledge, 2012), I cited a 2010 University of Michigan study which surveyed 14,000 students across a 30-year timespan. The study noted, at the time, a significant drop in empathy right after the year 2000, noting that college students were 40 percent less empathic than their counterparts 20 to 30 years earlier. (I wonder what the results would be of an updated version of that study if done today.)

The issue, as I perceive it, is that transparency requires soft skills like empathy. If we want people to trust us – our companies – we have to consider what their experiences would be like as they encounter our companies, and how we can make those experiences as good as possible, the end-to-end execution. 

Trust is the training companies give to their front-line employees, the tools (software) provided to their customer-engagement staff, the back-end integrated (or not) systems, the instructions or documentation on how to do something, the touchpoints customers receive when something works well or doesn’t work at all. 

Sadly, customer service feels like it has just devolved into risk management: how much can a company anger its customer to the breaking point of leaving, and then pay-off the customer to stay. This does really nothing to fix the problem, and only costs the company more to retain a customer soured on the company’s poor execution.   

As noted in the Deloitte report, 90% of executives state that a customer loses trust in brands when “brands are not open and transparent”. This does not require a brand to wash all of their dirty laundry in public. But it does require a brand to come clean when they have a problem, when they cause a problem, and when they are the problem. 

I don’t think that people expect even the most monolithic of corporations to be perfect all of the time. But there is the expectation that companies can – and should – do better, and it begins by effectively and clearly communicating, whether it is good news or bad news, and certainly when they are supposed to be the experts. Let us – your paying customers – know, and tell us what you are going to do to fix it and how long you think it is going to take. Hey executives: How would you want to be treated if you were your company’s own customer? Now that’s going to take a bit of empathy on your part.  

Let ERP also mean Environment Remediation Project. 

Supply chain, software, and operations folks know that ERP is the acronym for Enterprise Resource Planning, the business software system of record that – as I have previously defined it in my writings and presentations – accounts for how a business operates. The ERP system is where a business stores its master data entities, e.g., customers, vendors, suppliers, finished goods, raw materials, sales representatives, manufacturing bills. Core business transactions, such as purchase orders, sales orders, work orders, and invoices, are contained within the ERP system. Accounting functions – payables, receivables, and the general ledger – maintain a record of the monetary effects of the transactions using the master data entities.

ERP systems – and their counterparts like talent management systems for staffing firms – are typically once-in-a-lifetime projects for many companies and their employees. These are invasive, expensive, time-consuming projects not to be taken lightly. Books have been written on the subject of proper ERP software selection and implementation. I have had leadership and hands-on roles on 20 ERP projects. 

Justifying a new ERP system can be a budgetary stomach-churner. The choice to select and implement a new ERP system involves both tactical and strategic decisions. If the company is still using a real legacy system, e.g., an iron-horse AS400, or is relying upon a system based on an outdated software language, the decision should be a bit easier because companies cannot realistically continue to compete without proper modernization, and what was once comfortable becomes clumsy and clunky as it becomes outdated. 

One of the drivers that can help to tilt the scale in the decision to upgrade and update a company’s ERP system is the positive environmental and related cost-reduction impacts that a new ERP system brings. 

As I have witnessed, to my chagrin, people get used to paper, and this includes the needless printing of business transactions – sales orders, purchase orders, invoices – just to have something to hold on to and file. Worse, I have witnessed companies that wastefully print only to then scan for retention, then throw away or file the paper copies. Huh? 

Consider that a more modern ERP system reduces the need for excessive paper, ink and/or toner, and printer buy or lease expenses. These annual costs should be calculated and factored into the return-on-investment for the software expenditure. What is more difficult to calculate is the increased throughput of the employee staff in not having to waste their time to print, scan, and file; just imagine how much more work they will be able to get done in the course of a single day. 

Instead of printing and sending invoices and purchase orders via postal mail, how about sending them directly via email right from the ERP system instead? Or use a standard like EDI (Electronic Data Interchange) that is integrated with the ERP system to engage your company’s larger customers and key suppliers like 3PLs? More time and money saved! 

With an increased focus on the environment and climate change, individuals and companies alike need to do their part. Recycling and waste reduction are two helpful environmental protection measures. Don’t get me wrong: I still keep paper around for note-taking, especially as I never know when a creative idea is going to come my way. But needless printing when digital is preferable helps to drive down costs and benefit the environment. This is one advantage of an ERP implementation upgrade that your company may have overlooked. 

No parking, baby … 

There are serious problems with the state of the overall supply chain situation here in the United States: clogged ports, manufacturing labor shortages, roads and bridges in critically poor conditions, shipping delays, a lack of drivers, … the list goes on. But even if there were enough truck drivers to transport the goods on roads and bridges that were in better condition into and out of the ports and distribution centers, would this solve the supply chain problems?

Quite possibly not, based on some insight from an article in the November 2021 issue of Logistics Management. It seems that all these truck drivers lack a safe place to park and rest when their hours-of-service have hit the limit, e.g., for the day. 

Despite that some states have opened up rest stops, if drivers have to extend beyond their hours-of-service limits to get to those intermittent rest stops, the drivers would be forced to cut their shift early and choose a closer rest stop. As such, hours a truck driver could have been driving are wasted.  

When available rest stops fill up, as some tend to do early, truck drivers have no where else to turn to for safe parking. The article notes that a truck driver who was forced to park in an unsafe location in 2009 was shot and killed. East coast rest stops tend to fill up earlier than West coast rest stops, compounding the problem. 

One idea being circulated around is to allocate vacant office parks and industrial spaces and enable them to be used for safe truck parking. However, there is pushback against this idea because of the zoning regulations in place that prohibit such use and the general opposition to increased truck traffic into those locations. 

But if we don’t allow truck drivers to avail themselves of more safe parking rest areas, we limit the ability of truck drivers to fully use their hours of service to deliver the goods we need when we want. Per the article, the lack of available – and safe – parking areas reduces a truck driver’s available on-road hours to 7.5 instead of the allotted 11. That’s a lot of transportation inefficiency as well as lost wages for truck drivers. As the trucking and transportation industry seeks ideas on how to attract more truck drivers, finding innovative solutions and available locations for safe parking is certainly going to be a necessity. 

Midnight Star sung us “No Parking (On The Dance Floor)” in 1983. But here and now in 2022, we need to provide our truck drivers with more available safe parking alternatives so they can log closer to their allotted driving hours while ensuring that they have safe places to park while they are resting and re-energizing.

Nothing new: when present and past collide.

An interesting sidebar article in the December 2021 issue of Inbound Logistics magazine presented findings from a survey conducted by intelligence platform Verusen. 

The survey results highlight the age-old conflict between present and past, when what is new conflicts with what is old … with what has-been and continues to be, whether that is thought, methodology, or business practice. 

For example: 90% of survey respondents say that they are focused on cost reduction. On the other hand, 75% of survey respondents state that they are focused on risk reduction as part of procurement and sourcing. These two methodologies are at some odds with each other as the article notes. 

One area that the article does not delve into is that of the cultural clashes between embedded employees and newcomers with outside experiences. Pride, politics, and personal attachments to processes and software systems stand in the way of replacing legacy methodologies and outdated software applications and embracing new understandings of business. Companies need to understand how to integrate, engage, and embrace new employees with range. 

The last word in the previous paragraph should be looked at again. It is the lead of the title of a book by David Epstein called Range: Why Generalists Triumph In A Specialized World. The book is a fascinating read, and one that I appreciated very much. 

Do generalists really triumph, or are their resumes poorly understood and rarely get past artificial intelligence bots and the typical objective Control-F for buzzwords. Is there really an appreciation for the functional, subjective perspective that generalists bring to the table?

Today’s companies, notably consumer goods manufacturers and distributors, are struggling to break out of their legacy software systems and business practices to compete in the exceedingly fast pace of today’s customer-driven demand economy. The ripple-effect is increasing pressure on support companies like third-party logistics provides (3PLs) and contract manufacturers too. 

Companies need to understand that their long-term employees, those with institutional knowledge, have value because of their insight into the company as it is. The management of combining the strengths of these employees’ legacy knowledge with the fresh perspectives and outside experiences of new employees is a necessary exercise for companies that need to progress, and quickly, with projects that can be executed efficiently and effectively. 

I am not one to toss out something because it is old. Heck, if I did, at first glance, I might be throwing myself in the bin. Tried-and-true often do win out over flash-in-the-pan. In my 26th year of consulting, I have learned a lot of things. Build upon a solid foundation. Change when and for good reason. Respect the past, but sometimes tradition is history. 

Old and new can co-exist, and can complement each other, but it takes a wide range of talent – or a talent with a versatile range – to make it happen. 

Consider that the three core supply chain technologies of ERP (Enterprise Resource Planning), EDI (Electronic Data Interchange), and Automatic Identification (barcode labeling and scanning) are each many decades old but continue to be the foundational technologies that supply chains run on. 

The collaboration of old and new has to be managed, and this is something that I am just not certain that a lot of companies are as astutely focused on as they should be in this hyper-drive to get things done. 

Performance versus Execution

After the publication of my second book, Successful Supply Chain Vendor Compliance (Gower/Routledge, 2015), I was interviewed by Dan Gilmore, editor of Supply Chain Digest. Clever me titled each of the 17 chapters in the first (of three) part of the book with a word that begins with the letter “E”. I don’t know why I did this, but it just worked out that way. After Dan reviewed the book, he thought of another word that begins with “E” that summarized the book’s overall objective: Execution. That has stuck with me ever since. 

I help companies with a focus on supply chain technologies – ERP (Enterprise Resource Planning), EDI (Electronic Data Interchange), Automatic Identification (barcode labeling and scanning). I also help them with their supply chain metrics and financial penalty reduction. Those last two are examples of measurable performance. 

Execution, however, is not always directly quantifiable, but it is just as meaningful. Execution includes the overall impression, the touchpoints, the gap-closers. 

So, semantics aside, is performance the same as execution? In my opinion, no. I think that performance is part of execution.  I help companies execute better, like it says in the title of my third book: Attack, Parry, Riposte: A Fencer’s Guide To Better Business Execution (Austin Macauley, 2011).

Performance is a product working and lasting as long as it’s engineered, expected, and advertised life, let alone right out-of-the-box. Execution is the notifications that the original order has shipped, the replacement product has shipped, and the damaged original product has been received. 

Performance is responding in a timely manner to a customer complaint about a requirement change that may lead to a charge. Execution is having this handled by the completely wrong department and then having to have it transferred to another department to handle. Degrading the execution further is the failure to communicate with the customer by a means other than what looks to be a fraud-phishing scheme that is using hacked emails. Zix messages? Huh?  (I never opened them.)  Why not send a message back to the customer the way the customer sent it originally: via the secure message system inside the secure online account? 

University of Michigan researchers publish a quarterly called American Customer Satisfaction Index which attempts to measure how happy consumers are with the goods and services that they purchase. Based on the edition published around the week of February 18, 2022, the index reported a 5.2% decline in quality since 2018, with the majority of the decline in the COVID pandemic years. Whereas the Consumer Price Index (CPI) reflects that prices increased 7.5% in January 2022, if fully adjusted for quality declination, price inflation would have been approximately 10% according to the researchers. 

When the US federal government bailed out automakers and airlines and banks during the financial crisis of 2008 with TARP (Troubled Asset Relief Program), we learned about companies that were “too big to fail”. But what I think we have is a case of companies that are, in certain ways, too big to function. Beyond poor performance, or perhaps underneath their deceptive performance metrics, sometimes driven by ridiculous slanted surveys and misuse or abuse of technology, lies an inability to satisfactorily execute, and the results are customer complaints and brand apathy due to frustration. But the consequences to the company for these dysfunctions  are actually higher operating costs. 

Being the only choice in a market does not equate to customer loyalty either, for those companies who are actually monopolies. 

What matters is not just what you can measure, it is also what you need to execute.  Customer anger, customer disloyalty, and customer dissatisfaction are only measurable too far after-the-fact: when sales decline and there is the customary examination as to why.  Reduced revenue is measurable, and is an indicator of poor performance, but the reason – or reasons – are more likely due to bad execution.  There is a difference, and the truly aware – and successful – companies know it. 

Line up the barcode projects!

Ah – the ubiquitous barcode. From its use on products, packages, and in advertisements, it seems that those perfectly parallel lines and seemingly sporadically spaced squares are nearly everywhere.  Or, perhaps, maybe they are not. 

In the March 2022 edition of Logistics Management (www.logisticsmgmt.com) magazine, the Equipment Survey showcases the response of 114 respondents: 32% corporate headquarters, 26% warehouse / distribution, 25% manufacturing, 13% warehousing in support of manufacturing. The median annual revenue of these companies is $52 million, and the average annual revenue of these companies is $185 million. 

For years 2020, 2021, and 2022, when asked the question “which systems and equipment are you likely to evaluate or consider during the next 12 months?”, bar coding was ranked 5th, tied for 4th, and 4th respectively out of a total of 18 considerations. 

Not bad, but it gets even better for bar coding. 

For years 2020, 2021, and 2022, the information system ranked at the top of all three years, out of a total of 11 considerations, was bar coding, beating out Enterprise Resource Planning (ERP), Warehouse Management Systems (WMS), Transportation Management Systems (TMS), and Distributed Order Management (DOM). 

So … what is it about bar coding that has it beating out everything else here, 20 years into the 21stcentury? Shouldn’t everything have a barcode on it by now? Wasn’t that the way science fiction films of the 80s and 90s portrayed everything? 

I have been involved in barcode labeling and scanning projects since 1991. You don’t just slap a label on something and call it a day. It is a project in-and-of itself. 

There are a whole host of factors that go in to a proper barcode label and scan application. The print, apply, storage, and transportation environments. The label content, data source, and design-and-print software. The label size, media, adhesive, print methodology, and application methodology. The symbology of barcode to use, which may be industry-specific. The ergonomic factors of the barcode scanners or mobile devices that are to be used. 

There is no magic wand – or scanner – that can magically make a barcode project happen. Despite the omnipresent nature of barcodes, when it comes to product identification, compliance labeling, asset management, or warehouse / inventory control, barcode projects are a serious and encompassing undertaking.  

Barcode labeling and scanning increases productivity and decreases errors. The error rate for barcode scanning is up to 1:36 trillion characters … that is pretty amazing compared to 1:300 errors for manual data entry. 

But like any other project, the details matter the most, right down to the number of dots per inch. 

Employers should tell work-from-home employees to watch their steps … literally. 

According to a court in Germany, the steps a work-from-home employee takes from the bedroom to the … office … can be considered part of the commute, and as such, injurious incidents that take place during this journey are covered by the employer’s – not the employee’s – insurance. 

The case in question occurred in 2018 when a man descended via his spiral staircase from his upstairs bedroom to his downstairs workspace home office. The man slipped and broke his back. 

The insurance company for the man’s employer refused to cover the medical expenses. However, a federal appeals court for social security cases determined that “first morning journey from bed to the home office [was] an insured work route” and was therefore covered by the employer’s insurance. 

There was no indication that the man had been working at home on a temporary basis. 

But there was a callout in the court case that the man went from his bedroom to the home office immediately without having breakfast in between.   Apparently, going from bedroom to office “to start work for the first time” and is thus “a service in the interest of the employer”. 

I am not certain why or what the difference is in bedroom-to-home-office versus introducing, for example, kitchen, dining area, or bathroom prior in-between bedroom and home office in determining whose insurance should be paying for an at-home accident. Does it matter if one goes directly from bedroom to home office just to start-up the computer, and then goes about other personal matters like eating and grooming and dressing? 

The German court case did note that the country’s definition of teleworking spaces is: “computer workstations that are permanently set up by the employer in the private area of the of the employees, for which the employer has agreed upon a weekly working time and the duration of the facility”. 

“German law takes into account the nature of teleworking spaces” as was noted in the article and in the protection of operating workspaces. 

So … employers with work-from-home employees should strongly advise those remote workers to watch their steps, literally. If we all thought that traditional traffic-clogged vehicle-commutes were dangerous, apparently, so too can be the hazardous journeys within our own domiciles. 

Too many unnecessary returns.

Statistics in a January 12, 2022 article by Paul Roberts of The Seattle Times point to continued growth in ecommerce due in-part to the COVID-19 pandemic. While January has always been a big month for retail returns because it immediately follows the prior end‑of‑year holidays, this year the COVID crisis has exacerbated the effect by ramping up the returns. This is stressing out shipping companies and giving retailers of all sizes post-holiday headaches. 

According to real estate firm and commercial logistics firm CBRE, 2021 retail sales were $222 billion. And of that whopping sales figure, $67 billion, approximately 30%, will be returned to the retailer. That return rate is 13% more than 2020 and 40% more than 2019.

A key reason for these returns is that consumers are hedging their bets when shopping, overbuying due to supply chain shortage scares. 

But there was another reason cited in the article that I found of interest, and one that causes me frustration when I shop online … rare as that is, I confess. But as someone who is focused on, among other supply chain issues, master data management and data collaboration, this reason piqued my interest for a newsletter piece. 

Per the article, even before the holidays, consumers were already ecommerce buying and returning at a rate two or three times higher than in-store purchases. The reason? Online purchases were more likely not to fit or be satisfactory to the shoppers. And so, consumers would “bracket” items, e.g., buy the same item in multiple sizes and return the ones that do not fit.

Given that small retailers can ill-afford to offer free shipping on outgoing purchases, let alone free shipping for returns, the costs of return logistics for small (think mom-and-pop or local shop) retailers can be an excessive, costly burden. Large retailers can bulk contract with UPS and FedEx and get really great rates; small retailers cannot because they do not have the scale.

As I read the article and thought of my own experiences, one conclusion to this problem, at least to me, is the lousy product descriptions that accompany items on websites. With poor content, no size charts, minimal pictures that fail to include product details (like the inside), and no clear-cut details on materials, care, construction, size, weight, etc., is it any wonder that people return at such a high volume?

I have previously written that people would rather touch-and-feel many of their product purchases, proving that brick-and-mortar retail is not passe as many have incorrectly prior predicted. 

I truly believe that to reduce the rate of returns, one solution is to ensure that you communicate clearly to your audience, and your audience is your shoppers who do not know your products. Master data management is an end-to-end exercise and needs to continue through to the consumer. 

And where do too many of these returns land? In landfills, because it is too costly to inspect them or recondition them. 

Another reason to get product data accurate: save the planet. 

No blue Christmas this past year. 

Due to supply chain problems resulting in a shortage of key ingredients, there was somewhat of a cancellation of blue Christmases this past year, resulting in fewer than some people would have liked to have had. Apologies to Elvis Presley fans, as it is Elvis’ version of the 1948 Doyle O’Dell song that we all recognize around the holidays. 

According to a December 24, 2021 Washington Post article, ultramarine (a.k.a. “true blue”) – which was once more valuable than gold – is now sold in synthetic form and ranks behind whites and blanks in sales volume by leading paint suppliers to artists. 

But due to a shortage of pigments such as titanium dioxide used in whites and approximately one-third of artistic paints, the suppliers of blues, whites, and a host of other colors and their shades are at risk of running dry. 

Don’t forget that black – even as it can be defined as the absence of all colors – requires pigments to achieve its color (or should I say “shade”) artistically. For example, as noted in the article, each car tire has approximately six pounds of carbon black in it to achieve the black color (shade), or else the car tire would be a milky white. 

The materials shortage began with the foundational ingredients. For example, the record-breaking freeze in February 2021 in Texas caused major petrochemical plants to idle, leading to a shortage of resin which is an additive used in paint. A shortage of flaxseed oil, which some people have blamed on the health craze, has also negatively impacted paint company’s abilities to produce artistic paint. 

(It is my understanding that it is materials shortages, like resin, that are to blame for some product shortages on store shelves such as popular sports drinks, and not a shortage of the drink contents themselves. Because resin is used for the labeling, the reason for the shortage has to do with packaging, not product production, per se.) 

It can take a lot of pigment to make a little bit of paint depending upon the color. For example, as noted in the article, one gram of natural Tyrian purple pigment requires 120 pounds of sea snails. (Yikes! That’s a lot of escargots!) As such, paint companies have developed a synthetic version instead. 

The accessibility of pigments enabled historically famous artists like Monet and Picasso to paint some of their most memorable works at the right time, experimenting with new paint colors as they were introduced to the art world. 

Ultramarine – “true blue” – is derived from the Latin “beyond the sea” and is representative of the long journey it took from Asia to Europe. It is a calming color, and one that represents expansiveness and openness. It is the color of our oceans and of our skies. It is the color of Elvis’ suede shoes. 

Let’s just hope that we don’t run out of any of it: the color, the skies, the oceans. Though perhaps those shoes might not be coming back in style anytime soon. 

Happy New Year!