Edition 121, September 2022

Want To Enhance Your Reverse Logistics Processes with New Technology but Not Sure Where to Start?

By Scott Fletcher, LocatorX, Inc.

Newer Technologies Have Exciting Potential for Logistics, But They Must Work with Existing Investments and Processes

It is often said that the only constant is change. Having worked in and around technology the majority of my career, this rings especially true for me. Change may be incremental with technology applied to automate manual processes or a sweeping redefinition of an entire industry such as the technology-powered disruption achieved by Airbnb and Uber. Businesses can learn, adapt, and thrive, but those that don’t are too slow to realize the benefits of new capabilities run the risk of irrelevance.

The problem? In my experience, change is always disruptive; it requires effort and resources; it carries risks; and it can often be resisted-even by those who may ultimately benefit from it.

Either forward to the customer or in reverse from the customer, logistics is no stranger to technology. Barcode-based package tracking, increasingly automated distribution centers, and fleet management software are just some of the solutions already widely deployed to drive logistics efficiency. Yet constantly evolving technology presents many fresh opportunities to drive bottom line performance through efficiency gains.

It’s not just efficiency on offer either. Our company considers reverse logistics as the real final mile of your customer’s journey from purchase to receipt and potential return. Nailing the purchase and delivery experience is critical, good or bad, the return experience is often what your customer will remember most clearly.

Before we take a look at some of the technologies that can help, I want to highlight one sometimes overlooked opportunity presented by our industry’s use of technology: data. Few escaped the excitement and hype around “big data” a few years ago. However, as with many other promising technologies, it has taken time for the idea to become manageable for companies other than early adopters.

The growing landscape of technology powering logistics processes yields immense amounts of data. In many ways it is a near perfect example of big data given the scale of data being created, the variety of technologies and sources creating it, the speed with which it is created, and the increasing ease of accessing this data. Of course, this data is usable and interesting in its own right. Imagine the possibilities of connecting all this data and applying new technology and techniques to it that could yield previously impossible insights about the efficiency and effectiveness of your processes.

Potentially confusing acronyms have long ruled technology, but the good news is that the principles behind that technology are often far simpler than they first appear. Businesses that are able to focus on these simple principles and ask direct questions about their impact tend to have a clearer view on how value can be built by the technology in question.

On examining any new investment in technology, four critical questions should be asked:

  1. Will this technology help reduce costs?
  2. Can this technology enable revenue growth?
  3. Does this technology enhance profitability?
  4. Is there a regulatory need for this technology?

If the answer to one of these or more is yes, there’s a better than fair chance the technology deserves a closer look.

In addition to these questions, I’d offer one more that directly applies whether you are experiencing strong business growth or defending gains in uncertain economic times:

  • Does this technology enhance the customer experience?

I’d like to briefly explore four technologies that pass these tests and have the ability to improve the efficiency of logistics and enhance the customer experience.

First up, the Internet of Things (IoT) means a lot of different things to different people. The concept is broadly the same across definitions: to connect physical objects via a network. Those objects could be anything, a car, a home appliance, or a smart-labeled pallet carrying finished product from factory to retailer. While discussing this in a recent article, we suggested taking a step back and thinking about the big picture that the IoT could create. Imagine all the products moving around markets across the world. Consider that each product could be IoT-connected, and then visualize each of those tracked products as a point of light, moving in real time. Lighting up these physical flows of products would yield invaluable visibility into the supply chains and logistics that could power improvements across them-saving money, forging new growth, enhancing profit, and enabling new practices that delight customers.

In our example above, the IoT is how we connect all those products, but how can we track them? This brings us to the second technology: quick response codes, better known as QR codes. The QR code is something we’ve all run into in our daily lives, from scanning them when hiring a bike in the city to ordering from a menu to learning more about a product. They offer the ability to store larger amounts of information than traditional barcodes and, thanks to modern scanners and even your smartphone camera, offer near universal accessibility. Recent developments are also enhancing their appeal and security by offering genuinely unique QR codes (it can come as a surprise that some QR codes may not be unique!), and validating the data scanned against a trusted source.

Counterfeits are a growing problem across industries, from fashion to pharmaceuticals. The importance of managing this problem through the use of secure QR tags is discussed in this article shared by the World Economic Forum.

Talking of trusted sources leads to our third interesting technology, Blockchain. There’s a lot of misconceptions about Blockchain, and it’s too often considered solely in terms of cryptocurrencies like Bitcoin. However, Blockchain is used in a number of industries with different flavors or types of Blockchain such as Permissioned1. Stripping back to our principles, Blockchain is, in part, built on a secure-by-design approach that allows those using it to store data as an accurate record of fact, creating a shareable, trusted source that can validate other information. In the context of our scenario, this could be used when a QR code is affixed to a product at manufacture then scanned by the retailer and then the customer-and perhaps by the retailer or manufacturer on return-to assure them of that product’s origin and authenticity.

So far we have looked at the potential of connecting things with the IoT, making those things trackable with QR codes, and building assurance through the use of Blockchain principles to build trusted sources of data. Our fourth but by no means least technology is perhaps one of the most misunderstood: Artificial Intelligence (AI). As much as we may enjoy or fear the science fiction of AI in novels or on TV, on a practical level most applications of it are delivered by Machine Learning (ML).

You’ll remember that I asked you to think about the big data opportunity that we’re creating in logistics; this is where the value of ML is realized. Keeping it simple, the fact is the scale, variety, and speed of data that our industry already creates is immense, and as we adopt new technologies like the IoT it is only becoming even more so. Machines are creating it; machines will help conquer it.

We’re excited about the possibilities of ML to help improve logistics, forward and reverse, and have high expectations on what could be achieved. Examples in reverse logistics we’ve discussed include applying ML to the automation of decision making on what to do with items returned and learning from the pattern of returned items to more accurately match customer and product–reducing the number of returns.

As we examine what’s possible with ML and all this data to feed it, consider University of Oxford Professor Andrew Briggs’ (our company’s Chief Innovation Officer) characterization of it: “In traditional uses of computers, the machine is programmed to perform a task. With machine learning, as the name suggests, the machine is programmed to learn to perform a task.” The prospect of a constantly learning machine that continuously improves and adapts as the data that feeds it changes could be transformative for how we think about improving our businesses.

I started this article talking about change and the sometimes disruptive potential of technology. When planning for the future and grasping the opportunity to learn, adopt, and improve, it’s just as important to think about the past. We said earlier that logistics is no stranger to technology and most businesses have made considerable investments in solutions to help manage their processes. Those solutions are important not just for managing day-to-day operations; they also represent a substantial investment. Often adding weight to the balance sheet of the company, they also may only be part way through returning on the initial investment made. In other words, tearing these out to replace them with a whole new solution may not be the wisest decision.

Logistics and operations are one part of a bigger landscape of technology that serves every aspect of the business. Connections must be built across those systems touched by a process. Any new technology investment should offer an open approach to building that requires connectivity - enabling and enhancing existing processes and technology investments, not disrupting them or your customers’ experience.

We’re all familiar with cloud computing to some extent. Our experience could be as simple as a personal email service we use or as substantial as a business’s customer relationship management (CRM) solution. Wherever your experience is found, it’s fair to suggest the cloud has become a day-to-day part of business.

The cloud is most often recognized for the simplicity it offers in adoption and use, eliminating the need for expensive and complex hardware purchases and installations.  It replaces them with a web interface accessed on your laptop or by smartphone app with the underlying technology managed on your behalf.

There are many other benefits to be explored in the cloud.  Perhaps of greatest interest to those used to dealing with the peaks of demand in e-commerce around, for example, the holidays or sales events, is the ability to flexibly scale cloud solutions. Major increase in traffic and orders on your e-commerce website? No problem! Working within limits you set, your cloud solution will manage the necessary capacity changes for you to meet this demand as it occurs - allowing the business to pay for and use what it needs when it needs it and not when it doesn’t.

It’s worth noting, the pay-for-what-you-use benefit also extends to other capabilities within many cloud solutions. It allows businesses to try new features and functionality that may offer value without making a long term commitment.

Cloud solutions companies understand that to serve their customers effectively they must also enable connectivity to those customers’ existing technologies, whether those are in the cloud or at a customer’s own data center. You’ve probably heard technology professionals talk about APIs, or application programming interfaces. A long-established capability, APIs are a simple concept (that also thankfully mask some of the complexity of software); they allow one piece of software to talk to another. While they come in a variety of types, for our purposes their interest and value lies in the connectivity so essential when considering connecting multiple systems, new and mature, to suit the vast array of requirements and technology investments found in different companies.

APIs are an essential part of the connectivity puzzle, as is the emergence of what’s commonly called low- or no-code software. Low- and no-code software work in much the same way as a process flow diagram–each element of the process flow may be a complex operation or capability but the process that it enables is made easy to understand. As technology continues to open new opportunities to improve and automate the way we work, its inner workings have also become increasingly complex. Low- and no-code software can be thought of as a (very helpful) reaction to this complexity.

Low-code software offers a similar, visual approach to building processes and even whole applications by representing different technologies, software sources, and operations as elements within a flow. The software behind the scenes may be complex, but the user needn’t worry about that, instead focusing time on building the most effective solution using both existing and new investments in technology.

Change can be difficult but the risk of not adapting to constantly evolving customer requirements is too great to ignore. In writing this article I’ve tried to strike a balance between passion and excitement for what could be achieved with technology thoughtfully applied to some of the practical problems in logistics, and the effort and resources successful change demands. I've also addressed the challenge created by different approaches to process and existing technology investments building a diverse landscape of requirements for every business.

Whether you’re just setting out on exploring the possibilities of technologies such as the IoT or AI, developing a plan for how to master vast amounts of potentially valuable data, or building a transformation program, I urge you to strike your own balance. Taking the time to research and find technology partners that invest similar time and effort in understanding your unique requirements and appetite for change will pay back short- and long-term benefits as you continue to learn, adapt, and thrive.



Scott Fletcher
Scott Fletcher is the President and CEO of LocatorX. Scott’s career encompasses more than 30 years of experience with information technology solutions and new business programs for companies including Shell, PeopleSoft, Dun & Bradstreet Software, Evant, and i2 Technologies. He has an extensive history of building and leading technology initiatives in small startup companies as well as large multinational corporations. Mr. Fletcher has an MBA from Babson College and a bachelor’s degree in Business Administration from Boston University.