“Death, Taxes and Customer Returns” – New White Paper Details Challenges and Opportunities for Businesses

While no retailer enjoys dealing with customer returns, an alarming number of distribution center managers  — 44 percent in one study – said they consider returns a “pain point” in their operations.  And for retailers that must contend with returns coming from Canadian customers, the process can be even more painful.

The reason for all the pain?  Lack of planning, for one thing.  Until recently returns management was the 600-pound gorilla in the supply chain.  Everyone could see the problem, but no one wanted to address it.

That’s all changing, as businesses are increasingly realizing that (a) customers care very much about how they are treated when they return a product and (b) there is money to be had, and lots of it by reselling non-defective returns in the secondary market.

Smart businesses are enlisting the services of experienced logistics providers to help construct returns policies to meet their unique business needs.  Key considerations include the frequency with which returns are delivered, whether to maintain a designated returns processing center, establishing core processes for returns handling, and incorporating a highly effective customer service component.

Businesses that ship regularly to Canada face added challenges including a trip across the border and a stop at U.S./Canada customs.  Purolator International recently published a new white paper:  “Death, Taxes and Customer Returns:  Turning the Unavoidable into a Supply Chain Opportunity,” that details the added challenges of cross border returns management.

For one thing, products that leave the U.S. as exports, return as imports.  Products entering the U.S. must be in compliance with a bevy of regulatory mandates, paperwork filings and duty/tax requirements.  However, product returns are eligible for priority treatment in some areas.  But unless a logistics provider is aware of the exact nuances of Canada Border Services Agency (CBSA) and U.S. Customs Border Protection (CBP) policies, a shipment may not receive the benefits to which it is legally entitled.

Before returns arrive at the border, a business will need to determine the most efficient method for gathering those packages, which will likely be arriving from points all across the vast Canadian landscape.  Ask your logistics provider about intra-Canada consolidation, whereby packages will be combined into smaller shipments, thereby eligible to cross the border as a single unit.  This will reduce border wait times and help control customs and brokerage fees.

Another consideration is making the returns process as easy as possible for your Canadian customers.  Canadian consumers expect the same high level of customer service as American customers, and according to the 2008 TD Trust loyalty survey, fully 95 percent said good customer service “can make or break” a relationship with a particular brand or company.  A few things to consider:

  • Include a pre-printed returns label in the original packaging, or allow customers to print a label directly from your website.
  • Returns Material Authorization (RMA) whereby the consumer alerts you in advance of a product return will give your consumer tracking/visibility into the status of a return, and will allow you to understand exactly what merchandise is being returned, and for what reason.
  • Access to good customer service.  Technology now makes it possible for a business to implement state of the art solutions that allow customers to track their returns and get the information they need.  But for those issues that can’t be addressed online, businesses need to invest in human resources that allow customers to speak with trained and polite agents.

Returns management is slowly losing its stigma as a necessary evil of doing business.  Businesses are beginning to understand that with those returns comes opportunity.  Purolator’s white paper will help you understand the components of a solid returns management process, including the extra steps for returns coming from Canada.

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Multiple Regulatory Challenges for Cross Border Sales of U.S. Pharmaceuticals, Medical Devices

A U.S. pharmaceutical manufacturer looking to expand to the Canadian market will need to ensure that all product labeling meets Canadian requirements, which often vary from U.S. requirements.

For one thing, Health Canada requires that directions for use be printed both in French and English, since Canada is officially a bi-lingual country.  And special care must be taken to list all product ingredients, manufacturer details, dosage/use  information and, if the product is imported, the name of the manufacturer and distributor must appear on the label.

If any of Canada’s labeling requirements or conditions for use differ from U.S. requirements, the U.S. Food and Drug Administration requires the manufacturer to state, on the label, that those conditions are not approved in the United States.

Sounds like a crowded label, right?

In fact, the regulatory burden for U.S. pharmaceutical and medical device manufacturers was listed as the top supply chain concern of industry executives in a recent study.  But it is not the only issue.  Changing demographics, namely the aging of the U.S. population and the increasingly global marketplace are also putting strains on the traditional supply chain.  The expiration of several lucrative patents, which led to a surge in generic drugs is another factor that has caused manufacturers to look for efficiencies.

Purolator International takes a detailed look at all trends affecting U.S. health product manufacturers’ supply chains in a new white paper, “U.S. Pharmaceutical and Medical Device Manufacturers:  Supply Chain Trends and Canadian Cross Border Efficiencies.”

As the paper makes clear, one of the most important decisions a supply chain manager will make, is choosing the right logistics provider to oversee all logistics and compliance issues.  Surprisingly, many managers do not do the necessary legwork, and learn too late that its “experienced” logistics provider does not have what it takes to move highly-regulated, highly-sensitive shipments of drugs across the border to Canada.

To learn more, please click here to download a copy of “U.S. Pharmaceutical and Medical Device Manufacturers:  Supply Chain Trends and Canadian Cross Border Efficiencies.”

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Non-Resident Importer Program allows U.S. Businesses Greater Access to Canadian Market

Pity the delivery person who attempts to deliver a package to a Canadian consumer that includes an unexpected invoice for additional taxes, duties and brokerage fees.  Few things anger Canadian consumers more than packages that arrive from the U.S. accompanied by unexpected invoices which, in some instances, can total more than the value of the product inside the package.

Many U.S. businesses have learned the hard way that to succeed in Canada, they need to anticipate mishaps like this, and find ways to make interactions with their Canadian consumers as hasslefree and seamless as possible.

Canada’s “Non-Resident Importer” program is one such opportunity.  Administered by the Canadian government, the program allows a U.S. business to act as “importer of record” for goods entering in Canada.  This in turn allows the U.S. business to collect taxes and fees at the time of purchase, thereby alleviating the need for any unexpected invoice at time of delivery.  In addition, NRI status offers other benefits both to U.S. businesses and their Canadian customers:

• Economic Feasibility:  NRI allows a U.S.-business to operate in Canada almost as if it was physically located in that country.  This eliminates the need to maintain a brick-and-mortar presence in Canada, and allows the U.S. business to build a supply chain that most efficiently meets its needs.

Unfettered access to Canadian market.  With NRI status, an American business is free to solicit as much Canadian business as it chooses.   Cross border issues are virtually eliminated, allowing U.S. companies to compete for business with their Canadian counterparts.

Consolidation of Clearance Fees.  NRIs are able to combine many orders into one consolidated shipment, thereby eliminating costly per-piece customs clearance charges.

• Simplified transactions.  Since the U.S. business assumes the importer responsibilities, the Canadian customer simply receives the goods.  There are no borders to deal with, nor is their paperwork or recordkeeping at this end of the transaction.  Cross-border transactions are painless for the Canadian customer.

No hidden costs.  The cost quoted to the customer is the final cost, including all shipping, taxes and duties.  Canadian customers don’t have to worry about hidden surprises, or having a second or even third invoice arrive unexpectedly.

• Minimizes border delays.  Because NRI shipments may enter into Canada as a single consolidated shipment, delays at the border are less likely. An American supplier can provide a delivery estimate with great confidence.  This is turn helps Canadian businesses to better manage inventory and anticipate deliveries.

• Comparison shopping becomes easier.  Because customers are quoted a landed price, Canadian customers can compare apples-to-apples when shopping around for the best deal on a particular item.

Purolator International recently released a new white paper, “Non-Resident Importer:  Improved Canadian Market Access for U.S. Businesses,” that provides an in-depth analysis of the NRI program.  The paper examines the benefits of NRI status to a U.S. business, the application process, and also the responsibilities an NRI has for steering shipments through the customs process.  Please click here to download a copy of Purolator’s complimentary white paper.

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New Purolator White Paper Explores Growing Trend to Move U.S Manufacturing Back to North America

A recent post on BusinessInsider.com, coined the phrase “American Industrial Renaissance,” as a way to describe the growth taking place within the U.S. manufacturing sector.  That upward spike, which is occurring on an even grander scale in Mexico is due, at least in part to a growing number of U.S. businesses that are deciding to return manufacturing to North America, and away from China and other low-cost countries.  U.S. businesses returning home are said to be “reshoring,” while those relocating nearby to Mexico, Canada or Latin America are “nearshoring.”

The exodus from China includes a veritable “who’s who” of America’s leading companies – General Electric, Apple, General Motors, Ford, Caterpillar, Microsoft and Wal-Mart to name a few – and it seems to be picking up steam.  A 2013 survey by the Boston Consulting Group found that 54 percent of executives at U.S. companies with sales in excess of $1 billion are planning to return production to the U.S.  That figure is a sharp increase from the 37 percent of executives who said they were considering reshoring in a 2012 survey.

A new white paper from Purolator International, “Nearshoring and Reshoring on the Rise as Businesses see Greater Opportunities in Keeping Manufacturing Closer to Home,” explores the current trend away from China, and helps businesses understand the potential of a North American-manufacturing strategy for their own companies.

Why the sudden “rediscovery” of North America as a viable source of manufacturing options?  The simplest explanation is that China is no longer the bargain it once was.  Higher labor costs, inflation and increases in transportation costs have helped dim China’s star, and instead the spotlight has turned to North America.

According to a 2013 report by Bloomberg, Chinese wages are likely to increase by 10-15 percent during 2014, while U.S. wages will increase by less than two percent.  Or, put another way, a Chinese worker would be earning the equivalent of $46.23 per hour while the American worker’s wage would be $19.28 per hour.

At the same time, U.S. businesses have lost their penchant for locating production thousands of miles away from home.  Instead, managers are looking for more “regionalized” approaches, in which production takes place closer to the end customer.

A 2012 report by The New York Times referred to the majestic ships that haul automobiles from their Chinese manufacturing sites across the ocean as the “nautical workhorses of the industrialized world,” and described their capacity to haul 8,500 vehicles.  But, the journey across the ocean takes an average of 28 days, while transit from Mexico to the U.S. takes a fraction of the time, and can be 75-80 percent less expensive.

While no experts are predicting the end of China’s role as a leading destination for U.S. outsourcing, there is no denying that the decision to move production abroad is no longer as cut-and-dried as it once was.  To download a complimentary copy of Purolator International’s new white paper, please click here.

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When it Comes to NAFTA Benefits, not all Products are Created Equally

Although it’s generally understood that the North American Free Trade Agreement (NAFTA) eliminated tariffs on eligible products traveling between the United States, Canada, and Mexico, less understood is that not all products qualify for duty free treatment.

Determining which goods qualify for NAFTA benefits, and knowing how to initiate the process for claiming those benefits can be a highly confusing process.  A new white paper from Purolator International, “Understanding NAFTA and its Implications for U.S./Canada Trade,” offers a detailed overview for businesses that ship regularly to Canada, and want to ensure they take advantage of all available trade benefits.

As the paper makes clear, “origination” is the key factor in whether or not a product is eligible for duty free treatment.  NAFTA provided for the elimination of all tariffs and most non-trade barriers on goods produced and traded within North America.  But understanding if a product qualifies, or what percentage of a finished product’s component parts can be of non-NAFTA origin, can be an exceedingly intricate process.  Failure to assign the proper tariff classification code – based on the Harmonized Tariff Code of the United States — can result in having to pay higher duty rates than necessary, or in missing out on trade agreement benefits.

To help clarify eligibility, NAFTA established “rules of origin,” that drill down into a product’s component parts.  For every product, there is a rule of origin, but finding the appropriate rule  — and applying the correct interpretation — can sometimes be challenging.  For one thing, the rules are reviewed on a continual basis, so product eligibility may change over a period of time.   Consider the following example from the U.S. Department of Commerce website:

A batch of cupcakes have been baked in the United States, but are comprised entirely of imported ingredients.

Cupcakes:  Harmonized System Code:  1905.90

(In this example, the first two digits (19) are called the Chapter; the first four digits (1905) are called the Heading; and the first six digits (1905.90) are called the Subheading)

The first step to determine eligibility would be to look up the NAFTA rule of origin with regard to Chapter 19.  In this example, the Rule states that a product is eligible for NAFTA preferential treatment if component parts are not also found in Chapter 19.  For the sake of our cupcakes:

Flour – Chapter 1101

Sugar – Chapter 2102

Cocoa – Chapter 1806

Baking Soda – Chapter 2836

Eggs:  Chapter 0407

Therefore, because none of the ingredients fall under Chapter 19, the cupcakes are eligible for NAFTA benefits.

NAFTA recently marked the 20th anniversary of its implementation.  The agreement has its supporters and critics,  butit is undeniable that trade among the U.S., Canada and Mexico has increased dramatically during its period of implementation.  As the agreement begins its third decade, businesses would be smart to avail themselves fully of its benefits and opportunities.  Click here to down load a complimentary copy of the new white paper.

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New White Paper Focuses on Customs Process for Sending Goods into Canada

Each year the U.S. Department of Commerce publishes a “Guide to Doing Business in Canada,”  which offers detailed information for U.S. businesses interesting to exporting to Canada.

Quite possibly, the most important information appears in Chapter One, in the Market Challenges section, where it says:  “Canada remains among the most accessible markets in the world.  Nevertheless, doing business in Canada is not the same as doing business in the United States.  Canadian customs documentation, bilingual labeling, packaging requirements, ITAR (International Traffic in Arms Regulations) and Canadian federal and provincial sales tax accounting can be surprisingly challenging.”

The complexity of the U.S./Canada border clearance process surprises many people, who assume that because of the two countries’ strong relationship and shared border, that cross border trade must be a relatively easy process.

Unfortunately, that assumption is not correct, as many businesses have found out the hard way.  The fact is, the U.S. and Canada maintain very extensive and rigid border security and import/export control procedures.   Failure to understand and comply with any of these procedures could result in monetary penalties, excessive delays, or even a shipment’s outright clearance rejection.

A new white paper from Purolator International,  “Understanding the U.S./Canada Customs Clearance Process,” provides detailed information about the process U.S. businesses must follow to ship goods into Canada.  The white paper offers an overview of required customs paperwork, the Canadian sales tax structure, and increasingly rigid security mandates.  In addition, the paper reminds businesses that while their shipments may be considered imports into Canada, they are exports from the U.S., and subject to numerous U.S. export requirements.

The good news, the paper points out, is that things seem to be getting better.  Both the U.S. and Canadian government are committed to reducing the regulatory burden on traders, and on finding ways to encourage businesses to engage in cross border sales.

Learn more about the U.S./Canada border clearance process by downloading a complimentary copy of Purolator’s new white paper here.

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Route Optimization, Duty Relief among Cost Saving Ideas in New Purolator White Paper

It used to be that home furnishings retailer Crate&Barrel managed its annual load of more than 300,000 customer deliveries manually.  The company had a network of fixed routes, each of which serviced a specific geographic region.  A dispatcher would assign roughly 16 deliveries per day to each route, in a not so elaborate system created by hand.  The system trudged along with high levels of calls from customers wondering when their shipments would arrive, and one way or the other, the deliveries were made.

That all changed though, when Crate&Barrel was persuaded to implement a route optimization software system.  The company chose a cloud-based solution that offers a range of capabilities including mapping, route consolidation and real time visibility.  Today the company is using fewer trucks for the same amount of deliveries, and has been able to cut its delivery windows in half.

Clearly route optimization was a winning solution for Crate&Barrel, just as it has been for a growing number of businesses nationwide.  A recent supplychain247 article suggested that route optimization technology “can uncover millions of dollars in supply chain savings just by optimizing existing assets and processes.”

Route optimization is one of several money saving options discussed in a new white paper from Purolator International.  “Managing Freight Costs” offers a detailed discussion about how, at a time when shippers face significant increases in freight charges, smart planning and innovative thinking can help keep costs under control.

The paper also discusses opportunities for businesses that ship regularly to Canada to minimize costs associated with customs clearance.

U.S. Customs and Border Protection’s “duty drawback” program is one opportunity.  Businesses that pay import duties on products that are subsequently exported, are entitled to a refund of up to 99 percent of  the duty paid.  In addition, a business may find that its shipments have been assigned an incorrect tariff code, meaning they may be paying more duties than necessary, or missing out on trade benefits to which they are entitled.

Purolator’s new white paper offers many options for businesses interested in reducing freight costs.  You can click here to download a complimentary copy of “Managing Freight Costs.”

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When it Comes to Replacing your Vehicle, 11 is the new 5

Next time you go to start your 11-year old car or light truck, you can find comfort in knowing that roughly half the vehicles on the road are older than yours.  As reported on CNN, 2013 data from Polk market research firm found the average age of vehicles on the nation’s highways reached a record 11.4 years.  This represents a marked increase from ten years ago, when the average age was 9.8 years.  The upward trend is expected to continue, with the number of vehicles 12 years of age or older expected to increase by more than 20% by 2018.

According to Polk’s research, fallout from the economic recession caused many people to hang on to their existing vehicles longer than they normally would.  In addition, overall auto quality has gotten better, meaning fewer breakdowns and less need to purchase a new vehicle.

The growing age of the nation’s fleet has impacted the nation’s $318 billion automobile aftermarket.  The aftermarket is generally defined as all products and services purchased for light, medium and heavy-duty vehicles after the original sale.  This includes replacement parts, accessories, lubricants, appearance products, tires and collision repair parts.

Aftermarket suppliers maintain replacement parts for all vehicles, regardless of obscurity.  But with more than 2 million SKUs to manage, the trick is to manage inventory so that the correct part can be identified and installed into a customer’s vehicle in the shortest amount of time possible – generally within 24 hours.

The nation’s aging fleet is good news for aftermarket suppliers, since older vehicles tend to require more trips to the repair shop than newer models.  At the same time, newer models – hybrids and electronic vehicles – have introduced completely new product lines.  Managing the extensive inventory adds a new twist to the already complicated aftermarket supply chain.

Many aftermarket businesses have found technology and “better thinking” to be lifesavers.  As reported in IndustryWeek, Discount Auto Parts turned to technology as a way to manage scheduling and distribution issues, along with its SKU inventory.  The result?  $106 million in cost reductions over four years.

At the same time, new concepts for inventory and warehouse management are getting serious attention as supply chain managers search for greater efficiency in an increasingly competitive environment.  One concept gaining attention is the idea of “horizontal collaboration” whereby businesses with products headed to the same retailer or distribution center share truck space as a way to reduce transportation costs.

Taking advantage of new supply chain processes is the subject of a new white paper from Purolator International:  “Using Best Practices and Innovation to Drive Your Automotive Aftermarket Supply Chain.”

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Visibility Still Lacking in Many Supply Chains

The newly-released 2014 Smart Manufacturing Technologies Survey found 40 percent of manufacturers say they have no real-time visibility into their supply chains, with nearly 10 percent admitting their factories spend a considerable amount of time “looking for” equipment and products.

The survey results confirm research from past surveys, which also found a lack of supply chain visibility among U.S. businesses.  These findings are surprising, alarming even, given the proven positive impact improved visibility can have, and the widely available technology solutions that can help a business improve its processes.

A new white paper from Purolator International:  “Supply Chain Visibility is Key to Improved Efficiency and Reduced Costs” provides an in-depth look at the benefits visibility can bring to a business, and also discusses the specific considerations a business will need to take into account.

For example, an operations manager is told by senior management to cut costs by 10 percent.  But how can the manager do that without understanding how a cutback in one area will reverberate across the rest of the production process?  Instructing Vendor A to change a process without understanding that Vendor B relies on Vendor A’s output, could uproot the whole process.

Allowing the manager to have insight into the entire process – greater visibility — would avoid potentially disastrous scenarios such as this from playing out.

This then, is a key objective of all businesses:  360-degree insight and awareness of all processes to ensure synchronization, awareness among all stakeholders, and maximum efficiency.

To start, the operations manager would need to work with senior management to consider three core questions:

1)     Who do we want to share information with?

2)     What information do we want to share?

3)     How do we want to share that information?

Determining the who, what and how will drive a business’ approach to visibility.  The more stakeholders “in the loop,” the greater the likelihood for collaboration and efficiency.  But, that collaboration will come with increased exposure to risk.  Finding the right balance is key.

To download a copy of Purolator International’s new white paper, please click here.

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Businesses Find B2B Returns can be Opportunities for New Revenue, Customer Satisfaction

A report last year from Forrester Research found that spending by U.S. businesses on B2B eCommerce during 2013 was more than twice the amount spent on B2C online sales.  B2B eCommerce reached $559 billion, versus $252 billion spent on B2C transactions.

These numbers reveal a fundamental change taking place in the world of B2B transactions.  Purchasing managers are increasingly putting down the thick catalogues that traditionally served as their “bibles,” and instead looking online for the same access to product and pricing information they access for their own personal shopping needs.

The reality that the B2B eCommerce market is twice the size of the B2C market is causing many businesses to retool their B2B marketing and “outreach” efforts, with many companies redesigning their websites and mobile outreach to provide B2B shoppers with retail experiences that more closely resemble B2C transactions.

So too is eCommerce changing the face of B2B product returns.  A recent article in Forbes discussed how managers who place B2B orders online, expect the same high quality service they receive when they shop for themselves.  This extends to expectations that B2B returns will be easy and hassle free.

Changes in B2B returns management is the focus of a new white paper from Purolator International:  “B2B Returns:  Finding Value and Opportunity in a Well-Managed Returns Process.”

As the paper discusses, while B2B returns generally fall within one of the same “buckets” that have always defined B2B returns:  Defective Products, Product Recalls, End-of-Life Merchandise, Obsolete/Unsold Merchandise, or Warranty Returns, manufacturers are realizing new ways of evaluating those returns.  Whereas returns were traditionally seen as a drag on the bottom line, businesses today are committed to capturing value from those returns.

Undamaged products, for example, can be sold in an outlet store or via eBay.  Useable parts and components can be salvaged and made available for resale.  Other goods may be remarketed and sold overseas.

Businesses that cater to the B2B market are enlisting the services of their logistics partners to help better understand their opportunities, and to develop customized approaches to fit their unique situations.

To find out if your business might benefit from a new B2B returns process, please click here to download Purolator’s new white paper.

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