OCTOBER 9, 2013

Merchants have found that shrinkage and pilferage account for 1-3% of retail inventory loss. But BusinessWeek (Sept. 30-Oct.6, 2013) reports on yet another source of loss to retailers. Many merchants have long lived by the mantra that the customer is always right, adopting liberal return policies in hopes of winning the loyalty of free spending shoppers. But with a recent increase in the wearing and subsequent return of expensive clothes—a practice merchants call wardrobing—many retailers are taking a stronger stand against the industry’s $8.8 billion-a-year return fraud problem.

Bloomingdale’s just started placing 3 inch black plastic tags in highly visible places on dresses costing more than $150 as they are being purchased. The clothes can be tried on at home without disturbing the special tag. But once a customer snaps it off to wear in public, the garment can’t be returned. Similarly, Nordstrom uses silver-colored paper tags, similar to price tags, which are affixed high on the outer side seam under the arm of special-occasion dresses. They must still be attached for returns.

The department store chains are not alone in trying to outwit some unscrupulous customers. Electronics retailers have turned to hefty restocking fees to discourage short-term use of expensive electronics to watch events such as the Super Bowl.  Improper returns afflict a wide swath of products. Such “borrowing” also has become prevalent in fine jewelry, seasonal décor, and tools. Ditto for expensive video cameras popular at weddings. After the nuptials, the gear sometimes goes back into the package and off to the store for a refund. Some Victoria’s Secret stores are compiling lists of serial returners. And high-end outdoor goods retailer REI recently announced it’s ending its lifetime return policy after customers took advantage of its lenient rules.

Merchants say the costs are now too great to ignore. About 65% of retailers reported experiencing wardrobing last year, meaning 3.3% of their total returns were fraudulent.

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.com. Professors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.

OCTOBER 1, 2013

We are certainly a technology driven society, with our ATMs and EFTs, on-line newspapers and e-books, robotic surgery and robotic butchering, and optical scanners. So what happens when something as simple as a phone app for navigation fails?

If you are headed for the Fairbanks, Alaska, Airport, just don’t ask your iPhone for help. The Detroit News (Sept. 27, 2013) reports that Apple has disabled driving directions to the Fairbanks International Airport after a glitch in its maps app guided drivers to the edge of a runway instead of a terminal.  Two times, drivers continued on and cut across an active runway to reach the terminal. Now, when someone puts in the airport as their final destination, a message pops up and says, “Directions not available, direction cannot be found between these locations.”

Previous directions on newer iPhones and iPads guided drivers to the edge of the tarmac instead of the correct route to the terminal. In incidents Sept. 6 and Sept. 20, drivers went through a gate, past warning lights and signs, and then across an active runway, to reach the terminal. The first mishap involved an out-of-state visitor trying to return a rental car before a flight, and the second was an Alaska resident trying to get to the airport.

The airport has since barricaded that entrance to the taxiway. A sign posted there gives a phone number for people to call to get the correct directions to the airport. After the first incident, airport authorities immediately contacted Apple requesting a fix.

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.com. Professors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.

SEPTEMBER 6, 2013

The exciting topic of 3-D printing continues to evolve, now with a new process called “Selective Deposition Lamination” (SDL). Each 3-D printer builds up objects, layer by layer, but what the layers are made of varies from one to another. Some extrude filaments of molten plastic. Some spray special “inks,” such as liquid polymers that solidify when exposed to ultraviolet light. Some use powdered plastic or powdered metal that is then fixed in place with a laser or an electron beam.  For all of these, the process can be expensive, as manufacturers put a high markup on their printing materials, just as the producers of 2-D printers do on their ink. Now, reports The Economist (Aug. 10, 2013) there is yet another way.  Office supply company Staples is introducing machine prints that are made of a substance that Staples has in abundance: sheets of paper–at 5% of the cost of the materials for other 3-D systems.

In the case of SDL, the process starts by the machine applying drops of adhesive to a sheet of paper. Then the machine slides a second sheet of paper on top of the first and presses them together to bond them. The process continues, layer by layer, until the object is complete. It is then removed from the machine, the supporting material is peeled away, and the finished item, which has a consistency similar to wood, is revealed. Adding color involves old-fashioned 2-D printing. Each sheet, before it is put in the stack, is printed top and bottom with appropriate ink in a pattern that follows the edge of the item at the level this sheet of paper will occupy.

Staples hopes people will use their imaginations and print all sorts of other things as the firm expands the service throughout its chain. One day, as more office documents migrate to cyberspace, 3D printing with paper may even overtake the 2D sort. (For a lengthy overall look at 3-D printers, see The Economist –Sept. 7, 2013).

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.com. Professors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.