Corporate Social Responsibility Committee

by Brian F. Eddy

Reverse Logistics Magazine, Edition 16

Corporate Social Responsibility (CSR) is a very hot topic that affects many stakeholders and all companies. CSR touches many aspects of a company's strategic external environment, and if effectively deployed, CSR can be a very tactical differentiated advantage to a firm's value creation and value-proposition model.

Reverse Logistics covers many process areas that directly correlate with CSR. One of the main challenges companies have with CSR is to effectively incorporate programs that create a transparent business link to their CSR efforts and create a valid business model that improves their bottom-line results.

Defined

There are many sources that have defined CSR, and it basically comes down to how a company can make a positive impact on society. CSR covers a very broad area that affects the following: Society (public accountability, health and safety, human rights and community), Environment (pollution, reduction of resources, impact of output and optimization of waste/reuse), Economy (fiduciary duty and contribution to economic prosperity).

Types of CSR

There are six distinct types of CSR that fall into targeted categories:

• Cause Related Marketing
  
• Corporate Social Marketing
  
• Cause Promotions
  
• Corporate Philanthropy
  
• Community Volunteering
  
• Social Responsible Business Practices
  

There are many books on CSR that attempt to define the process steps involved to create a winning road map and plan. One book: "Corporate Social Opportunity: 7 Steps to Make Corporate Social Responsibility Work for Your Business," by David Grayson and Adrian Hodges, is a good example.

The third step outlined in this book, Making a Business Case, is what most will find the most valuable, but can be the hardest to quantify. This issue can become more complex when you consider whether a company is privately held or publicly held. One can agree that compliance issues with public versus privately held companies vary, as each have different stakeholders. Despite this, there are several universal CSR Business Drivers and some of these are listed below.

Business Value - Key Drivers and Benefits of CSR:

1. Company reputation and brand image
   
2. Corporate Values: "Right thing to do"
   
3. Improved relations with all stakeholders and helps mitigate disputes/issues improving customer satisfaction.
   
4. Improved access to other vertical markets and customers
   
5. Compliance with regulations with environment
   
6. Social license to operate and grow
   
7. Cost savings or improved bottom line results
   

When looking to create a CSR model with Reverse Logistics, there are many challenges. If you are an OEM, 3PSP, Supplier or within the supply-chain channel, these will occur:

Key challenges in Reverse Logistics

1. Meeting customers' needs - Customers want best price and selection and demand quality. They will/do return goods and want seamless process with no hassles.
   
2. Volume - The sheer volume of all product returns is large in dollars and unit volume. The goal is to quickly extract the remaining residual value of these items and to maximize ROI.
   
3. Management (In-house versus Outsource) - The RL process is costly to manage (7-8% COGS), and involves many labor intensive process steps. One key hidden cost that is overlooked is employee turnover. The RL jobs can have high turnover due to the very repetitive nature of job. The cost to hire, train and retain per entry level labor is $4,000/ per employee.
   
4. Data Management: Key to managing the process and measuring on-going results.
   
5. Disposition of Product: Having a complete RL supply chain in place to process, destroy, salvage, remarket or donate item.
   
6. Regulatory Compliance: Need an expert in all waste management laws, regulations and process requirements.
   
7. Partnership: is required throughout the EOL, entire product life cycle. Having the "right" partner is key and supplier collaboration agreements are required for optimum results.
   

CSR - Innovative Best Practices

Several 3PSPs, 3PLs, Retailers and OEMs are effectively training and utilizing non-traditional labor sources, like people with disabilities to perform the very labor-intensive process work/steps in RL. Thus, they are achieving a win-win on both their CSR goals and improved bottom line results. While some companies keep the entire RL process in-house, many are starting to realize that reverse logistics is not their core competency and either outsource some or all the required operations to a 3PSP.

The Reverse Logistics Association's Corporate Social Responsibility Committee is seeking interested people to join this committee. The focus of the committee will be to further explore many topics. The committee will create a mission statement, choose specific topics, and produce an industry white paper on these topic(s).

For more information about the RLA Corporate Social Responsibility Committee, please contact Brian Eddy, beddy@rehabcenter.org.

Brian F. Eddy is the Director, Sales and Marketing of SubCon Industries located in Olean, NY. SubCon is the vocational training operation of The Rehabilitation Center, a private non-profit organization that provides employment opportunities to over 200 people with disabilities. Over the past 50 years, SubCon Industries has been a 3PSP providing a wide range of labor-intensive, value-added services for top companies. For more information, please visit www.subconindustries.com.