April 2001 | Commentary | Viewpoint

Handling Returns: Just Tell Me Where it Hurts

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Our economy has experienced tremendous growth cycles over the past several years. As a result, manufacturers are making more stuff, retailers are buying more stuff, and consumers are spending more money on stuff than ever before!

Inevitably, mistakes are made, resulting in product defects, bad merchandising decisions, or over-optimistic sales projections. No matter how good you are at forecasting, manufacturing, buying, distributing, transporting, or managing the supply chain, seasonal and spike returns happen. With today's economic conditions, this poses an even bigger problem.

Here are some suggestions on how to successfully troubleshoot potential problems and respond when you are faced with a seasonal or spike return project:

Rally the Troops. Assign an employee as the lead on the specific reverse logistics project to oversee and interact with all appropriate departments and staff. This allows an individual to be fully focused and accountable for the project at hand. Also consider designating one source to handle any outsourced portions of the project.

Create a Proactive Plan. This plan should include:

  • Allocating an area for the project that is not co-mingled with regular returns processes.
  • Developing a process flow and layout design that addresses how the product will move through the allocated project space.
  • Addressing security issues such as caging, security gates and cameras, and motion detectors.

You also need to capture relevant information. Ask these questions:

When? When will you capture accurate data for the customer and the product: at the time of receipt or at another stage of processing? When will the crediting information be relayed to the customer? What? What system will you use to capture the information? What files (Item, Store, RMA) will you use to populate the returns system for accurate reconciliation?

Where? Where will you process this project? Will you use your own return facility or lease additional space? Does this center interface easily with departments that need the information to process customer credits and optimize inventory? Will you secure a 3PL to handle this project?

How? How will you capture data: UPC scanning or manually entered into the system? Do you have an advanced shipping notice that ties the product to a pre-approved file? Are there ways to streamline this information to optimize product handling? Will the system reduce or create additional manual steps?

Why? Why do you need this information? Are you sure you need all of the information being built into the data gathering process? (For example, if the product is to be destroyed, do you need to capture data for future dispositioning?)

Measure the Metrics. Establish performance expectations that can be measured. If you don't have objectives regarding cost containment, timeframe of project, or asset recovery goals, you will not know if your project is successfully executed. As a result, you will find it difficult to justify any special handling on future projects or seasonal spikes.

Document Everything. Proper documentation ensures that when future seasonal spikes occur, or an unexpected recall happens, your company can handle it as cost effectively as possible and optimize the value of your inventory. This would include standard operating procedures, as well as process flow and layout design.

Create a Contingency Plan and Expect the Unexpected. In the event a project is more than your company can handle, do you have a relationship with a 3PL that can step in and assist? If resources are low, space is limited, or the company focus does not allow dedication to the project, outsourcing can be a smart decision. It also provides an excellent opportunity to find out how a potential long-term partner performs under a controlled event, and could lead to a more economical, efficient approach to your long-range returns strategy.

If you understand that "temporary" does not necessarily mean expensive or painful, then you're a step closer to being able to understand "where it hurts" and establishing a solid plan that can realistically handle your seasonal or spike returns.

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