November 2013 | Commentary | Reverse Logistics

Plan Early for Peak Returns Season

Tags: Reverse Logistics, Supply Chain Management

By late fall, supply chain executives worldwide are well prepared for the high-volume year-end holiday season. But following close behind it is peak returns season. Now is the time to plan for managing the returns, overstocks, and recalls businesses will process between mid-December and early March.

During peak returns season, companies handle up to 45 percent of the year's total returns volume. Proper reverse logistics planning can significantly impact profits by minimizing processing costs and maximizing recovery values of returned inventory.

A plan to handle peak returns season focuses on three critical areas:

1. Communication. Manufacturers and retailers must be prepared to deal with two types of returns. First are standard customer returns. The volume of these transactions is fairly predictable, and fluctuates year-to-year in line with sales volume increases or decreases.

The second type of return is recalled product, or guaranteed sale returns. These recalls result from an agreement with the retailer in which the manufacturer takes back any unsold product above a negotiated amount.

Teams tasked with managing the returns process must communicate with buyers and sales teams to find out what will be returned. Establishing these internal lines of communication is critical to planning for peak returns season. Speaking frequently with key internal players helps ensure the reverse logistics team has the most accurate and current information.

2. Labor. Peak returns season volume can be three to four times greater than any other time of the year, so proper staffing is a must to control labor costs and ensure that product is processed quickly. Many big-box retailers, for example, increase operations from five single-shift days per week to six or seven three-shift days per week for the first three months following the holiday season.

Expanding operations to this degree takes planning, additional supervision, and many more processors. Once you have a reliable estimate of the inbound volume and relative productivity expectations, management can determine labor and supervision needs, and develop the operations schedule.

Obtaining additional labor and supervision generally comes from two sources. One source is the forward supply chain workforce. Distribution volumes are typically low, so workers and supervisors from the supply chain side of the business can be temporarily reassigned to returns processing.

The other labor source comes from temporary services. If an operation plans to augment its staff with temporary workers, it should use at least two different services to ensure labor needs are met throughout the high-volume season. Qualifying and selecting temp services takes time, so do not wait to make the necessary arrangements.

3. Infrastructure. When planning for peak returns season, it is critical to ensure you will have enough space and equipment available to receive, process, and store all the product that will be flowing back through the reverse logistics pipeline. Three factors are especially important: inbound holding capacity and equipment, processing space, and outbound storage capacity.

For some operations, the high returns volume will require leasing outside space, while others may only need to rent storage trailers. It all depends on the labor plan and the actual flow of volume.

Recipe for Success

Returned products do not get better with age. Adequately planning for the post-holiday returns season can avoid needless overtime and processing costs, and help maximize the value of all returned goods.