In this article, we look into an increasingly significant logistic and supply chain management issue – Returns. What is the importance of returns management to a company utilizing a 3PL for the entire returns process? We will see that when a fulfillment company is managing customer return expectations properly, it can save money and time for the company and protect the brand by properly serving the customer. In addition, a well-designed product return process can serve the environment in the arena of sustainability.
What will the fulfillment company offer to handle this important issue and mitigate the negative impact? Put simply, by properly managing returned products the fulfillment company can significantly cut the company’s losses and have a ‘green’ impact as well.
A top-notch fulfillment company will have a Returns Management Team (RMT) trained and experienced in handling a wide variety of retail returns and individual customer returns. This team will know the client’s wishes: the right process to boost customer satisfaction and protect the client’s brand; the best way to keep the return from being experienced as a loss; and how to minimize any losses that do occur.
We will keep the focus on the individual customer and eCommerce returns as this process is newsworthy… changing and evolving due to an emerging trend.
What Is the Return Management Process?
Return management starts when a customer makes the decision to return a product. The process continues with the business approving the return and offering an exchange or agreeing to a refund. It continues with the business or the fulfillment company arranging for the product to be picked up and delivered to the fulfillment company.
Once the product is in the hands of the fulfillment company the RMT takes over and makes the decisions on the product. With the client’s wishes (or what is referred to as returns disposition rules) in mind, the Team will begin to determine why the customer returned the product – is it faulty, was it damaged during the delivery, or the return process. If so can repairs be made? Is this product of high enough quality to repackage and restock?
Most Teams have an auditor who will make the determination on behalf of the client based on their list of checkpoints and the determination for the final disposition of the return.
How do you Manage Effective Returns?
In the best of all outcomes returns management is a circular process that starts with customers wishing to return a product and ends with the fulfillment company collecting, organizing, evaluating, possibly repairing, repackaging, and restocking that product for the client. If the product needs to be recycled, or disposed of, the RMT has a clear process with regard to proper environmental disposal or recycling that can benefit the client.
According to last year’s statistics, an average of 8.1% of all products that were purchased were returned. Obviously, returns can be very costly for eCommerce sales that offer free returns. The fulfillment company’s Returns Management Team is there to ensure that the negative impact of these eCommerce returns is kept to a minimum.
The flow of returned goods from the customer toward the fulfillment company is called by several terms due to the fact that changes are taking place – reverse logistics, outbound logistics, circular logistics, and more. The job of the RMT is to take advantage of every avenue of returns with an eye toward reusing, recycling, and reducing the negative impact.
What Is the Importance of Returns Management?
In a recent article John Bevacqua, logistics advisor for AMS Fulfillment spoke about an area of importance that is being increasingly recognized:
“A redesigned model would see the fulfillment company adopt the 3R’s (reduce/reuse/recycle), and improve the sustainability of the operations, and efficiencies of inventories. This would include adopting JIC /JIT models (Just in Case / Just in Time), and the use of more green transportation to get those products to their multiple destinations throughout the life cycle.”
John is describing a model that is currently a trend, making the returns management process less damaging to the company and the environment. He goes on to say that the linear model is still prevalent today, with the linear model being: take the raw materials, make a product, deliver to the customer, and dispose of returned materials.
He goes on to say, “Alternatively, in the Circular supply chain, we would concentrate much more on efficiencies, waste reduction, refurbishment flowing out every bit of value instead of the one-time use within the linear model. The Circular model essentially loops the materials through several life cycles in what would provide a more circular economy.”
How do you Process a Return?
There are three clear vital aspects in the process of managing returns: speed, visibility, and control. The Returns Management Team will have expertise in all three.
The main ingredients in handling returns with appropriate speed are automation, accurate labeling, and user profiles.
As previously mentioned, a well-seasoned returns processing team will review the disposition rules that were previously agreed upon by the client. The speed at which this can take place varies. It depends on the product and or the number of rules based on the condition of the product once it is returned and received by the Team.
Of course, there’s a direct correlation between the time it takes and the number of checkpoints that have to be conducted to determine the disposition.
The second vital aspect of the process is visibility. For visibility, the fulfillment company will utilize web-based portals, integrate with the carriers, and use bar-coded identifiers.
Once the return is executed by a consumer, it typically gets approval through the Return Material Authorization (RMA) number from the merchant. A return merchandise authorization, return authorization (RA), or return goods authorization (RGA) is the beginning part of the process of returning a product to receive a refund, replacement, or repair. It could also be part of a product’s warranty period. Once the RMA, RG, or RGA is issued, it should be visible as an inbound order through an inbound tracking process just as if it was an outbound order being delivered.
There are many ways to monitor this through the integration of carriers and tracking software. Most 3PLs will already have this type of integration set up and available online through their WMS or Customer portal. Visibility is an integral part of being able to know when to issue a store credit or refund replacement or repair.
Thirdly, the Returns Management Team (RMT) will focus on control of the process by making sure there is regulatory compliance, handling reconciliation and final disposition of the product, and quality assurance.
Once the package arrives back at the designated returns address for processing, the information associated with the RMA enables RMT staff to process it efficiently. After the RMT has confirmed that everything is in order with the return shipment, they immediately begin to comply with the agreed-upon disposition rules for that particular product, thus the customer’s account may be refunded/credited for the return amount, or a replacement order may be issued, or other follow-up steps can also be taken.
The final step is to evaluate the returned inventory and decide based on compliance with the disposition rules. This is typically determined by a returns quality assessment staff member.
How do you Manage Effective Returns?
Clients should look for a fulfillment company that has long experience in managing effective returns. You want the returns management and reverse logistics services handled by dedicated teams quickly, efficiently, and cost-effectively. The RMT should understand the need to manage returns in a timely fashion, whether consumer returns where customers expect immediate credit on their orders or retail returns in which clients seek to clean up the books before month’s end.
First of all, the company should utilize world-class carrier partners who get the package shipped from the customer back to the Team expeditiously. The RMT will work with each client to create inventory management returns solutions, or it will link up with their desired returns fulfillment platform and perform the work to get the return registered in the system, data communicated back to the client, and the product back on the shelf and ready to sell. Or, if the product is damaged and cannot be resold, the team will set it aside for donation, alternate sales channels, or destruction.
The fulfillment company should utilize operating software to efficiently manage returns for credit and returns for exchange on behalf of their clients. The return management services can be fully integrated with the client’s chosen shopping cart software or customer service module so returns data is immediately available. They must work closely with every client to properly define and determine the returns management flow and defective return criteria, ensuring that all saleable products are moved from the returns warehouse to finished goods.
A top-notch RMT will utilize barcode scanners (or count by hand if necessary) to itemize exactly what was returned by the customer. They will then send the required returns data to the client in a format that meets the client’s specific accounting needs.
Product refurbishment varies greatly by the client and this means closely following the refurbishment guidelines established by each client. Whether testing, repacking, replacing components, and/or checking for a broken seal are involved, the RMT will provide quality hands-on service. An expert team will follow documented guidelines for the actions to be taken with each returned product they encounter on behalf of each client.
Returning to our opening question, what is the importance of returns management? A top-notch RMT can reduce the negative impact of product returns, which is vitally important to the client. An additional area of importance is seen in the sustainability aspect of the Circular model. A dedicated RMT can hold, as much as possible, to the Circular model that loops the materials through several life cycles. This circular, or ‘green’ returns process is important to all of us.
Quoting AMS‘s John Bevacqua:
“The shift from the linear to a more sustainable 3PL supply chain requires organizations to redesign their models. It’s a big paradigm change from the linear model of what could be called take- make- waste- dispose- to one that is more efficient in utilization.”
AMS Fulfillment has decades of experience in returns and refurbishment, a firm commitment to the success of each client, and a commitment to the Circular returns model as much as possible. AMS is proud to be a B Corporation, dedicated to doing business in an environmentally conscious manner.
Contact Us today to see how we can help you improve your returns management process.