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Does your company manage returns well? If not you could be losing money, damaging your reputation and letting your customers down all at the same time. Here, Esther Dutton looks at the challenges and the solutions.
Retail has changed. As the popularity of online shopping has blossomed, so the concept of returns management has taken on a new importance. Today, a supplier has to manage returns efficiently or the profits from its activities can evaporate as quickly as they are made. Yet with a simple, transparent process in place for handling returns, companies can make more of the right decisions about stock handling, supplier relationships and customer service, allowing them to keep their bottom lines firmly in the black.
There was a time when stock was returned to the supplier only if it was faulty. Today, however, many business models, such as e-fulfilment in the fashion industry, expect their returns to far outstrip their sales as consumers take delivery of multiple items from which to select their purchases. With more goods coming back than are being sold, returns management takes on a whole new perspective.
Goods can be returned for many reasons and not only is it important to understand why, it’s vitally important that those reasons should be recorded, assessed and acted upon appropriately.
Are the goods faulty? If so, can they be repaired, should they be returned to the manufacturer, are they suitable only for scrap and are there any associated charges? If the goods are in good condition and fit for purpose, is the packaging damaged, can they be resold at full rate or should they be discounted?
Assessing returned goods usually requires some human input. Only by careful inspection, for example, is it possible to tell if an item of clothing has been worn. If so, a decision on the required action has to be made in accordance with the company’s returns policy. The expectations and needs of the customer should be considered; warranties checked; refunds made; replacements sent; stock records amended; and accounts updated.
Modern warehouse management systems, such as MACSwms, control the entire returns process ensuring that customers are satisfied, valuable stock is tracked, records updated and profits retained. A key element in MACSwms is its ability to automatically allocate each returned item a specific status that clearly identifies the reasons for its return and the course of action required.
The process will be different for each customer, designed to meet the specific needs of the business. However, once in operation, it will not only ensure that returned stock doesn’t end up on the stock room floor and that customers are kept happy, it will also identify important trends that can help to direct decisions. For example, if a product line suffers from a high number of returns, perhaps it should not be stocked in future or the entire batch should be recalled. Conversely, items that are rarely returned can be promoted knowing that a delivery is more likely to turn into a sale.
Through a streamlined process of alerts, scheduled reports and continual stock analysis it is possible to identify these trading patterns, understand which items are returned, why and how best to maximise the profitability of the business.
Whether your company is managing its own stock, is providing a 3PL service or is trading through e-fulfilment, returned stock is a fact of life. The efficiency with which returns are managed can make the difference between profit and loss, success or failure. As guardians of the stock management process, today’s warehouse management systems play a huge part in helping companies get it right. When it comes to returns policy, compromise is not an option – efficiency is everything.
Earlier this year, following a devastating earthquake and subsequent cholera outbreak, MACS sent in reinforcements to get the SCMS (a delivery partner for USAID) warehouse, which despatches vital antiviral drugs, back to full operational capacity.
We all celebrated MACS Software’s 21st birthday recently with a staff trip to the Sutton Elms Go-Karting circuit in Leicestershire in order to let off a little steam. Some of the team showed a natural aptitude for thrashing around a race track – a far cry from our day jobs designing software for some of the world’s leading corporations.