Automating returns with software: 5 benefits

Handling returns doesn’t have to bring your operations to a halt. Returns management software solutions can streamline the process.

By Bob Trebilcock, Editor at Large -- Modern Materials Handling, 5/2/2008

Stripped gears. That’s what happens when you accidentally shift from fourth gear into reverse while cruising down the interstate. One minute you’re doing 70 mph, the next you’re picking up pieces of your transmission while you wait for a tow. 

Handling returns can be like stripping gears, says Lee Norman, director of business development for ClearOrbit. Most supply chains are designed to go in one direction—straight ahead at 70 mph. The problem? Now and then business customers and consumers get the wrong stuff. Faster than Arnold could say, “I’ll be back,” returned merchandise is sitting on your receiving dock and threatening to bring your operations to a grinding halt.

Why are returns such a problem? “Typically, it’s because no one owns the process,” says Norman. “Returns touch most of the functional areas of a company. Customer service has a piece, the warehouse has a piece and finance has a piece. But no one is managing the overall process.”

There’s a second part of the problem: Distribution centers are designed to handle the routine and returns are the exception to the routine. “The result is that most people just throw labor at the problem and that’s inefficient,” says Norman.

Automating returns

One best practice is to automate returns with software. Just as a warehouse management system can streamline the order fulfillment process, a returns management software solution can automate the reverse logistics process. That is especially important for companies that can’t take a one-size-fits-all approach to customer service.

These returns management systems perform 5 functions.

1) Gate keeping: Returns management systems provide a Web-based tool that provides the customer with the labeling and shipping information to send a returnable item back.

2) Process management: The system determines what’s coming back, how it’s coming back and where it’s going to be sent. That visibility allows a facility to plan to handle the return.

3) Receipt: Returns management interfaces with a warehouse management system and makes sure there are rules in place to optimize the flow of returns. When an operator scans a return label at the dock, the system knows how they should be handled.

4) Disposition: That is determining whether the return needs to be repaired, remanufactured or repackaged, whether it can go directly to another customer and whether it has to be scrapped.

5) Reconciliation: The system provides the information necessary to issue a credit and reconcile a customer’s account.

Find out why it’s coming back

In addition to streamlining the returns process, a returns management solution includes a layer of reporting that can provide visibility into how products—especially new products—are performing in the marketplace. That’s because the solutions can aggregate information like which products are being returned and why. That allows a manufacturer or distributor to identify problems that may be consistently cropping up.

 “The information collected in a returns management solution allows you to look at areas like warranty costs or the rate of returns on a new product,” says Norman. “If you’re getting a 15% return rate on a product, you may have a manufacturing problem. Now you can address a problem proactively.”

Those types of incremental improvements are the reason why an enterprise may invest in a returns management solution. “For companies looking for the next cost-containment opportunity returns is ripe for improvement,” says Norman.