Make Returns Management a part of the Supply chain Wheel
Product returns are a reality in every business and often goods that are returned become a problem for organization as most distribution networks are not geared for managing returns. Boxes of returns wind up on warehouse shelves taking up valuable space and at a later stage during warehouse inventory these returned goods are thrown away, returning nothing to the supply chain solutions.
According to Gartner Research, the average cost of processing a return electronically is $4.75 compared with $25 when returns are processed through a call center.
Having an effective returns management in place can positively impact your firm’s financial performance in today’s competitive environment. You need to understand that returns do affect your overall bottom-line. Reverse logistics and how product returns are handled can be the differentiator between profitability and loss for many companies.
Every returned product incurs a cost whether it is to you or the customer. Companies need to carefully monitor the cost of unplanned returns and also maintain customer satisfaction and retention. Moreover if a replacement product is being sent, transportation charge is again incurred. Companies that handle returns effectively and resolve service issues can improve a customer’s loyalty to their organization.
Organizations need to look at returns process in a logical and efficient manner. Integrating informational technology with operational process is most critical in returns management, where companies’ product returns are tightly controlled and customers are in the loop and know what and where the product is in the pipeline.
Whether the returned product are fixed and put back in inventory, disassembled for spare parts, returned to the contract manufacturer or disposed, everything has to be planned for. With returns approaching 20% of outgoing shipments, managing reverse logistics can be the difference between profitability and loss.
A good reverse logistics system not only improves corporate bottom line, but it can also improve customer trust and confidence in you, especially in today’s tough business climate. Hence returns logistics management should be equally as important as the forward logistics. All this can be simply proactively managing what previously was thought a hindrance and turning it into a usable resource.
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