Returns Management: Challenges for the Modern Day Supply Chain
A company’s supply chain is a vital component for managing both short term and long-term cash flows and cost savings. However, the lack of inventory planning, ineffective techniques and inefficient supply chain processes has a major effect on the company’s profitability. Nevertheless, the current business scenario with its globalized environment and widespread offices demands organizations with critical strategies to ensure a smooth flow of products and services to the customers. Under such tight circumstances, managing the reverse flow of products becomes a bigger issue to be dealt with.
Viewing critically, the reverse flow of products can be a source of opportunities for organizations to wade through during difficult times. Effective returns management can positively impact the financial condition of the organizations and pave way for stronger customer relationships. From the financial viewpoint, returns are negative adjustment of sales. Organization needs to consider the operational cost of the returns as unlike the case of forward logistics, this incurs more transportation costs, inventory carrying costs and warehouse space, all leading to higher cost of returns besides impacting customer loyalty and relationships.
Today’s global business environment with all the legal compliances has placed returns management as a challenge for effective supply base management. Since in the supply chain, the product can be returned from any member of the value network, the supply chain consulting organizations work towards understanding the cause of returns. This will pave way for improved decision-making in the supply chain process. The leaders in the industry sector have designed and developed integrated return product management system that would help enterprises with efficient management of the returns process.
Returns management being a cross-functional process, the major ground rules for its effectiveness include,
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Considering returns management as a strategic point under the broader strategies of supply chain solutions.
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Developing appropriate policies to enhance profitability and strengthen customer relationships.
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Develop effective quality control and gate keeping policies so as to ensure that the products don’t enter the return flow.
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Develop operational procedures to handle returns, including policies to resell returns products through the forward logistics chain.
Aligning performance metrics of returns management with the forward logistics strategies.
The common procedures used by most organizations in managing return goods include destruction of the retuned materials, warranty assessment, testing and repair, try to upgrade the software or hardware of the products in question, refurbishment and even repackaging. However, the returns management services developed by the leaders in the industry are world-class. It tends to remove the pitfalls that result in return and rework. Further, to maintain customer loyalty, the returns management service provides customers with a hassle free return system with returns materials authorization support, warranty returns, testing and debugging, repackaging and refurbishment along with web based reporting.
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