The Importance of Returns Management

Returns management, often referred to as reverse logistics is the management of returned items to your company. But do you know the importance of returns management?

We talk through some of the benefits.

How you manage returns will influence the overall management of your warehousing and storage, inventory, depreciating goods and soiled items. Therefore, the bottom line will be the impact on overall profitability.

Managing returns is never quite as simple as putting items back on a shelf to be shipped off to another customer. Returns involve a quality control process. The reason for returning an item should be established as soon as possible once it has been returned, if not beforehand. Streamlining a process by which returns are then managed will prevent hindrance to outgoing logistics too.

Processing can become expensive if it isn’t efficient.

Absorbing the cost

When products are handled by a large third party company such as Amazon, once the condition of the return has been established it can either be repackaged ready for resale, sent for refurbishment or, alternatively, for recycling. Even when products can no longer be sold, it is still possible to mitigate costs against refurbishment or recycling, and this can neutralise the expense of the process involved.

It is also important to remember that once an item has been returned, it will either be refunded or replaced without an additional sale. Managing the reverse logistics efficiently will prevent these cases from becoming a severe loss to the company from within the overall logistics management process.

The cost of returned products will have an impact on pricing. If many of the same products are being returned then to keep the product profitable its price will inevitably go up.

This domino effect can be reduced by an effective system that reduces the cost of returning the product, while also providing insight into the reasons behind the return. There are instances too, where the cost of the return is not worth the value of the product even at scrap value. In these cases, it may be a better solution to simply credit or refund the customer and ask the customer to dispose of the item locally.

Customer relationships

The efficiency and adequate management of returns have a substantial influence on customer relationship management. This will in turn influence long term returning customers, additional sales and future business development. When the returns management is prioritised, it leads to greater profitability within the company. It leads to increased customer satisfaction too and therefore reduces waste.

Every return is an indicator of failure that has taken place with the client relationship.

Items may be returned for many different reasons. It could be that the product wasn’t exactly what the customer wanted, it arrived damaged, or that there was an issue with timeous delivery. When the returns process adds to that experience in a negative way, not only will the customer be reluctant to do business with you again, but they’ll discourage others from doing so too.

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Effective product returns management can have a positive environmental impact too.

There are many ways that non-sellable returned items can be recycled or reused. Some that are refurbished create a greater balance in the profitability offset, helping the organisation to reduce any real costs to the process.

Everyone is involved in returns management

Everyone participates in the returns process, not just the staff at inbound receiving. Sales staff need to recognise why items are returned and can be proactive in reducing the number of returned goods. Sometimes the item won’t meet the needs of the customer or the client needs to be better educated in how to use the item.

Quite often goods are returned, and no fault can be found with the item. When this happens frequently, it can indicate that the customer doesn’t know how to use the product correctly and the item or its packaging may require some re-engineering. When marketing staff are invested in the returns process, they will have an interest in keeping the sales profitable. This will, in turn, enhance reduction in returns.

Staff in finance will have to apply a credit or a refund, and this requires a seamless system from the moment the return is despatched back to the warehouse or supplier. The supply chain is as it implies reversed and this needs to be as robust as the outgoing logistics system.

Returning products to the sales inventory

When products have been inspected and found to be in a saleable condition, they can be quickly repackaged and replaced in a merchandising position that enables the supplier to resell it and thus reduce the handling time and consequently the cost. An inspection and repackaging solution offered by returns management companies can also help to lower the cost in returns of no fault items. This reduces the reverse logistics cost to the company even further.

Get your products back to market sooner with returns management

If you want to streamline your returns process so that you regain the profits from your returns, then speak to Ribble about their Ribble Right Size solutions.

With Ribble Right Size can help you recover the costs, repack your items and resell almost immediately.

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