Returns Management | 4 mins read

Returns Management- 3 Key Components for Businesses

returns management 3 key components for businesses
Mary Kate Morrow

By Mary Kate Morrow

What is Returns Management?

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The returns management process, commonly referred to as the reverse logistics process, is the part of the supply chain responsible for collecting, sorting, organizing, and restocking exchanged or returned products. However, it is crucial that businesses understand the differences between reverse logistics and returns management processes.

Reverse logistics is a component of the returns management process that is defined as the process of retrieving returned products and contains sorting and delivering processes. The returns management process is much more comprehensive and may include anything from receiving initial customer service complaints to return management software implementation.

With case studies reflecting that 92% of customers crucially consider the range of return options available before making a purchase, the returns management process should be considered a top business priority. In fact, case studies report that 73% of consumers say their returns processing experience directly affects their decision to continue shopping at a business.

A great returns management process improves customer satisfaction while preserving business profits. If used correctly, a return management process can provide businesses with a competitive advantage and increased sales.

The Returns Management Process

The returns management process is its own business process and as such necessitates its own procedures and strategy. The returns management process generally contains five main steps including the initial return request, company approval, reverse logistics process, inspection upon receipt, and inventory restocking.

The first step of the returns management process is the initial customer return request. There is a wide range of reasons a customer may want to return a product, from a product arriving damaged or an incorrect size received.

Secondly, the business approves the return if it meets returned product policy requirements. The company then uses reverse logistics to ship the returned product from the customer back to a warehouse or sorting facility.

Once the returned product arrives at the sorting facility or warehouse, it is inspected for quality. The fifth and final step of the returns management process occurs when the product is restocked for resale.

3 Pillars of Returns Management

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The return management process must be hassle-free and customer service should be friendly while also fiscally feasible for businesses. Thankfully, there are best practice pillars of return management that businesses can review and implement into their own return management processes.

The 3 pillars of return management include-

1. Speed

The 3 primary tools used to increase the speed of a business's returns management process are automated workflows, labels and attachments, and user profiles. Automated workflows speed up the returns process through data collection and analysis allowing workers to spend less time manually identifying crucial data points.

After the automated workflow generates a return material authorization, labels and attachments can be created. Including shipment labels and necessary document attachments help to make sure that customers have the most hassle-free returns process possible.

User profiles simplify the return management process by storing and sharing crucial customer information. A user profile can yield information regarding payment terms, product return qualifications, service agreements, and locations.

2. Visibility

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The 3 most effective methods to achieve returns management process visibility are web-based portals, carrier integration, and bar coded identifiers. Web based portals are online tools that allow authorized users to engage in activities regardless of their time zone and physical location.

Web based portals are a great best practice tool for the return management process especially with consideration to global supply chain expansion. With web based portal accessibility, a diverse range of manufacturers and third party service providers can easily access real time updates and important data points.

Carrier integration connects carrier tracking numbers to return material authorizations. Carrier integration provides shipment visibility within both web based portals and via automated notifications.

Bar coded identifiers make sure that inbound shipment data points are accurate. Data points included within bar coded identifiers range from the product name to a description of the product's current condition.

Bar coded identifiers are an inventory management best practice tool as they also make sure that both receiving docks and repair depots have the resources required for returns management processes to run most effectively.

3. Control

The returns management process should incorporate the 3 control touchpoints of regulatory compliance, reconciliation and final disposition, and quality assurance. Compliance covers every component of the reverse logistics process, from geographically to industry specific regulations.

Reconciliation and final disposition designates product engineering in charge of determining the resale value and potential of returned products. A main objective of reconciliation and final disposition is to find a balance between customer satisfaction and internal financial control.

Quality assurance combines a variety of different departments, working collaboratively with the ultimate objective to even further optimize quality. While product engineering pinpoints any quality control issues, finance measures fiscal risks, and distribution confirms shipment accuracy.

Key Takeaways

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  • The returns management process requires its own strategy and procedures.
  • The objective of returns management is to make returns as hassle-free as possible for customers while maintaining business profitability.
  • Pillars of proper returns management include speed, visibility, and control.