Returns Management – Controllable and Uncontrollable Returns

Who wants to bear the cost of products getting ruined during shipping, be it delivering orders to the customers or receiving returned orders from the customers through an improper Returns Management Strategy?

No manufacturer or industrialist wants their products to go in vain. For retailers, manufacturers, and distributors, Returns management have often been seen as a typically difficult, a cost center, and an area of potential customer dissatisfaction.

There are two types of returns:

Controllable Returns: Can be avoided or eliminated by actions taken by the company

Uncontrollable Returns: Companies can do little or nothing about in the short term.

CONTROLLABLE RETURNS:

Problems, difficulties or errors from the end of vendor or customer can mainly be eliminated by strategies and correct programs by the company or its supply chain partners.

Reasons causing returns could be minimized or eliminated by the best advanced logistic processes, improved market forecasts, better product management or storage. Better management, better packaging, and improved transport and storage of the items eliminate or reduce the chances of products getting damaged while transportation.

It’s basically to avoid the risk of problems before they occur.

UNCONTROLLABLE RETURNS:

These returns are generally unavoidable since most of these are categorized into returns related to issues like the wrong size, number of orders, or will be based on one’s preference.

Another possible rationale could be that one has bought something for their friend or their family member and that person doesn’t like the product or find some problem with it. Retailers have no control over these variables; these returns are classified as uncontrollable.

Usually, warehouses prefer to store products that are demanded by retailers or customers in huge quantities to avoid loss. Companies should try to eliminate the causes behind controllable returns and also develop optimal processes for managing uncontrollable returns of products.

To manage returns for all companies regardless of the industry and type of product, it is important to follow this process of 5 stages:

·         Receipt: Product returns are received in a centralized location, for instance, a warehouse, to be acknowledged.

·         Classification and channeling: Once the items have been received, the products are classified into many categories:

Subsequent channeling may be based on automatic belts or simple passing by hand to destination in places that contain different product categories.

·         Processing: The returned items are divided into items based on the number of stock-keeping units that can be returned to the stock/inventory. On the other hand, vendor’s returns are organized based on the name of the specific supplier. It is at this point that it is possible to refund the customers.

At this stage, the paperwork that accompanied the return is separated from the item and these documents are then physically sent to the administrative area for comparison with the electronic records should discrepancies occur.

·         Analysis: The value of the returned item varies depending on the product disposition strategy employed, individuals involved in this stage must be very knowledgeable about the products, repairing or refurbishing opportunities, about returns, permitted as opposed to unforeseen ones, allowable versus non-allowable returns, and the financial benefits associated with each disposition option.

For example, items that can be repackaged for resale will return greater financial reward than items that must be refurbished or remanufactured prior to sale. Repackaged or refurbished items always result in higher revenues than items being sold as scrap or salvage.

·         Support: The disposition of each returned item is determined. Items are distributed according to where they should go such as Back-to-stock or back-to-store items are returned to inventory. If repair, refurbishment, or repackaging are required, appropriate diagnostics, repairs, and assembly and disassembly operations are performed in order to get the items into a salable condition. Getting items into a salable condition quickly also reduces inventory carrying costs.

These salable items are made ready for resale to customers sooner, thus improving service levels. This would be especially important if there is a high demand for the items and regular inventories have been depleted. Apart from this, these salable items are made ready for resale to customers sooner, thus improving service levels. This would be especially important if there is a high demand for the items and regular inventories are depleted.

As the recovery rate for products to be repaired or reconditions is high, returns management for eCommerce must take place efficiently and at a low cost, which is important for the company’s return on investment.

Another option is that returned items can be donated to local, regional and national charities or relief organizations. If the items are not salable to some type of customer, they will likely be sold to a salvage or scrap dealer who will purchase the items for the value of their components?

All this is impossible without Scanning and quality check. The returned packages are thoroughly scanned at the inspection, segregation, and put-away ensuring that no faulty package reaches the shelves and churns back into the inventory.

Sort your returns into damaged and undamaged items. You can enter the undamaged items back into your inventory. If the item was pre-damaged, you need to return it to the supplier.

Therefore, a three-step quality check is conducted with the same resources required for a single-step quality check procedure in a traditional returns management setup. After all the scanning, valid packages undergo a time-bound and requirement-based transfer to the fresh stock inventory.

This is done to ensure to attend to your customers’ grievances and provide them with a replacement product, complying with a pre-decided policy. Customer satisfaction comes first and foremost.

How can we fetch profits from returns management?

Product Return management can become a profit center if managed and administered properly. Turning product returns into a profit center requires that in addition to cost savings, companies improve the recovery value of returns and, if possible, obtain revenues from various reverse logistics activities.

The following illustrates some of the major ways that efficient returns management can reduce costs, improve revenues and enhance profitability as a result.

·         Improved customer service and customer knowledge.

·         Effective inventory management and product dispositioning.

·         Efficient product returns as a marketable asset.

·         Personnel and Training.

·         Good Communications.

·         Use of Third Parties.

The calculation of the impact of return rate and reduction of return management costs is already considered to be a great success for companies, considering the impact that these costs have on the erosion of margins.

As a third party logisticians, 3PL companies make sure that they provide you with quality check controls and keep a record of the products by scanning them. They try the best to keep the products safe while the mobility of the goods takes place.

AAJ Supply Chain Management are one the leading 3PL chains in India, deliveries happiness since 2010. They assure their customers and clients foolproof inventory checks and storage when handling returns, hence, properly manage the returned products.