The returns process is the reverse of the shipping process; however, it is far less structured in most businesses. The result is uncertain inventory, delayed accounts receivable, and customer dissatisfaction.
Scope
Return request and approval: Recording the request along with the reason, applying the approval rules, and assigning a return number.
Reasons for return: Coding and analyzing reasons such as incorrect shipment, damage, quality issue, excess stock, unsold goods, or warranty coverage.
Collection and transportation: Receiving the returned goods from the customer; combining them with the outgoing shipment where possible.
Return acceptance and inspection: Checking and determining the fate of incoming goods: placing them in resalable stock, reprocessing, quarantine, repair, or destruction.
Financial closing: Issuing the accounts receivable note or return invoice and ensuring inventory-accounting reconciliation.
Warranty and service contact: Referring the product to service and evaluating the warranty coverage.
Packaging returns: Tracking customer-specific balances for recyclable packaging such as pallets, crates, and drums.
Recall support: In the event of a product recall, identifying affected batches and buyers and managing the collection process.
Root cause analysis: Analyzing the reasons for returns based on product, customer, region, and carrier to prevent recurrence.
Return data is a treasure.
When return reasons are properly coded, it becomes the most honest source of feedback for the business. Damaged returns concentrated on a specific product point to packaging issues, incorrect shipment returns concentrated in a particular region indicate collection process problems, and excess stock returns concentrated with a specific customer point to order processing issues.
Without this analysis, returns are merely a cost; with it, they are an input for continuous improvement.