The Complexity of Managing a Returns Process
One of the biggest stories of Fall 2016 was the Samsung Galaxy Note 7 recall. While the company is just now starting to move past that massive product and public relations disaster with the release of new devices, it remains an example of some of the enormous logistics challenges that can present themselves without warning. The need to orchestrate a return on the level that Samsung did had many moving parts – from consumer drop-off/mailing programs, to what to do with the devices when they’re received back by Samsung and its partners.
Hopefully, your company will never have to experience the immediate and urgent recall of a product such as that – but it does bring to light one element of your operations that is often overlooked: returns management. Returns management is needed by each and every product company – no matter how good your quality control and testing – there will always be devices that don’t work out of the box, or that are damaged by the consumer.
Far too often, companies just take a return and send out a new device without trying to renew, refurbish, recycle – or learn from it. Once companies realize there is so much more to returns than simply sending out a new device, the next questions asked are usually: “how should I do this?” and “what is the best way to set up my returns program?”
You need to install a process that makes it easy for customers to return products – while at the same time, ensures that you are driving the greatest value possible out of each return. There are eight key steps to doing that correctly:
A site should be set up for customers to quickly and easily register the broken product. Simple questions help determine why the product is being returned – and can even prevent a return if nothing is wrong.
Once registered, the information entered helps determine what facility a product should be sent to and the customer receives information on how to ship the product back.
Return information should be coded on the label so that when the product arrives, the company/partner knows what product it is, why it’s coming back and what the next steps are.
Once the product has re-entered the company/partner’s system, it is reviewed and one of the following steps are taken.
- Recovery: In the case where there wasn’t anything wrong with the product, it’s called a No Fault Found (NFF) return and sent back to be re-sold. The customer receives a new or refurbished product in exchange.
- Repair: In cases where the product is broken but can be fixed, it is sent off to a licensed repair center to be repaired and returned to the customer (or if it will take too much time, then the customer will get a new product and the repaired product will re-enter the market post-repair).
- Pay: In some instances, customers can just receive a refund.
Once products are repaired, if not going directly back to the customer (in cases where a refund or new product was given instead), they can be refurbished to be as-good-as-new and remarketed by the company. They could also be re-sold as is.
If the product cannot be fixed, then it still has value. It can be broken down and parts sold to recyclers.
Each return should be registered and tracked, with key information connected to it, giving you a real-time look into what is being returned, when, why – and what the ultimate customer resolution was.
The data produced by the reverse supply chain cycle should then be analyzed to discover patterns and issues that can be corrected to cut down on the amount of product being returned. Without regular analysis of the reasons products are returned, you’d have no idea that there was a correctable problem – and by repeating that problem in future product versions, you would run the risk of turning customers off from your products forever.
Another element of running an excellent returns management program is to think about how you should manage returns on a global basis: Should you organize regionally-specific or with a global center? Is one better than the other? Is there a wrong answer? Here are a few pieces of advice on how to best make this critical decision:
- No Two Companies Are The Same – The first step in answering that question is in taking a look at your own operations. Every company has different operation structures, has products manufactured/assembled/shipped slightly differently – and often have a variety of different markets that they sell to. In short, no two company situations are exactly the same. Recognizing that at the beginning is important to getting this right.
- Think of What’s Being Shipped Back – Think of what your product is and how difficult it would be for someone to ship it back. Is it heavy? Bulky? Tough to package up safely? All of these answers matter. Each can dramatically increase the cost for you to receive goods back – and could also mean you have to provide better, more expensive packing materials when shipping the product out initially, as you want to make sure every product returned isn’t destroyed in the returns process.
- How Many Different Products Could Be Returned? – Think of your product lines. Are you just a maker of wearable fitness technology – in which case the core product being returned would always be the same – and the only differences in returns would be model types? Or do you make a variety of goods, each which would require different experts to analyze the return and decide whether to refurbish or recycle each product? Those with a wide-ranging variety of products may want to split out return locations by product type.
- Efficiency vs. Cost – Having one global center may be more efficient from a process standpoint – all the products come in, are analyzed and sent to their next destinations through the same process, done by the same team. Those efficiencies may not be more important than higher costs, however. Companies want to do returns correctly, but not to take a loss on it. Having a couple of identical return centers in geographically central locations may offset any cost issues and still provide a level of efficiency that serves your customers well.
The key takeaway is that there really is no easy answer. Every company’s mitigating factors are different – and to assume that what works for one company will automatically work for another can be what will cause a critical issue in your returns program.
Working with a partner that knows the industry inside and out and has experience in planning returns programs can provide an organization with a level of expertise and confidence that it simply won’t have when attempting this for the first time.
ModusLink’s Returns Management solution simplifies the returns process for retailers and manufacturers that want to improve service parts management and the value of returned assets. We manage the end-to-end process, including receipt, RMA, sorting, triage, credit processing and ultimate disposition of the returned product.
By leveraging our globally integrated supply chain infrastructure, technology, and operating expertise, we’ve streamlined returns management operations. Our efficient system eliminates costly handoffs and decreases inventory processing time, leading to an increase in value recovery.
Contact us to learn more about how our best practices could help your program run smoothly.
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