The Returns Management Process You Need

Maximising efficiency and minimising costs through effective returns management.

January 3, 2023

Warehouse workers checking box

Have you considered operating returns management at your warehouse? While it may seem like a minor task, handling returns, also known as reverse logistics, can significantly impact your business. Not only does it affect your warehousing, storage, and inventory, but it can also impact your profitability.

But why is returns management so crucial? An efficient returns management process can streamline your logistics, saving you time and money. According to a recent study by Zebra, 87% of respondents agreed that managing returns are a challenge. In response, many retailers are turning their stores into fulfilment centres to handle returns better, and 44% even plan to outsource their returns management to a third party.

The good news is there are tools available to help streamline your returns process. WMS cloud software, for example, offers high-speed modules for processing returns, including specialised functions for specific industries such as clothing, publishing, and spirits.

In this article, we’ll be exploring the advantages of a Warehouse Management System, how it can help and a three-step returns process for your business.

The Top Advantages of Using a Warehouse Management System

Having a warehouse management system (WMS) in place can significantly benefit e-commerce businesses that experience high volumes of returns. One key advantage is the ability to promptly quarantine and deal with damaged goods, whether that involves repackaging or disposing of them.

With a WMS, you can quickly identify any reusable stock and relocate it for order picking. This helps ensure that you make the most efficient use of your inventory.

Additionally, a WMS offers complete traceability, allowing you to track and monitor the levels and types of returns. This can be especially useful for identifying trends and improving your overall returns process.

Another benefit of using a WMS is the ability to integrate with your enterprise resource planning (ERP) system. This ensures that credits and replacements are processed efficiently, helping maintain high customer satisfaction levels.

Finally, a WMS can help you implement a cost-effective reverse logistics program. This connects the incoming supply of returns with the relevant product information and demand for repairable items or re-captured raw goods, streamlining the process and potentially reducing costs.

The Three Stages of an Effective Returns Management Process

Phase One: Speed

To streamline your returns management process, it’s crucial to consider automating decisions about whether to generate return material authorisations (RMAs) and how to process returned materials. Here are three tools that can help speed up returns processing:

  1. Automated workflows can help drive efficient and repeatable processes, ensuring that returns are consistently routed and processed quickly. Automated workflows can also help you make informed decisions by considering various data points, such as the item’s value and materials, repair scope and cost, return source, and customer service contracts.
  2. Labels and attachments: Automated workflows can also validate RMAs and generate labels and shipping documents. Properly labelled shipments with the required paperwork and pre-addressed, carrier-compliant labels are less likely to experience delays and create a more predictable inbound return stream.
  3. User profiles: Having profiles for your users can help simplify maintenance and permissions. User groups can share attributes such as physical locations, payment terms, service contracts, and product return eligibility.

By handling inbound return shipments quickly and efficiently, you can increase the value recovery of your returns.

Phase Two: Visibility

To improve visibility and predictability in your returns process, it’s important to capture information early on, ideally before the return is delivered to the receiving dock. Here are three practical and easy-to-implement approaches for obtaining visibility:

  1. Web-based portals: These online tools allow authenticated users to perform tasks from any location and time zone. Integrating web-based portals with product data and financial applications enable you to provide consistent and accurate information across a diverse network of manufacturing locations, business units, and third-party service providers.
  2. Carrier integration: Linking RMAs to carrier tracking numbers provides visibility for shipments, both within web-based portals and through automated notifications. This can help you track returns and stay informed about their status.
  3. Bar-coded identifiers: Accurate inbound shipment information, including details such as parts, condition, quantity, and dates, ensures that the receiving dock and repair depot is stocked with the necessary labour and equipment to handle and process returns. This helps improve efficiency and minimise delays.

Phase Three: Control

Synchronising material movements can be a challenge in supply chain management, particularly regarding returns. It’s essential for manufacturers to pay close attention to receipts and reconciliation and to notify stakeholders of any potential quality issues. Reconciliation helps to improve visibility and control across the enterprise.

To build adequate controls into your returns management process, consider the following three touchpoints:

  1. Regulatory compliance: Compliance is an essential aspect of the reverse logistics process. Automated workflows that speed up the process can also provide controls that minimize corporate liability.
  2. Reconciliation and final disposition: Labelling and enterprise data integration can help reconcile RMA information with the physical shipment, value, and accounting data. Combining financial systems with exception-based reporting can enable quick resolution of shipment variances and proper credits, helping to maintain both external customer satisfaction and internal financial control. Integrating with product engineering can also determine raw materials’ resale potential and value.
  3. Quality assurance: Timely feedback is essential for addressing the root causes of returns. Product engineering can identify quality control issues, while distribution centres can review outbound shipment accuracy. Finance can quantify financial exposure and risks. Automated communication and metrics for each team can help improve quality throughout the enterprise.

Software solutions can also help speed up returns management by providing user profiles and workflows that define supply chain partners and processes, labelling and documentation that track the material, and web-based portals and exception-based reporting to deliver timely reconciliation information.

In Summary

Product returns are an essential aspect of supply chain management that must be effectively handled. Focusing only on forward supply chain management and ignoring reverse supply chains is insufficient in today’s competitive business environment.

By implementing an effective returns management solution in conjunction with a warehouse management system (WMS), companies are more likely to improve customer service and response times, reduce their environmental impact by reducing waste, and improve overall profitability.

Are you struggling with managing returns in your warehouse? Clarus WMS can help! Our advanced warehouse management system streamlines the returns process, allowing you to track and manage returned items efficiently. With real-time visibility into your inventory, you can quickly process returns and get the right products back on the shelf. Don’t let returns slow you down – try Clarus WMS today and see the difference it can make for your business!

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