Returns Mangement. A Pending Subject.

Escrito el 6 julio 2009 por Jesus Guerro en General

Returns Mangement. A Pending Subject.
The Volume of Returns in Trade grows day by day. The rise of Customer Bargaining Power, the Harsh Competitveness and Legal Requirements by Environmental Institutions, are the main triggers.
From this viewpoint we should differ between:
a) Expected returns: They are embeded into the Company Strategy (Distribution agreements, post sales services or collection according to Legislation)
b) Unexpected Returns. They are uncontrolled and oftenly processed poorly.
According to research, unexpected returns are object of 50% of B2B shippments. The rate accounts for 35% in Retailing.

This fact reveals that companies should strongly focus on this matter. The operating costs associated to returns as well as the assets value lost because of damage or obsolence (between a stream of causes) have an overwhelming impact on EBITDA.
Returns provide the Black-Box to analyse where the company is failing or it has an opportunity to improve. Usually, the Disease is not there where it hurts. Somehow the main leverage to minimise returns flows is not on the drawback system but it is concerned with decisions taken in previous stages.
Product Development and Supplier Collaboration play a key role on this issue. It has to respond how to comply with customer expectations while making possible the operations drawback flow run faster and effciently. (Resistant, Feasible, Easy to use, easy to dissambly, easy to store, easy to identify and classify..)
The Objetives are:
– To reduce the number of unexpected returns
– To recover maximum value
– To rule returns system with higher levels efficiency.
– To encourage Recycling.
Other returns come from divergencies between the Sales Order and the Delivery. Cross Functional Integration is the key to fit organization. Nevertheless companies have to allocate negotiation skilled people at any point of customer contact.
Returns also demand Research on Secondary Markets, to reinsert the prodcut as soon as possible when first target rejects our product. Global Operations makes this issue essential due to the huge costs of transporting back the products.
Returns systems provide the opportunity to contact the final User. For example HP does not know who is his customer until It involves the customer in the return of their products, even paying a fee. Otherwise the collection from household would be bloody. In its Buy-Back system HP takes advantage of contact to obtain information which is incorporated to Business Intelligence analysis.
Hereby, I comment only a brief summary of capabilities that a proper Returns Management System can bring to the organization.
It is time of companies to review its Reverse Logistics..


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