Better Return Material Tracking

In the supply chain, there are multiple reasons that product must be (or is) returned to a supplier from a customer. It can be from an end user to the distributor or from the distributor to the manufacturer. In all cases, it can prove to be a nightmare of forms, lost information, and manual processes that create excessive paperwork, lost productivity, and reduced profits.

Some of the major reasons for returns are:

  • A wrong product was shipped (and the value was less than the customer was going to be charged)
  • The incorrect quantity was shipped (not enough to fill their customer order so they do not want the inventory or there was too much and the item does not turn enough to be worth the extra handling even if the excess inventory was not billed)
  • The product is damaged during shipping due to inadequate or inappropriate packaging
  • Poor product quality that does not pass predefined inspection requirements
  • The product arrived late and the customer used an alternative supplier
  • The customer decides to no longer carry product (obsolete inventory)
  • The customer wants to recover cash by returning non-moving products

No matter what the reason, a complete process is necessary to initiate the process, track the material, handle it properly, issue credit memos, and finally, recover costs. In a perfect world, the process would be relatively simple.

When a customer initiates the return, it requires efficient handling by customer service personnel. They first must be able to verify that the inventory was actually purchased from their organization and then relate the purchase to a specific Purchase Order, shipment, and invoice.

Next, a shipping label with an easy to read bar code (linear or 2D) is generated which exactly identifies the material being returned and is sent to the customer by email (as an attachment) or FAX. The label provides a link to all of the electronically stored information that the CSR (Customer Service Representative) already researched and captured.

When the product arrives at the supplier’s receiving dock, it is positively identified by the bar code and instructions for its deposition are available to the receiving clerk. It may be held for testing, it may be inspected and returned to stock, or it may be cross docked to return to the manufacturer.

All of the internal paperwork is completed by the computer and the proper credit memos issued, less any restocking charges. Restocking charges can be determined by the product category cross referenced to the specific customer. If there was shipping damage, the system should assist the CSR in completing all necessary insurance claim forms and track them to payment.

Any material that is to be returned to the next level supplier (importer, master distributor, or manufacturer) will be properly identified with a custom shipping label that meets the supplier’s specifications. The label will be applied to the package and it is then ready to be forwarded on without additional human intervention.

The system will track the physical return of the merchandise based on the bill of lading. Once it has left the shipping dock, the application should follow up to make sure appropriate credit memos are issued and applied. The electronic paper trail will be available at any point to track the current status of any individual return or all returns to a specific supplier.

In this perfect world, the electronic system described above will eliminate the “spreadsheet in the drawer” that has been traditionally used to track and follow up as best as possible on returns. Through CSR access to information, both customers and vendors will have the ability to access and inquire against the database to verify the status of any given return.

If you aren’t operating in a perfect world, but would like to, contact us today and find out how you can make your return system better. For more information about return material tracking, download our whitepaper here.

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This entry was posted in March 2012, Newsletter, Warehouse Management Systems (WMS). Bookmark the permalink.

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