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Advanced Returns Management: a smooth returns process from inspection to crediting

20 februari 2019, 4 min leestijd

For many organisations, processing returns remains a complicated process requiring many administrative actions. This blog post examines the problem areas of returns management and explains how you can easily resolve them with a solution that you may already have available. 

As we mentioned in a previous blog post, reverse logistics has become a fully-fledged process that deserves just as much attention as the sales process. That blog post underlined that the prevention of returns may contribute to a streamlined logistics supply chain. And if any items are returned, the process must be organised efficiently. This is where many organisations go wrong. Processing returns tends to be a time-consuming, costly process that involves a great deal of manual and administrative actions.  

Why is that? 

When an item is returned, it is inspected by a warehouse operator. The operator checks why the customer has returned the product and whether the product is damaged or faulty. Then the operator decides what to do with the item. Should the supplier fix the item? Can it be taken back in stock to be sold again? Or does it have to be destroyed?  

In many cases, returns arrive without any prior notification by the customer. It is then unclear whether the customer was allowed to return the item, what the reason is and what reference the return should be logged with. This lack of clarity leads to unnecessary communication and wastes time.  

Lack of understanding and clarity delays the processing of the returns. This in turn results in inaccurate inventory positions, uncertainty as to what was returned by which customers and unnecessary delays in customer refuns. The previous blog post gave a detailed description of the effects this has on the various people in the organisation. 
How do I optimize the processing of my returns? Follow the webinar on Tuesday 26 March

Advanced Returns Management 

What many organisations do not know is that SAP Extended Warehouse Management (EWM) already has the standard functionality to initiate logistic return actions automatically. We call this Advanced Returns Management (ARM). So how does it work? The idea is simple. Return parcels usually still show a sales order code. Warehouse operators can use this information to process the returned items, assess their condition and decide what should happen to them. All this can be done without having to create a return order first. When operators are processing an unscheduled return, they can easily indicate whether an item is faulty or should be sent back to stock. The automatically created documents, such as the return orders, deliveries and credit note, can be requested in a single insightful overview. 

Who can benefit from this functionality? 

Customers benefit from Advanced Returns Management because their returns are finalised more quickly thanks to the automated process. They know where they stand sooner and they receive their refund more quickly. ARM also ensures that the customer service department is also aware of the status of returns. If customers contact customer service with questions about returns, the service staff can immediately see the status of the returns. Customers therefore get the right answers to their questions immediately. That makes it much easier to manage customer expectations. 

Companies themselves can process their returns more quickly and efficiently by reducing their manual work and by eliminating unnecessary communication between different departments. This leads to a speedy, correct process with fewer errors and a single overview of the overall status of orders. The process owner can monitor the entire process throughout the entire chain. The comprehensive overview shows the process owner the status for each item and who has processed the order. This allows the process owner to direct action when there is room for improvement, rather than constantly playing catch-up because he's busy trying to keep on top of things.  

With ARM, the financial department can also organise the returns process in such a way that the inspection results are linked to fixed refund codes. As soon as the operators have assessed the state of a returned item, a pre-set percentage of the purchase price can be credited automatically. Of course, finance can still adjust that amount when it processes the order. The warehouse also benefits thanks to a faster physical flow of the returned items. The returns process is more efficient and better integrated with other business processes. There is no more unnecessary administrative work. Operators can process each parcel immediately without any delays. 

There is gold in your system 

The simplicity and convenience of Advanced Returns Management will help you to achieve a streamlined returns process. You may even have this useful functionality already, depending on the release level of your SAP EWM. Even if you are using SAP ECC, the ARM functionality will be available to you. In that case, the process is slightly different, but you will also benefit from many advantages.  

How much can you increase your profit with a faster returns process? Find out how you can take full advantage of automated return order processing at our webinar: 'How do I optimize my returns management' on 26 March from 10 to 10.30 a.m.