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Purpose of Returns “Effective method for handling an item that does not achieve its intended purpose�

Cabbage Production 70 Days from seed to Market 69 million metric tonnes Globally China, India and Russia

Who is RMS In Business Since 1986

Multiple Locations across the United States Many retail industries – Food, Hard goods, Entertainment, Sporting Goods, Drug Stores, etc. Developed own proprietary systems

Operate returns centers and provide system solutions

Return rates by industry Magazine Publishing




Book Publishers




Book Distributors


Mail Order Computer


Greeting Cards


Mass Merchandisers


Catalog Retailers


Auto Industry (Parts)


Electronic Distributors


Consumer Electronics


Computer Manufacturers


Household Chemicals


Drug Stores

2- 4%


.5 – 1.5%

Source: Going Backwards Reverse Logistic Trends (University of Nevada) & FMI/GMA joint study

DVD Returns

Book Returns

Book Returns

Before Automated Returns 10,000,000 units in annual returns Accuracy rate of 70% on orders

After Automated Returns Returns reduced by 15% Accuracy rate increase to 99% Savings of $5,000,000

Customer A 75,000 square feet 1 shift - 55 people 900,000 units/month 5 receiving stations

12 primary scan stations 1500 pallet asset recovery 5,000 RTS slots

High Value Item Returns

High Value Items

Electronic Returns Unique Product

Relationship between Manufacturer and Retailer/Distributor Clear communication as to crediting policy Branding profile/image Liability/product visibility Marketing Trends/strategy

Objective of a Returns Process Maintain customer service experience

Move product out of the selling space Recover costs associated with returns

Categories of Returns Defective Warranty Out of Warranty

Performance or wrong item ability for consumer to use

Guilt – buyers remorse Outdated

Types of Returns Consumer Performance Defective Guilt Product Use Retailer Defective Slow moving Outdated/Model Change Discontinued In-house Damage Pilferage

Purpose of a Returns Program Give retailer/distributor a tool to move product back

Identify Credit process Manage non-selling inventory Track product

Challenges Accurately Identify Products

Track & issue credit Cover costs for returns = Who pays Product liability Brand Image

Duplication of efforts Business relationship – trust Non-revenue process

Solution Parties need to establish the following:

Communication and expectations Credit policy Tracking procedures Reporting

Product flow Product Disposition Compensation

Communication Both parties agree on the following:

Standardize data exchange What and how items are to be returned for credit Agreed upon handling procedures Agreed upon disposition procedures

Credit Policy Warranty versus Non-Warranty returns

Credit rate – what is the policy Retail, Cost, Cost +, % of Sales (Cap), etc.

Physical product handling Return, Repair/Refurbish, Liquidate, Destroy and or Recycle

Tracking Procedures System interface

Item tracking through the process Credit handling and disposition Handling instructions Disposition

Reporting Retail Activity

Products shipped from retail location Variance reporting from Retail location Compliance Consolidated Supplier charge backs

Authorized versus Un-Authorized items Disposition/manifests Liquidator Manifests

•Items received and checked against – retailer/supplier returns agreement •Qualified items for return are consolidated and Return Request filed •Not-Qualified for supplier return are liquidated/refurbished/ recycled and or destroyed

At Manufacturer level

•Customer brings product back •Quality Check item •Return to selling space •Defective/Warranty return to supplier for credit •Through Distribution channel or directly to supplier

At Distribution level

At retail level

Product Flow

•Items are checked in to validate reason for return •Refurbished/repaired •Liquidated •Recycled

Product Disposition Return to Manufact urer

• Automatic Return Authorization • Request Authorization


Destroy / Recycle

• Bulk Sales • Refurbish

• Landfill • Recycle/Break down to parts/ Donate

Compensation The goal is to make the consumer whole

Who takes ultimate responsibility for item Manufacturer, Retailer, Distributor? Ultimately costs of returns are reflected in the costs of goods. How returns are managed can determine how much impact they have on the overall cost model

Conclusion “Electronic returns are like cabbage, unlike fine wine, They don’t get any better with age”

6. Australian GS1presentationfinal  

Purpose of Returns “Effective method for handling an item that does not achieve its intended purpose” Cabbage Production 70 Days from seed t...

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