Returns Management Model - 9 Key Dimensions
Earlier this year we released a major study which examined the State of the Art of Reverse Logistics Management Systems (RLMS). In the next several blog postings, we reference key learning’s from our study by looking at the challenges the industry faces with respect to bringing RLMS adoption to its full growth and development. Our analysis will highlight the most crucial problems as well as offer insight toward their solutions. In this blog we will focus specifically on how RLMS can effectively support and impact the efficiency of product returns.
Return management is perhaps the most “high profile” dimension of reverse logistics. However, a conclusive, standardized model of this service has yet to be created. In addition the progressive shortening of products’ forward life cycle, a built in and growing array of product obsolesces of products, high consumer demands, liberal return policies, and legal and cultural demands of environmental regulations, contribute to the difficulties of constructing such a model. The returns management model should incorporate the following eight dimensions into its system:
1. Workflow and business rules that process returns quickly from key channels in order to halt or decrease products value. The longer a product is out of the cycle the more its value decreases.
2. Ability to handle large volumes of returns with little advance knowledge of incoming amount of returns.
3. Accurate and current funnels of disposition points and their connecting branches.
4. Data entry points and reporting that enable real-time tracking of products through the supply chain. Visibility is paramount for both the company and the consumer.
5. Analytics to process data in order to inform tighter forecasting, gate keeping, and logistics management.
6. The ability to have flexibility is setting return policy, based on general trends and individual customer habits, through visibility, reporting, and tight BI.
7. Fraud protection against such scams as habitual returns and defense against free “renters”, i.e. customers who buy products with the intent to return them after functional use of them.
8. Accurate and immediate return entitlement validation facilitates customer satisfaction and also provides companies with accurate data for inventory, forecasting and logistical requirements.
Product returns have reached unprecedented heights especially when non-traditional retailing, such as catalog sale returns that can be as high as 20%, is factored into the total volume of global returns. Therefore, the re-evaluation of return management processes in order for companies and firms to run more efficient and cost-effective is necessary. Conversely, when returns are not properly managed, profits go unprotected; there are higher costs in processing returns, and missed opportunities for growth and development.