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    Reverse Logistics Magazine - Managing The Retail Return Nightmare - RL Magazine - Reverse Logistics Association

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    Reverse Logistics Magazine - Managing The Retail Return Nightmare - RL Magazine - Reverse Logistics Association

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    Reverse Logistics Magazine - Managing the Retail Return Nightmare | RL Magazine | Reverse Logistics Association 8/24/18, 2(40 PM

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    Managing the Retail Return Nightmare


    Home by David Cope, MGH Consulting
    Reverse Logistics Magazine, Nov/Dec 2007
    Submit Article
    Corporate Identity & Consumer protection laws across the globe are tightening. Typically in Europe the consumer can
    Logo Usage return any defective product to the retailer within 14 days and request a replacement or a credit.
    With sales through the internet the product doesn't even have to be defective. These returned
    Current Edition
    products then flow back through the retail supply channel back to the manufacturer where they are
    Past Editions credited. This return process in itself is very expensive and difficult to manage, but the larger issue
    for the manufacturer is what to do with the returned material. If the box has been opened the
    News Center
    material cannot be resold and so an alternative solution has to be found. The scale of this problem is
    Author Guidelines increasing and we have seen increases of over 100% over the last two years and predict a similar
    Artwork Submittal trend for the next two years.
    Ad Specifications Add to this increasing product complexity and
    Media Kit interoperability and it becomes very evident that the costs
    of retail returns cannot be ignored. This cost, whether taken
    Media Partnership
    as a straight warranty cost, or credited to sales is growing.
    Circulation Data With reducing product margins it needs to be managed
    Ad Pricing carefully.
    Insertion Order The three major principles for managing retail returns are:
    Article Reprints Control the volume of returns through sensible
    Editorial Calendar validation
    Maximise reutilisation of the accepted returns to
    Purchase Advertising minimise cost
    Monthly Newsletter Allocating the costs correctly to drive the right behaviour
    Industry Events
    "Controlling the volume of returns through sensible validation" means assessing several factors
    Reader Feedback including:
    CIP Downloads a. Scope of material. The first decision that needs to be made is whether the value of the material
    Contact Us warrants validation. Often with low value consumer electronics there is no business case for
    validation and the material should be sent straight for reuse or recycling
    b. Where to validate. This decision is a balance between transportation costs and centralisation
    economies of scale. Ideally the validation is done in as few places as possible as this drives
    consistency and lower costs. Typically, this means that heavy and bulky goods need to be
    validated in country. High value consumer goods are often best validated centrally.
    c. What to validate. The assessment of what to validate involves a good understanding of the
    validation process. Typically validating the return dates through Proof of Purchase and validating
    product completeness and damage are the basics. However, deep technical analysis of the
    customer problem can prove to be very difficult to come to a conclusive answer.

    View Edition 94
    PDF | Mobile | ONLINE

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    Reverse Logistics Magazine - Managing the Retail Return Nightmare | RL Magazine | Reverse Logistics Association 8/24/18, 2(40 PM

    View Edition 93
    PDF | Mobile | ONLINE

    The maturity chart (Figure 1) should help in identifying where your organization is in it‘s
    understanding and management of retail returns.

    Case study

    Situation

    A major consumer electronics company had a growing retail return issue. Volumes were growing and
    were validated at a country level. The validation role was outsourced to a number of local companies
    and the validation quality was generally poor. The validation rules were locally negotiated resulting in
    a bewildering variety of rules. There was some reutilisation of the main unit locally, but almost no
    reutilisation of the rest of the product accessories. The cost of retail returns was taken directly to
    warranty and so there was little incentive for the sales force to control retail returns as it had no
    detrimental financial effect on them.

    Solution

    After a full review of the current situation and options it was decided that a centralised validation in
    Eastern Europe would be the most effective solution. All retail returns are now consolidated in
    country and then sent back to the Retail Return Centre by a single carrier. Validation is completed in
    two weeks and rejected units returned directly to the retailer. Accepted units are credited on
    acceptance. For credited units all of the parts of the sales pack are inspected and fully tested /
    repaired. They are then returned to service stock for use in repairs and serviced exchanges. Translate
    The crediting process has been changed to spread the costs appropriately across warranty, local sales
    and product division to drive the right behaviour.

    Results

    Increased customer satisfaction with the process as credit processes are quicker and easier to
    understand.
    Pan European and growing global visibility of the costs of retail returns.
    Maximised reutilisation of all material. Reutilisation across Europe and developing global
    optimisation.
    Developing standardisation of retail return rules.

    Summary

    Consumer laws globally are only moving one way. For all manufacturers of retail goods, the costs will
    increase. The art is in controlling this increasing costs and ensuring that your processes minimise the
    net costs of retail returns.

    David Cope has over 20 years of experience in after sales service and logistics operations from a
    number of `blue chip' service environments including; IT, Medical, Telecommunications and other
    High Technology sectors. Prior to establishing MGH in 1996, David was with Coopers & Lybrand as
    Principal in the After Sales team. He has also worked for IKON as Service Director and with Xerox in
    various After Sales roles. MGH Consulting specializes in management consultancy and interim
    management, providing a range of services primarily to the high technology sectors, (IT,
    Telecommunications, Medical Diagnostics and Printer / Copier). For more information visit:
    www.mghconsulting.co.uk.
    Reverse Logistics Magazine, Nov/Dec 2007

    Copyright © 2018 Reverse Logistics Magazine. All rights reserved.

    http://www.rlmagazine.com/edition08p18.php Page 2 of 2

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