(Courtesy: Robert F. Blackman at flickr.com)
Let’s keep in mind that a warehouse has a dual purpose. As orders go out, returns come in and a warehouse must be able to accommodate both.
If a warehouse manager were to visit the return area of the warehouse, he would probably see a large number of open cartons holding many different SKUs that need to be identified and sorted according to character. Moreover, it must be determined to whom credits should be issued and return-to-vendor tracking must be created.
The return side of the operation is often neglected because of the complexity of the undertaking and that results in making the process a low priority. However, if neglected for too long a plethora of problems could arise that will affect the efficient operation of the warehouse.
Problems resulting from the neglect of the return process include:
· Work areas that are too small and poorly laid out.
· Too much paper is necessary to describe and track reasons for returned products.
· The absence of real-time tracking does not permit rapid put away or cross docking.
· Poor integration of returned products prohibits quicker allocation and shipping.
· Bad tracking and accountability of un-sellable products makes it more difficult to determine what vendors to bill.
As a result problems fall into the customer service department. These issues include:
· Bad data entry and credit processing due to too much paper being delivered from the return docks.
· No link between data collection and credit processing that could result in over crediting a customer.
· It is too difficult to separate problems by customer, salesperson, truck driver, or warehouse employee to eliminate errors.
These problems can be avoided by following industry best practices in the business process and data collection and flow.
In order to appropriately deal with returns the warehouse needs to figure out an efficient way to identify the products, assign them to a customer, account or a disposition and then physically sort them for processing. Because of the nature of the beast, some items must be discarded or kept back for vendor charge-backs. Not all products will enter electronic inventory. Some merchandise must be repacked and accounted for manually. Moreover, credits are commonly issued later and often for only some part of the return. In short, the process is difficult to automate. Specialized return software that is either a part of a Warehouse Management System or stand-alone, can provide the assistance you need for better control of the return process.
Good software should:
· Separate the physical process from the accounting process.
· Separate responsibility over physical inventory from responsibility over customer credits.
· Distinguish between the reason for the return and physical disposition.
· Control the return process through “Returns Authorizations.” Return authorization allows for the pre-approval of returns and assures the quick identification of returns and the quickening of the overall process.
· Separate saleable returns by a put away zone. Most returns are saleable and will ultimately be placed back into storage. The process must be streamlined. For example, saleable products can be staged onto pallets by destination zone.
· Track un-saleable products with a bar-coded label. Un-saleable merchandise that can’t be discarded is commonly stored according to vendor instructions. Some vendors just require an inventory report to issue credits and others will send a representative to the warehouse to exam the products or to ship to the vendor. An audit trail involving reason for return, date of initial shipment, date of return, customer’s name and more will verify the legitimacy of your claim.
Ways to assure efficient data collection and flow include:
· Handheld scanners.
· An interface with a Warehouse Management System.
· An interface into accounting software.
Creating a process for handling returns may sound and look daunting, but a combination of software and planning can clean up the problem fairly rapidly.