Mirror Images of Sales and Returns
Quality relates to perception as they say, and profit links a dollar value to this perception. Sales and return are the two sides of the same coin. They depict and demonstrate the extent of both quality and profit hand in hand. While returns trickle in throughout the year, for many consumer goods retailers the annual holiday season is characterized by an flurry of returns. Successful organizations around the world provide an easy opportunity to the customers to return the products. It is a fact that many customers prefer to shop at stores that offer the best returns policy along with bargain pricing.
If we look at returns as a function of all these variables mentioned above, then we can conclude with the following:
Probability(Returns) = XF(Decrease in demand) +YF(Incorrect forecast) + ZF(Damage in transport) +AF(Quality issues) + BF(Stores inability to sell) + CF(Incorrect promotions)
Being a world class organization is never easy and it has never been. Achieving this competitive advantage, along with the high cost of processing returns, points to a simple fact: managing returns is just as important as managing sales. It is widely understood that retailers and distributors end up loosing close to 15% of sales revenues handling returns each year. The need of the hour is to avert this avalanche of returns by combining the best practices in efficient handling and management techniques with appropriate technologies. This will lead to reduce the return management and handling cost for the organizations and divert the fusillades of customer returns.
The prime factors in honing one's return capabilities are:
- Customer-Reimbursement Process: It is vital to compensate the customer as soon as possible. This needs speed and accuracy, thereby saying that advanced information systems must be put in place to support this short cycle time while ensuring the highest possible degree of accuracy. Think about it, this is such closely tied to your customer relationship management.
- Product Quality and Handling Cost: Efficiently handling the products returned is essential for controlling costs and product quality. The goal is to maximize the value of the goods that are returned. Organizations need to enhance the value of the returned products while minimizing the handling cost at the same time. Think about it, this is such closely tied to your supply chain.
- Technology Imperatives: The automated material handling systems and storage equipment utilized in the returns area must be modular, flexible and easily scalable to handle anticipated peak volumes and growth. Material handling equipment, controls and software systems must support the transaction volumes and quick crediting requirements.
I gather reading on Reverse logistics in this relation. In my next blog I will churn out a few thoughts on the same as it applies to returns management. SMART Retailers around the world, are imbibing the best practices in operational and technology management to nip the bud of return before it blooms.
