And I’m not just talking about the significant savings opportunities that can come from optimizing your trash pick up with a good spend analysis, as discussed in SI’s recent post that asked [IF] You Know How Much Your Trash Costs You? An average retail chain will write of a lot of damaged inventory and discard it in the dumpster when, in fact, that inventory, if repaired, or, typically, returned in a timely manner, could result in significant dollars back in the retail chain’s pocket.
As pointed out in a recent post over on the Supply Chain View from the Field on Reverse Logistics: What happens to all of those product returns you’ve been making, anyway?, what typically happens with a return that could result in a credit to the retailer is that it ends up in many cases going into the dumpster even though, in many cases, the product is still good. This happens for a variety of reasons. The store manager doesn’t know that a return to the manufacturer will result in a credit. The store manager believes it will cost more to process the return than discard the item (or, if the store manager is lucky enough, sell it to a flea market). The store manager knows that there is money that is probably worth going after in the return, but has to use a new returns management / liquidation system that they don’t know how to use and can’t figure out on their own because it’s clumsy or ill-defined (like the SARS system that has been pushed down to individual stores by Home Depot and that could spell the beginning of the end). Or maybe they can figure out how to record the damage, get a pending credit, but lose the credit because they don’t process, and (bar)code the return properly.
Returns, which can often be refurbished, repaired, re-sold, or in the case of a NPI (New Product Introduction), returned to the producer/manufacturer within a certain timeframe for a full refund as per the contract, may not have the profit potential of a product that is not returned, but they still have profit potential and, most importantly, when properly managed, do not result in expense and loss. Proper reverse logistics and returns management, which is standardized, near real-time, and provides multi-channel visibility (as discussed in this post which brought you Reverse Logistics Tips from World Trade Magazine, significantly improves the bottom line and should be performed by every retailer and reseller.
For a few more tips, check out Rob Handfield’s tips from his post on Reverse Logistics: What happens to all of those product returns you’ve been making, anyway?.