If you’re a fourth-quarter business, you’ve no doubt already inspected your warehouse systems, double-checked demand forecasts, stocked your shelves, reevaluate labor processes to optimize order fulfillment. But in addition to preparing for the holiday season’s spike in output, you also have to get ready for the inevitable return of products.
Developing an efficient, effective reverse logistics strategy is a major task that involves numerous functional areas and collaboration. Now is the time to turn the light on this neglected corner of the distribution center, giving yourself the gift of increased profitability and achieving their new year’s resolution for customer satisfaction. Instilling the guiding principle of effective returns management and executing the plan requires the following steps:
Take it to the top and across the board. A champion, preferably from top management, should be selected to oversee the progress of the plan. A cross-functional team (manufacturing, distribution, logistics, IT, customer service, finance, and marketing) should meet weekly or on an as-needed basis.
Assess current operations. A current-state assessment will identify the effectiveness of the returns process (the number of returns, the disposition of the products, how long it takes to process return authorizations and issue credit, etc.). An analysis of each supply chain component involved—from the manufacturer to the customer and back—will provide a basis for moving forward.
Plan and implement. Fix a budget to determine project scope, and set performance goals and a timeline. Establish key performance indicators (KPIs) to measure operations performance. Then design a detailed solution, including the specific process each player and channel will follow as well as new systems configuration within the distribution center. Implement the returns improvement design, and establish a formal, repeatable training program for all of the updated procedures, software, and equipment.
Review results and continuously optimize. After startup and training, the cross-functional team should analyze the updated reverse logistics process by comparing performance against the set KPIs. They should also collect qualitative and quantitative data by listening to customers and staff concerning customer satisfaction, ease of process execution, and performance levels. If the performance goals have not been reached, the process should be reexamined and continuously improved.
Will Taylor is associate marketing director for Mason, OH-based Forte, a distribution supply chain consulting and engineering firm.