Uncover Hidden Revenue and Benefits in Your Reverse Supply Chain

In an industry where improperly handled returns can erode 30 to 35 percent of potential profits (source: Gartner), todayï3/4¿s catalogers can turn the reverse supply chain into a powerful source of both profit and customer satisfaction. Managing the returns process more effectively through tighter control and visibility across the supply chain and a more personalized touch with each customer can help you uncover hidden revenue and increase customer satisfaction. Capturing this “hidden revenue” stream can yield numerous benefits. Here are a few:

*Real-time visibility. Especially for online catalog companies, the Internet is increasingly being used to help automate the reverse logistics management process, because it increases visibility into purchase and return behavior. Critical product and shipping information can be tracked, stored, referenced and reported while a product moves from return commencement to receiving to inspection to pre-disposition. A real-time view of your inventory also minimizes product loss and maximizes asset-recovery value.

*Faster reconciliation. Returned merchandise can sometimes sit in your store or warehouse without proper attention, losing value with each passing day. Controlling the speed of the returns process is critical to helping you recover assets and recoup lost revenue.

*Faster turnaround on returns. There is often a correlation between margin and return rates -- the higher the margin, the more forgiving the return policy tends to be. High-tech/electronics products, for example, often are sold on razor-thin margins. A typical PC loses approximately 5 percent of its value for every week it is not sold, so turnaround time is critical. On the other hand, items such as apparel generally are easier to return and can be re-sold more quickly. In either case, turnaround time can mean the difference between profit and loss.

*Smarter shipping strategies. As many catalogers know, shipping contributes to the overall cost of a returns process. Controlling the transportation method used for a return can result in significant savings derived from carrier discounts. Additionally, shipping a pre-paid return label with a return (or allowing one to be generated online from a Web site) presents the customer with an easy and cash-less transaction. The customer simply applies the label and sends back the item. In this way, shipping costs are known and can be netted out of a customer’s refund.

*Personalized customer care. A return can be made into a positive experience for both you and your customer. Using a Web-based returns management approach allows you to electronically capture the reasons behind each return, gauge the perceived quality of a new product and evaluate a customer’s return habits. These tracking data are available in real time so you know within hours (vs. days or weeks) when a returned item is en route back to you. You can use these data to start a dialogue with customers, such as an e-mail note that thanks them for their business and offers incentives on future purchases.

*Cross-marketing potential. Returns management goes beyond pure transaction ï3/4¿ it is also an opportunity to gain helpful information for future business. Historical data and reports that specify which items were sold and how often goods were returned and why can offer powerful insight to improve customer service levels. Taking this a step further, the real-time information generated by an automated asset-recovery system gives you opportunities for up-selling and cross-promotion.

Dave Hommrich is senior director of reverse logistics for Manhattan Associates, a consulting company specializing in supply chain management. For more information, visit: www.manh.com