In supply chain management process, returns management is the part which deals with the material returned from retail stores. The activities that are covered as part of returns management are reverse logistics, gate-keeping, and avoidance. Although organizations have ERP or SAP software to manage forward logistics supply chain program, sometimes they fail to include the returns management process into the program.

Sometimes companies give least priority to returned material. But, returned goods should be accounted for correctly to enable organizations to do some re-work and covert them into ROI again. The returned materials are usually divided into four categories: items for re-packing, items for repair, items for re-work and items for scrap.

The items listed under re-packing are those that require immediate attention because the defect lies only in the primary or secondary packaging and not with the product. After repacking, they are sent back to line or retailer. Manufacturers try to get the work done within 24 hours to avoid any delay.

The items listed under repair are those that need to undergo minimum amount of re-work on them. Here, the manufacturer may have to allocate jobs or tasks to other divisions or departments to take up the jobs as part of their regular work schedule. Sometimes, they are assigned as high-priority tasks.

Items for rework are those that may require large amount of activity. Some parts may be in damaged condition and they may require the material to be sent back from the start of the supply chain process. Items under this category usually take a long time to get back to sales line, so this process is undertaken based on assessment done by manufacturer with regard to its future sale value.

Those that do not come under any category will be scrapped immediately (discretion lies with the manufacturer). Since manufacturer also earns from scrap yard sales, it is important to make the ‘scrap’ decision early.

When supply chain solutions from leading market players are used they bring economic benefits to the enterprise. By implementing the best solution for reverse product flow, the manufacturer can recycle or rework on the goods and send them back to sales line early.

Returns management solutions from leading supply chain solutions can enhance money value to returned goods.

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