Positive returns guaranteed
December 1st 2008

iForce processes over 15,000 individual items per day at its returns centre in Saltley, near Birmingham. According to CEO, Mark Hewitt, it guarantees same-day processing, delivering cash flow via credit/disposition, and currently delivers 100 per cent on KPIs

For a long time processing returns had been a head-scratcher for retailers but a growing number are grasping the nettle and realising that opportunities exist for not only gaining revenue but also for providing better customer service.

Legislative challenges brought about by the Distance Selling Act and the WEEE Directive although still open to interpretation are, however, focussing minds on the issue of returns processing.

Yet the strongest driver remains the continued pressure of market driven price deflation. This places a significant and growing need for an efficient processing solution to ease working capital pressure on retailers and to maximise the value of returned goods.

The cost of processing a return can be two or three times that of an outbound shipment of the same item. That's why returns can devour some 30-35 per cent of profits.

However, as between 70-90 per cent of the asset's value goes straight to the bottom line, getting returns processing right can uncork some very attractive cash flow possibilities, not to mention significant customer service advantages.

Having a returns policy is one thing but it is only when you have the solution to make that policy work effectively that it will then become something to shout about – as a growing number of successful retailers are indeed now doing. Retailers who can process returns but with systems that are simply not cost effective or efficient will prefer to keep their returns policy quiet, while those retailers who, because they have no means to process returns, will actually make it difficult for the retailer to return their goods. Ask yourself which retailer is likely to retain the customer? Successful solutions are built around a technologically advanced, streamlined returns processing system, using software to provide real time information enabling clients to pre-plan work schedules and agree disposition/delivery routes before the items have been received at the returns centre, which can need to process big number throughputs. iForce, for example, currently processes over 15,000 individual items per day at its returns processing centre in Saltley, near Birmingham, where clients include Tesco and House of Fraser.

Outsourcing returns processing to a specialist that can provide a scaleable solution is one way of dealing with the issue, particularly if the specialist can guarantee same-day processing with the returns centre delivering cash flow via the agreed credit/disposition route while delivering 100 per cent on Key Performance Indicators.

Receiving returns It's important to find the most efficient means of receiving the returned goods and this rarely includes using delivery vans to pick up returns: encouraging the customer to return the product to a counter at a local branch even if they bought it online will simplify the returns process – for both customer and the retailer.

The retailer can set the returns process in motion at the counter, which requires sophisticated returns processing management software to work out the routes of dispersal. Many large retail chains will link their tills to this software but this can be a costly implementation, especially for smaller users. With systems such as iForce's inhouse ReSCU returns processing system it is possible to have an internet connection to the software, its tools and real-time information, allowing the retailer to pre-plan work schedules and disposition routes before items are received at the returns centre.

The retail assistant simply clicks on an icon on their computer screen to process the return. All that's required is a broadband Internet connection. Furthermore, unlike using a 'wired-up' till connection, this connectivity allows the retailer to utilise the full returns management software package with the potential to save a lot of money.

The returns centre The goods collected at the counter can then be shipped back to the returns centre where testing, repair and repacking prior to goods being returned for resale can then be carried out.

The returns centre itself requires a different set of characteristics to an outbound logistics facility: adequate space for work and goods-in areas is a must, workstations need space for staff to remove packaging and systems will be required to deal with the rubbish and to recycle wherever possible. Staff should be trained to handle returns; adopting barcode scanning will reduce the amount of errors and provide realtime data for the management systems and will allow quick and efficient return of stock to inventory. Procedures need to be in place to set in motion the returns process within the necessary time frame and at regular cycles to ensure goods do not 'clog up' the system. Where the product is on backorder, it can be shipped to the waiting customer rather than sent to inventory.

Deciding the disposition route for a product, even when doing so in line with clear instructions and procedures, will require clear procedures and experienced staff.

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