Most businesses have a specific policy when dealing with returns from customers. Thus, it is important to establish a solid returns management system to ensure that all returns are sorted out efficiently and to make the entire process as smooth as possible. If not, then it will take up much space and time from the employees and could overshadow more important tasks that need to be dealt with. Returned merchandise could also take up an entire heap when you perform physical inventory of the warehouse where these merchandises are stored. Hence, it is not only a practical measure to adapt a more efficient management system for product returns, but is an essential must for business operation.

Below is a step by step procedure that will walk you through the process of handling returns in a more efficient manner.

Step 1

You need to identify what merchandise can be returned by customers. Business organizations need to set clear what can be returned, which are mostly based on goods that are currently on stock. Products that have discontinued its production or special orders are usually not allowed for return since there are no new merchandise available for replacement on the product.

It is important though that you make this rule known to customers to offer fair trade to them. If possible, let them know about this particular rule or limitations to the returns policy before they choose to buy the product. But make sure to come up with a formal agreement to ensure that all parties have agreed upon it, such as through an invoice or packing slip. However, make sure to provide enough leniency for the top management to override such policy in certain situations. Business organizations must also put into consideration how a particular transaction would benefit the company in terms of profitability.

Step 2

You need to handle returns as you would other stock receipts in the business. Never attempt to dump or dispose off any merchandise that is returned. Instead, you must seek out return material authorization or RMA to your customers for proper documentation of all items that are returned. Make sure to list those items along with proper quantity to ensure that your customer has proper authorization that give them the right to return any product purchased from you.

Although you will be giving the authorization to the customer, do not forget to keep a copy to yourself such that you can properly document it and for legal procedures, should they arise in the future. The RMA will serve as packing slip that will be utilized by people who will receive the item that is being returned by the customer. Do not forget to remind the customer about the said RMA and emphasize its importance in order to warrant that return.

There are currently four categories of items that are received from customers, which are: 1) items that can be used or sold given its current conditions, 2) items that need to be repaired before they are put back in stock, 3) items that must be sent back to the supplier, and 4) items that need to be scrapped or disposed off for good.

Step 3

In the third step, you need to calculate the cost involved with the returns management. You need to compute the time it takes for a returned product to go back to its normal storage location, as well as the time it takes for the employees to issue the memo about the returned product. It is important to emphasize the time needed to carry out those tasks since it will also mean that your organization’s productivity level and ability to make profits are directly affected.

There is a formula suggested by experts for this computation and enable you to come up with a more effective returns management system. You must divide the hourly wage of the employee with the number of items that they can put away from the returned list within the same amount of time. The result will enable you to determine whether it is causing losses or profits to the company. In the end, this approach to a returns management system will satisfy your customers and also ensure that you do not cause a huge blow to the business operation.