Edition 58
Returning Thoughts
by Paul Rupnow, Andlor Systems

Return to Menu

Reverse Logistics teams who take the time to really understand the Receiving process have the opportunity to impress their leaders, clients and financial teams by keeping costs low, returns flowing rapidly and creating the opportunity for much bigger financial gains from quicker recapture of higher values for the returned assets.

Unlike the forward logistics receiving process (inspect, match to expected receipt, put away), the Reverse Logistics receiving process is often more involved. But a more involved receiving process does not necessarily mean that Reverse Logistics Receiving is difficult.

The primary goal for the Receiving team is to receive and process quickly, but do not forget the next goal is to enable the highest value recapture for the returned items. An effective “Best Practices” Reverse Logistics Receiving team requires planning, defined processes and a software system to help manage and optimize the Receiving, Sorting and Put Away processing. With these things in place 3PL’s (3rd Party Logistics Companies), 3rd Party Reverse Logistics Service Providers (3PSP’s), Depot Repair providers, Manufacturers, Retailers, Fulfillment or E-commerce groups can generate significant savings and much higher asset recovery values.

The following 9 tips will help you assemble or refine your Reverse Logistics Warehouse Receiving, Sorting and Put Away processing:

1. Plan - have a plan for how you will handle and process each returned item, in any condition, from the second it arrives until the second it leaves the warehouse as refurbished, processed or scrapped.

2. Identification - identify Sender, RMA/Order, Item(s)/parts as the first step upon arrival. Additionally, many items benefit from a barcoded label, “license plate” or traveler for better tracking and quick identification as the item is processed.

3. Matching - after identifying the units, match the items to the RMA, to ensure it is eligible to be received. For retail returns, use a UPC barcode scanner for higher volume quick SKU item identification.

4. Condition Assessment - set an expected condition, such as New, New Open Box, As Is, Used or Needs Repair. Report any exceptions and reclassify.

5. Disposition Rules Engine - utilize all the data you have collected and combine it with condition and disposition plans to create “rules” that are utilized to prompt the warehouse staff to take action. Build the rules around:
a. Item setup - setup your inventory items with as many attribute details as possible
b. Grading/Condition system - determine how you wish to grade or describe the condition of your returned items, typically for easy resale, such as New, New Open Box, Refurbished, Used, Not Working.
c. Highest Value Disposition channels for each item - determine your best value channel for each grade of the item
d. Refurbishment or Processing streams - determine the possible streams you wish to flow the item though (both in and external to this facility) to repair, refurbish or upgrade it into the condition you need for highest resale value or to just flow the low value bulk items through with as few touches as possible.

6. Rules - with all the above data, many “rules” can be created so that each item is handled optimally at each step of your processing. Example rules: All items with current resale value less than $10 go to “bulk” stock to be sold as a large lot. All high value items with excessively damaged packing go to re-package location by manufacturer. All high value items in New Open Box grade B condition with a Priority Item flag go directly to outbound priority pick locations for immediate shipment availability. Providing the manufacturer/product owner with visibility to manage and create rules is essential to success of the processing and highest value recapture.

7. Put Away - use staging locations, pallets or bins to sort and consolidate “like” units and to enable group processing from stage to stage in your workflows.

8. Aging - most inventory items lose value rapidly when idle, furthermore idle inventory often means a decision needs to be made. Aging will prompt action and avoid decision paralysis.

9. Configurable workflow - not all units need to be processed in the same order, especially if the units arrive in different conditions. You will need the ability to create different workflows with different process orders for each item.
For the warehouse staff, the complexity is gone. Staff Training is simple. A good software system, rules and workflow make processing rapid and effective. The software does all the hard work and makes all the decisions for the user. The user is just instructed where to “Put Away” each unit at each step.

It is time to revisit the Reverse Logistics Receiving opportunity and convert these tips into action. Your clients, customers, finance team and CEO may be very impressed with the results

Good Luck!
Paul Rupnow - Director, Reverse Logistics Systems, Andlor Logistics Systems Inc. Editor - Reverse Logistics Professional Report Business Insights and Strategies for Managing Product Returns

Return to Menu