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Who to give responsibility for the Return Policy?

by Stef de Bont, on Jun 7, 2017 9:44:34 PM

The Reverse Supply Chain has been around for years and every company that deals with returns has some kind of process for that. It is an interesting question who in the organization should hold the responsibility for the return policy. Let’s look at a few options.

Option 1: The Return Policy belongs to Logistics

In (on-line) retail distant-selling regulations give customer the right to issue an undisputed product return within 14 days after purchase. Many will say that these returns occur just after the product has been shipped. Dealing with these commercial returns is part of the delivery process. So it does make sense that returns belong to the responsibilities of the logistics (warehouse and distribution) organization.

To evaluate this logic a simple question can be asked. Who else would have an interest in a good return policy?

The product return involves a service delivery (e.g. refund or exchange) to the customer and the service delivery performance influences customer loyalty. So the customer care organization might have an interest.

The returns also involves the restock of returned products that are in good condition. Or the disposition of products in bad condition. Both involve inventory management and the financial balance position. So the procurement and financial organizations might have an interest.

Option 2: The Return Policy belongs to After-Sales Service

In many industries returns occur in case products cannot be used by the customer because of a defect (repair), planned service (maintenance) or unplanned issue (recall). In all cases the main priority is to safeguard the continuation of using the product by the customer. In many cases product usage involves a secondary revenue stream (e.g. mobile phones). Dealing with these service returns is part of the after-sales service process. So it does make sense that returns belong to the responsibilities of the service organization.

Who else would have an interest in a good return policy?

The product return involves transportation and handling. Activities that involve costs that are often irrelevant for the service organization (customer service first) but relevant for the logistics organization who holds the budget.

Defect products require some kind of disposition like repair, refurbishment or recycling. The chosen disposition tactic defines how value is created from returned products (e.g. repair or parts recovery for spare parts). The supply chain organization should have an interest in that. The disposition tactic itself might be subject to change during the product-life-cycle. The product management team should have a stake in making these choices.

Option 3: The Return Policy belongs to Environment, Health and Safety

At the end of useful or economical life products will be declared obsolete by its user. Take back obligations (e.g. WEEE) require products to be retrieved from the market and this might lead to take back returns from the customer. Take back returns enable sustainable disposal and product value recovery. So it does make sense that returns belong to the responsibilities of the EH&S organization.

Who else would have an interest in a good return policy?

Take back returns involve costs of logistics (transportation and handling) that are part of the budget of the logistics organization. For sure they will keep an eye on these returns.

Take back returns can also be a good marketing tool to engage with a customer who is about to stop using a product and might want to buy another one. It also is a tool to setup a trade-in program to support a new product introduction. Product management and Marketing & Sales should have an interest in these returns.

Who finally holds the responsibility for returns?

Empowering one organization to hold the responsibility for the return policy is not that easy. Dividing the responsibility over multiple teams will likely lead to a situation where the opportunities are not fully leveraged.

How would you organize reverse logistics in your company? How does your returns management process look like?
Topics:returns managementreturn policy

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