Managing Product Returns for Competitive Advantage

Product returns have often been viewed by companies as a necessary evil, a painful process, a cost center and an area of potential customer dissatisfaction. However, say the authors, many successful organizations have realized that an effective product returns strategy can provide a number of benefits, such as improved customer service and customer knowledge, effective inventory management and product dispositioning. The authors' analysis divides returns into two categories: (1) controllable returns, which can be avoided or eliminated by actions taken by the company, and (2) uncontrollable returns, which companies can do little or nothing about in the short term. They then describe the five stages of the returns process -- receive, sort and stage, process, analyze, support -- and illustrate how companies as varied as Philips Consumer Electronics, Sierra Trading Post, Road Runner Sports, Altec Electronica Chihuahua, Sauder Woodworking and Est_e Lauder minimize returns and their associated costs throughout the process by applying a variety of tactics, such as improvements in product quality, elimination of "mispicks" and shipping errors, and implementation of programs such as vendor-managed inventory, efficient consumer response and prepostponement.