Developing an Efficient and Cost-saving Return Process
National consumer electronics retailer improves return recovery rate to 95% and creates efficiencies in freight, storage and labor.
Key Challenge
Returning 150,000 parts annually from “carry-in” repair
facilities and “in-home” technicians to a consolidated
warehouse and then to 100 suppliers took time and
created other problems—including challenges in record-keeping and tracking, excess inventory on shelves,
inventory obsolescence, carrying costs and labor for
handling.
Solution
FIDELITONE offered this client a robust virtual return process, which not only served to rein in inventory control costs but also eliminated the first leg of the process by automating the system between the client and suppliers. The first step was to eliminate the consolidated ware-house as part of the returns process. This allowed the returns to ship directly from the client repair facilities and technicians to the supplier. From point A to point B, the client can now track any return from the repair facilities and technicians to the suppliers because an electronic return label and shipping manifest is automatically generated and attached to each piece. The information is electronically updated and shared with both the client and supplier for confirmation.
Outcomes
In a sense the system improvements created much higher visibility of product movement. One of the most obvious benefits came in the form of timely resolution. Additionally, the return recovery rate moved from 70% prior to the system improvements to over 95%.
Elimination of the first leg of the freight saw a direct savings of over $500,000. Additionally, the no-touch virtual returns process created efficiencies with 30 fewer FTEs and the reduction of warehouse space by 35,000 sq. ft. The improvement in reduced obsolescence yields millions of dollars to the client. Today, the virtual returns program has grown to more than 2.1 million parts per year.
In addition to an improved return recovery rate and cost savings, the system automatically opens an accounting record for both the client and the vendor. It generates 21-, 60- and 90-day escalation and resolution alerts. Suppliers can be given advance notice of returns through this virtual, electronic return process. Consequently, all returns (including core items) are now handled in a more expedient and reliable manner.
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