Supply Chain KPI Killer #3: RMA Processing Bottlenecks - Streamline Returns With Tech

Our ongoing series of Supply Chain KPI Killer articles explored how receiving errors can significantly impact your supply chain's performance. Today, we'll explore another critical area: Return Merchandise Authorization (RMA) processing. Inefficient RMA handling can lead to customer dissatisfaction, increased costs, and delays in the reverse logistics process.

Obviously, many more issues can happen along the way of RMA processing. In this article, we reveal more about RMA and how to process it efficiently to lower your error occurrence. See more tips and tricks to improve your Supply Chain KPIs.

What is return merchandise authorization (RMA)?

Return Merchandise Authorization (RMA) documents are essential for managing returns in the supply chain. Simply put, they serve as a tracking mechanism and provide critical information for efficiently processing returns. But still, you may wonder what that is.

So, let's put it more simply. If you're an experienced logistician, you may already know some of these facts, but not all of us have that essential knowledge. RMA is a number that helps identify items through systems like WMS systems or ERP systems, where purchase orders are registered. This allows company owners to trace the entire life cycle of a certain item, from manufacturing to customer and backward. Sometimes, the same items are sold again to another customer. This happens if the e-commerce process includes recovery and refurbishment processes for items. Most likely, if you purchase a high-tech item and it's returned, it can be scrapped, refurbished, and sold again. RMA can help businesses track this process from end to end.

I hope that is clear. So, here are the key elements of an RMA document include these:

• RMA number. A unique identifier is assigned to each returned unit.
• Customer information. Name, contact details, and order number.
• Product details. SKU, description, quantity, and purchase date.
• Reason for return. Customer-specified reason for the return (e.g., defective, incorrect, unwanted).
• Return authorization. Indicates the seller's approval for the return.
• Return instructions. Specific guidelines for packaging, shipping, and documentation.
• Refund or replacement details. Specify the desired outcome of the return.
• Processing date. Date the RMA was issued.
• Return deadline. The deadline for the customer to return the product.

All the above data is kept in the system for further evaluation, including customer service processes.

What does the RMA return process look like?

The RMA return process in eCommerce begins when a customer claims a return based on their warranty agreement. He or she goes to a B2B portal on the website, fills out a form with the SKU number of the item or Sales Order number, and requests a return to receive a new item or a refund. The system automatically recognizes the RMA number assigned to this Sales Order (SO) or Purchase Order (PO), depending on the case. All data related to the item is now tracked down to the warehouse. Once the item arrives at the warehouse, the inbound clerk performs the receiving process and can add additional information to the RMA. This information can indicate, for example, that the box with the customer's return doesn't contain the required item. At this stage, based on the RMA, the return process and the customer's claim to maintain their warranty agreement for the item will be declined simply because the customer sent the wrong item.

A similar process applies to B2B, but most of the returns in B2B cover more units, and shipments of returned RMA-based volumes can exceed several pallets. In some cases, this doesn't happen too often as returns of such size also bring higher shipping costs.

The typical RMA process involves the following steps:

1. The customer initiates a return. The customer contacts the seller to request a return, providing details about the product and the reason for the return. For eCommerce customers, this can happen via a B2C/B2B portal and, in some cases, via direct email for B2B.
2. RMA issuance. The seller generates an RMA number and provides instructions for returning the product.??
3. Product return. The customer ships the product back to the seller, often using a prepaid shipping label provided by the seller.??
4. Receiving and inspection. The returned product is received and inspected for damage, defects, or missing.
5. Processing. The RMA is processed based on the customer's request and the seller's return policy. This may involve issuing a refund, replacement, or repair.
6. Customer notification. The customer is notified of the status of their return and any next steps.

What are common errors during RAM return authorization?

RMA processing can be complex and time-consuming; errors can occur at various stages. This is time-consuming if you don't have an automated process and software that can smell less register and validate returns with RMA. Inefficient RMA processing can significantly negatively impact key performance indicators (KPIs) related to operational efficiency.

Even with the best intentions, mistakes can lead to delays and growing customer dissatisfaction, directly leading to increased costs. In this article, we explained how understanding common errors in RMA processing is essential for businesses to identify and address these issues. By understanding all that, you'll be able to ultimately improve your overall efficiency and customer satisfaction.

Here you can find common errors during the RMA process:

• Delayed RMAs. Slow response times to customer return requests can lead to frustration and dissatisfaction. This happens when Customer Service teams are overloaded with work.
• Inadequate information. Incomplete or inaccurate information on RMA forms can hinder the processing and resolution of returns.
• Improper product handling. Improper handling or damage to returned products can result in additional costs and customer complaints.
• Processing delays. Inefficient processing of RMA requests can lead to delays in returns. Let's say that your KPI is about 2 hours for the receiving process. If your inbound clerk is late, your customer may see this in the system as items were registered late versus inbound log registration (which is arrival time).
• Lack of communication. We often highlight poor communication with customers about the status of their returns. This can undermine trust and loyalty in the long term.
• Data entry errors. Simple typos can cause confusion and make it difficult to resolve returns. So, for example, if paperwork is inaccurate or the barcode for scanning is damaged, the inbound clerk can do it all manually to the system, and errors occur.
• Inventory discrepancies. Sometimes, inbound clerks can receive items that don't exist. Later, if a returned item is no longer in stock but was processed, it can potentially be shipped system-wise to new customers. So, this is quite a big issue.
• Unfair returns. Customers may try to return items they did not buy or that have been damaged through misuse. In fact, customers may make false claims of defects or damage to avoid paying for products.
• Disputes with vendors. Vendors and sellers may disagree on whether a return qualifies for a refund or exchange.
• Compliance issues. Failure to comply with local or international return regulations may result in fines or penalties.

How can the return merchandise authorization process be improved to avoid KPI hits?

To streamline your RMA process and avoid these common pitfalls, consider the following strategies:

Implement an RMA registration system:

• You can use a dedicated RMA system or integrate RMA functionality into your existing warehouse management system (WMS) or inventory management system.
• Automate the RMA process as much as possible to reduce manual errors and improve efficiency.

Provide clear return instructions:

• Clearly communicate your return policy and procedures to customers and give instructions such as Standard Operating Procedures (SOP) to your inbound clerk.
• Include detailed instructions on packaging, shipping, and documentation requirements.

Utilize technology:

• Implement barcode scanning or RFID technology to track returned products accurately with your custom software and mobile devices.
• Use reverse logistics software to manage the entire return process, from authorization to inspection and processing.

Streamline inspection and processing:

• Train staff on efficient inspection procedures to minimize processing time.?
• Implement a Document Management System for better paperwork control.
• Implement quality control measures to identify and address any issues with returned products.

Enhance customer communication:

• Provide timely updates on the status of returns to your co-workers and admin staff.?
• Use customer relationship management (CRM) software to track customer interactions and preferences. Good substitutes for this can also be an order management system, which can provide tracking on RMA.?

Analyze and optimize:

• Regularly review your RMA process to identify areas for improvement.
• Use data analytics to track key performance indicators (KPIs) related to returns and identify bottlenecks. Let your personnel run KPI from each stage so that anyone can be involved in the process of reporting issues. You can create a list on the whiteboards where inbound clerks can directly add errors or add features in your WMS for KPI recording with media such as photos and videos.?
• Implementing these strategies can significantly improve your RMA processing efficiency, enhance customer satisfaction, and reduce the negative impact of returns on your supply chain.

Finale takeaway of return merchandise

RMA processing is a critical aspect of supply chain management that can significantly impact customer satisfaction and operational efficiency. Ineffective RMA handling can lead to delays, increased costs, and of course, damage to brand reputation. Moreover, handling RMA is a key component of the supply chain that directly affects key performance indicators (KPIs). Inefficient handling of returns can lead to your performance drop-down visible through KPI metrics.

Is your RMA process struggling with inefficiencies? Contact us today to learn how our experience can help you streamline your returns handling and improve overall supply chain performance. Get your software partner today!