Why You Need a Warehouse Management System Even More During Peak Season

It's Reverse Logistics time for your WMS again!

The need to process items sent back by increasingly fickle customers has become an all-year-round burden across all sectors for third-party logistics (3PL) operators. But there is no doubt that Christmas and the New Year are still the peak periods. The volume appears to be growing. One report put the total UK value of returns at ￡7 billion as recently as 2022, while a newer report just a few months ago predicted the UK total will be around ￡27 billion in 2024. Around half of UK online shoppers have returned goods in the past year.

These headline figures are doubtlessly driven by the significant rise over the last decade in the number of e-commerce businesses. For these, making it easy to make returns is part of their proposition but is in any case demanded by the rules and regulations that govern online sales. At the same time the majority of larger and established retailers, who are generally served by traditional 3PLs, are also seeing increasing volumes of returns. Some of this will be the result of growth in their own e-commerce activities but is also likely to be because these retailers are offering similar terms for items bought in store because that is what customers expect.

At the same time, traditional suppliers of all kinds of product (think building products, car parts, engineering components, gardening supplies etc) that were previously focused on business customers (and are mostly likely served by 3PLs) are now also selling direct to the public through some kind of e-commerce platform. Whether or not business returns have become more common, although it is entirely possible because customers no doubt prefer this option, this blurring of the lines is also contributing to the volumes that 3PLs need to handle.

Managing returns – known more generally in the supply chain as Reverse Logistics – can significantly impact both the financial health and operational efficiency of a business. The ability to manage reverse logistics effectively is crucial for maintaining customer satisfaction and loyalty and is therefore essential for long-term success. What does this mean for 3PLs and their warehouse operators, and are they using the full capabilities of their warehouse management systems (WMS) to manage this vital process? [sp]

Managing returns – known more generally in the supply chain as Reverse Logistics – can significantly impact both the financial health and operational efficiency of a business.

First and foremost, reverse logistics is going to be a significant factor in the future. Making sure an order is correct and delivered to the customer at the right time and without additional problems will remove one obvious reason for a return. Having an efficient WMS can definitely help with that. The challenge for 3PL warehouse operators is to have processes that can deal with returns efficiently and economically, whatever the reason or source, while at the same time meeting customer expectations.Many businesses offer a seamless service where items can be returned under broadly the same conditions to any location. From a supply chain point of view, it probably matters little whether the item was supplied from an online or real-world location or how or why it was returned. The item will need to be processed in much the same way once it arrives back at the warehouse.?

Returns management, or Reverse Logistics, is different to dealing with new stock. Original stock is typically supplied in bulk and delivered into the warehouse in predictable formats with optimised processes. Returns represent a different logistical challenge because they are unpredictable in terms of the timeframe, volume, and condition of the items. This unpredictability can create bottlenecks in the warehouse, slowing down the overall supply chain process. Furthermore, each returned item must be individually inspected, processed, and either restocked, repaired, or disposed of, adding to the complexity.

A WMS can play a pivotal role in addressing these challenges by streamlining the returns process, making it more efficient and cost-effective:

• Dedicated Returns Management: a specialised returns function within the WMS can support efficient processes and decision making and provide an effective interface with staff, automated systems, and other business applications, sales order processing, accounts, and more. Many modern WMS offerings include these facilities as standard and have numerous tools to simplify the necessary integrations.
• Automated Data Collection: technologies such as barcodes, QR codes, and RFID can record and track returned items accurately as soon as they arrive. This reduces the need for manual data entry, minimising errors and speeding up the process. Many suppliers have extended this so that, for example, items returned in-store or collected from the customer’s premises, are scanned at the same time. The information is automatically fed back into the WMS to help with warehouse planning while also providing enhanced tracking and status information to the customer.
• Efficient Processing: a WMS can automate many of the decisions involved in processing returns. For example, it can automatically determine whether an item should be restocked, sent for repair, or disposed of based on predefined criteria. This reduces the need for human intervention and ensures that returns are handled consistently and efficiently. It can also reduce, and possibly eliminate, the need for wasteful, costly, and time-consuming handling and storage processes. For example, making decisions as soon as (or even better before) an item arrives in the warehouse can remove the need to store it until further action is taken, thereby ensuring valuable space is used instead for revenue-generating activities. [sp]A WMS it can automatically determine whether an item should be restocked, sent for repair, or disposed of based on predefined criteria.[sp]
• Optimised Warehouse Layout: using built-in analytics and other tools, the WMS can suggest ways to configure the warehouse to handle returns more effectively. This might include setting up dedicated areas for receiving and processing returns or suggesting how existing areas can be reconfigured for greater efficiency. Making this sort of change can help streamline the workflow and reduce congestion in other parts of the warehouse.
• Resource Allocation: leading WMS products support sophisticated task management to optimise the operations of warehouse staff and infrastructure such as lift trucks and automated handling devices. Dynamic and rules-based task allocation ensures staff are always given those with the highest priority, which can change throughout the shift.Dealing with incoming stock and returns might be a priority as deliveries arrive in the morning but preparing outbound orders is likely to be more important as cutoff deadlines approach later in the day, let alone dealing with the immediate demands of same-day deliveries.Warehouse operators can maximise their capacity and ability to deal with the maximum number of tasks by using these dynamic features. They can be particularly important during peak returns season because maximising efficiency and productivity can help to remove the need for additional, temporary staff.
• Enhanced Internal Visibility and Tracking: a WMS provides real-time visibility into the status of returned items. This transparency allows warehouse operators to track the progress of each return, identify bottlenecks, and make informed decisions to improve efficiency.
• Integration with Other Systems: WMS can interface with other business applications, sales order processing systems, and accounting software. This integration ensures that all relevant information is updated in real-time, facilitating seamless communication across different departments and improving overall efficiency.

By leveraging the capabilities of a WMS, 3PL warehouse operators can significantly improve the efficiency of their returns process. This not only reduces costs but also enhances customer satisfaction by ensuring that returns are handled quickly and accurately. In a competitive environment, the ability to manage returns effectively can be a key differentiator, helping businesses to build stronger relationships with their customers and drive long-term success.

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