The supply chain is filled with instances where a delivered product does not necessarily meet the expectations of the merchant, consumer, or other buyers. When a product needs to be returned, it must go through a return process, referred to as Reverse Logistics, and obtaining the return merchandise authorization (RMA) is typically the first step of the process. However, return merchandise authorization may include several different aspects of service-after-sale, such as warranty management, service agreements, analysis of returns, and management of end-of-life equipment, vendor management, and replacement. Furthermore, many RMA policies may have subtle differences with these common interests. Let’s take a look into how RMAs function and some common examples of RMA policy.
What is Return Merchandise Authorization & the Functions
RMAs exist as reverse flows of products within the reverse logistics industry. At the heart of Return Merchandise Authorization policies, rests two primary functions of RMAs: to prevent improper returns and gathering information about the return. Now, you have probably thought your business could handle all returns in-house; however, returns management can become too complex and impractical for in-house handling.
For example, a business may sell 1,000 items online or for remanufacturing companies who have core returns, and 25 percent of such items are sent for returns due to a manufacturing defect. Rather than having 250 customers arriving in the store, or sending the items to your business, you need a means of encouraging the backward flow of these products to the manufacturer and obtaining financial compensation for doing so.
In addition, small to midsize companies may not have the resources needed, which includes both financial and labor resources, to handle mass returns for defective merchandise. As a result, employing a third-party logistics provider, who has the technology in place to handle RMA processes seamlessly becomes crucial to your ability to continue operating.
Common Examples of RMA Policy
In modernity, most RMA requests are completed through the Internet, so having the ability to process RMAs has become a crucial aspect of the tech world. Upon receiving the initial request, the representative, aided by the help of reverse logistics technology, needs to begin gathering information about the product. This information may include date of sale, order, and delivery, the channel through which the product was obtained, the method of payment, how many items need to be returned, and the reasons for the return. With the right technology, and with responsive design so the web-based revlog technology works on all devices, it could be as simple as hitting the easy button for a logistics manager. This could spur a competitive advantage with an automatic return authorization. All the logistics manager has to do is send their part number and serial number and the technology automatically approves the return so they don’t to touch the return until it hits their dock.
During the information collection process, a Return Merchandise Authorization policy needs to follow three different paths, as explained by Reverse Logistics Magazine®. These paths focus on the relationship between the supplier and channel of transport, the product quality, and consumer accommodation. Let’s take a close look at these areas.
Relationship Between Supplier and Channel
When an item is returned without defects, it may be used for multiple purposes. For example, it may be sent off to an outlet center as it becomes obsolescent, remanufactured to recover the value, restocked in the store, sent to another center in stock rotations, or exchanged following an order error.
This aspect of information gathering focuses on the quality of the item for the return. For example, was the item defective; will it need repackaging if opened; was it missing parts; or does it not fit into the consumer’s needs?
Customer accommodations refer to how the Return Merchandise Authorization policy seeks to make the consumer whole again. This may include offering an exchange for a similar product, exchanging the item for the correct product, or as part of a warranty replacement.
After gathering information, an RMA policy should move into the second phase of RMA: validation of information.
Information may be considered invalid or valid for a number of reasons. The return request may be outside of the refund and exchange window. However, you must also consider if the cost of denying the return will cause permanent harm to the buyer-seller relationship. For example, a return of $100 on a single item easily outweighs the cost of losing $10,000 worth of orders. To help keep things simple, follow the following steps.
- Verify the terms of the return contract.
- Verify the existence of the purchase order.
- Verify the identity of the person returning the item.
- Verify the purchase price of the item, especially since items may have been on-sale when purchased.
- Did the buyer receive any additional discounts on other merchandise as part of a promotion?
- Should the consumer receive the Return Merchandise Authorization approval as part of guaranteeing customer satisfaction?
Next, an RMA policy will need to have a chain of events for reviewing the following:
- Warranty policy.
- Buyer-Seller contract.
- Policy for customer service.
- Specification of RMA Type: Exchange, Refund, or Repair.
- User Expectations for the item.
- Product repairs.
Additionally, the Return Merchandise Authorization policy needs to take into account how the buyer-seller relationship may change due to the return, how will the return affect marketing strategy, does the item have additional use in the product lifecycle, and how can such a return influence continued business with the consumer. Upon analysis of all these factors and following these processes, the merchant may grant, or deny the return merchandise authorization.
Need help sorting this all out? Get in touch with us today and we can help you with any RMA strategies and arm you with the technology needed to effectively execute that strategy.