Returns Management Best Practices

Paul Adamson

Spinnaker (a Supply Chain Services Company)

padamson@spinnakermgmt.com

Overview

With greater than 10 percent of corporate revenues spent onreturns management, it is vital for executive leadership to focus theirefforts on this important part of supply chain.

In addition to margin improvements, effective returns managementpractices positively impact the customer experience, help drive repeatpurchase, as well as, enhance a firm’s brand and reputation for actingresponsibly in the circular economy.

Today’s discussion is simply a high level overview of areas you couldimpact in your reverse supply chain. Links to additional reference materialare available at the end of the presentation.

Who am I?

• Just a guy who:• Loves returns and the circular economy

• Leads the business development and marketing teams for Spinnaker

• Focuses on growth across our practices• Supply Chain and Reverse Supply Chain Consulting

• Returns Management Solutions

• Supply Chain and Technology Staffing

• Who is Spinnaker?• A holding company for supply chain focused companies – Consulting,

Services, Support, and Staffing

• 350+ resources globally

• Learn more at www.spinnakermgmt.com

What we are talking about today…

Strategy

Secondary Markets

Labor MgmtInventory

Mgmt

Consumer Engagement

Metrics

Components of Returns Management Best Practices

Strategy

REASONS FOR DEVELOPING A RETURNS STRATEGY

• Remain competitive in the market place

• Address the needs of the consumer

• Stay true to your core mission

3 COMPONENTS OF A WINNING STRATEGY

1. Strategy must be based on RETURNS – one size does not fit all!

2. Align the returns strategy to overall company goals

• Cost, Control, Consumer

3. Create business case for returns

• Evaluate the economics of returns

Secondary Market Strategies

• Brand Protection vs. Margin Improvement

• Must be able to answer the question (goes back to strategy!)

• Leverage “secondary markets” as “growth markets”

• Test flavors of products – conditions, warranties, etc.

• Develop a play book of products, distributors and end customers

• Invest for the long-term

• PARTNER WHERE IT MAKES SENSE

• Explore multiple markets

• You must diversify – lower risk, improve margin/revenue

Labor Management

The goal is to increase flexibility, scale and visibility into team productivity!• Labor typically represents as much as 70% of a warehouse / production facility’s cost

profile

• Labor Management is about people – shifting from stick to carrot

• Incentives must be aligned to actual benefits

• Invest time & effort to document the benefits

• Succeed by:• Early involvement of cross-functional team members

• Add cross-training to SOLVE THE NEVER ENDING BALANCING ACT

• Clearly communicated set of objectives

• Executive buy-in and commitment

• Create connections between “labor” and Eng., Customer Care, Finance, etc.

Returns people are different – talent selection criteria is critical!

Inventory Management

Art vs. Science – Understanding the balance between inventory levels and service levels

• Returns planning as a key driver of bottom line performance

• Focus on inventory turns and working capital consumption

• Evaluate existing inventory management parameters• Safety stock and safety time calculations

• Manufacturing lead times

• EOQ/MOQ

• Multi-tiered postponement strategies

• Alternative sourcing strategies

• Utilize appropriate enabling technologies to power better decisions

Use data to make decisions; prepare for a future of rules based decision making

REACTIVE PROACTIVE

Consumer Market Engagement

Win the war with great customer experience• Understand the Age of the Consumer

• SOCIAL MEDIA AS AN INDICATOR OF RM MATURITY

• Customer experience leaders create a customer experience that drives engagement and loyalty• Anticipate, Define, Communicate

• Customer Segmentation

• Service Differentiation • Ease of Process

• Issue Resolution

• Asset Value Accuracy

• Credit Timeliness

Game Changer

Metrics

Numbers never lie, but they can be misinterpreted

Understand the 3 Steps to Metrics Management

1. When to introduce metrics

2. What the right metrics are for your business

3. How to make sure the metrics work for you & your team

• Returns metrics are different

• Require a greater degree of granularity

• Measure only what is important, can be understood and is actionable

• TODAY’S METRICS MAY NOT APPLY TOMORROW

• Must establish a regular forum to review and adjust

“Measure what is measurable and make

measurable what is not so.” - Galileo

Metrics Maturity

• The complexity of a returns management operation lends itself to a wide spectrum of maturity levels

• When viewed in simple terms, the business of returns metrics can be viewed as:

“Measure what is measurable and make

measurable what is not so.” - Galileo

Metrics can’t be a set them and forget them…

Metrics tell the story and must be shared to show leadership the value of returns to the business.

What we talked about today…

Strategy

Secondary Markets

Labor MgmtInventory

Mgmt

Consumer Engagement

Metrics

Q&A

Other Information

Partnering with Spinnaker provides our clients with access to a broad set of knowledge and supply

chain thought leadership.

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