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Implementing Effective Returns Management

Managing returns effectively is an integral part of a comprehensive supply chain strategy. With the power to improve profitability, customer satisfaction, and overall efficiency, having a comprehensive returns management strategy can make all the difference.

What is Returns Management?

In distribution, returns management refers to the processes associated with returns and reverse logistics. Primarily relevant in retail, e-commerce, and other customer-facing industries, the returns management process encompasses activities associated with fulfilling customer requests to return or exchange a product. This includes collecting, organizing, and restocking returned or exchanged inventory. The returns management process is intersectional, involving facets of customer service, logistics, and inventory management.  Reverse Logistics refers to the process of receiving, inspecting, sorting, and delivering returned products to the proper distribution center or third-party management firm. It is an integral part of the returns management process.

By implementing an effective returns management process, organizations can track and fulfill return requests, decrease unwanted returns, and additionally put highly sought-after items back into inventory for resale once inspected. By accurately scrutinizing and sorting returned products, businesses can dramatically reduce losses by reusing undamaged returned items to replenish inventory. The SSI SCHAEFER Carrier enables an easy sortation solution for this type of management. 

Although returns handling is commonly regarded as an inconvenience for both customers and businesses, the process can be improved and streamlined with the help of warehouse automation equipment and software. E-commerce sales continue to grow rapidly, resulting in both higher return rates and customer expectations. To stay competitive, businesses must implement and optimize effective returns management processes. 

Basics of Returns Management

The returns management process has several stages, depending on whether the product was purchased at a retail location or via e-commerce. [link to market sector pages on retail and ecommerce] The process often follows these steps:

The customer receives the product and chooses to request a refund or return

When a customer decides they are unhappy with a delivered product, they request a return, exchange, or refund. This can be due to damaged product or delivery of improper size or color.

A business decides whether to approve the request depending on inspection.

The staff chooses to accept or deny the return based on company policy.

The company receives the returned product

After picking up the product via delivery or in-person return, the product is delivered back to the distribution facility to be sorted and inspected. Typically, a quality assurance employee audits the product based on the reason for return. If the product is in proper condition for restocking, they make a note of it.

The product is restocked or deemed a loss

If the product is in good condition, it is added back to the inventory and restocked. If it is a highly sought-after item, then the item may go into a buffering system until the item is sold. This reduces time within the distribution center. 

The steps involved are simple enough, however, streamlining the process is no small feat when dealing with a large volume of sales and returns. In busy distribution centers, even a small error or disruption to inventory flow can cause a butterfly effect of problems for warehouses and customers.

Returns Management Best Practices

Companies with hundreds of outgoing deliveries and incoming returns can find it difficult to optimize the returns management process to maintain profit margins. By following best practices, organizations can strategize or optimize a tailored returns process, increasing customer satisfaction and reducing losses.

Understand the Driving Factors Behind Returns

When creating or improving the returns process, organizations should be aware of the “why” behind their customers’ returns. Even the best automation equipment and software cannot solve confusing online product descriptions or inaccurate sizing. Are certain items returned at a higher rate? What are the customers themselves saying regarding the reasons for their returns? Do certain storefront locations experience more returns? Analyzing this type of data helps businesses decrease return rates - even before making changes to inventory and distribution management processes. Additionally, gaining information regarding location-specific return rates can help companies allocate resources to handle return volume.

Identify Opportunity Areas to Improve Speed, Agility, and Control

Referred to as the main pillars of returns handling, speed, visibility, and control are the focus areas of a smart and snappy process.


To save maximum time and keep customers satisfied, consider automating decisions related to approving returns and processing returned material. This can be accomplished by utilizing automated workflows and labels. This allows technology to oversee repeatable processes, increasing accuracy, and employee bandwidth. Shipments that are automatically addressed and labeled with accurate documentation experience fewer setbacks.


Capture information about each return before it even arrives at the receiving facility. Ensure that each return is linked to a reliable tracking number and equipped with accurate inbound shipping information including quantity, condition, and other relevant data. When the return arrives, it can remain visible for the remainder of the process by utilizing reliable warehouse management software


Maintaining control over inventory flow is challenging for busy operations, particularly when handling returns. Implement a system to track receipts, compliance documents, and solutions reached. Not only can this reduce company liability, but also notify stakeholders of quality issues in product and process. Additionally, labeling and enterprise data integration are effective ways to maintain control during returns handling. These touchpoints combine information about the return with physical shipment and financial information, producing more timely solutions.

Invest in Automation and Warehouse Management Technology

Modern warehouse automation equipment and software produce profitable results when utilized to streamline returns handling. By incorporating a warehouse management system that can handle returns efficiently, the process of inspecting and getting an item back into inventory for resale is key. A good WMS should be able to know when an item is being returned and be able to have that item ready for quick processing upon receiving. 

Warehouse Management Software like WAMAS allows organizations to effectively control the order pool, prioritizing high priority shipments including returns, ensuring your customers’ needs are met and they keep returning to your business.

SSI SCHAEFER also offers customized solutions to help warehouses get returned inventory available for sale quickly. Specially designed workstations help process returned goods swiftly. Additionally, the SSI SCHAEFER modular pocket conveyor allows for incredibly efficient procedures for short-term storage, buffering, and restocking.

Choosing the Best Solution for Your Application

Investing in technology to improve the returns management process can produce positive long-term results. Reach out to the team of supply chain experts at SSI SCHAEFER to learn more about custom solutions that help optimize returns management, improving operating costs and customer relationships.

Download the SSI SCHAEFER E-Commerce Best Practice Guide for more information on returns technology. For further reading, check out this case study detailing an SSI SCHAEFER engineered apparel solution for Finnish store chain Stockmann.

Want more Information? Contact us to speak with a supply chain expert!