Processing and Handling: Warranty and Other Returns

[Counterman]

Returns are an inevitable part of our everyday business. From miscommunications and misapplications to damaged or defective products, sometimes we must take items back. Like many other aspects of our daily routines, establishing and following processes for returns makes this part of our duties go much more smoothly.

Anything that leaves or enters our stores must be accounted for. To maintain the accuracy and integrity of our inventories, each part or product should be traceable from its acquisition right through to its disposal. When it comes to receiving and sales, these transactions are very straightforward. A packing list reflects the contents of a shipment, ideally notating any backorders or other shortages as compared to the order it fulfills. Proper receiving practices involve verification of the order’s content before entering these items into inventory, accounting for any discrepancies, and then distributing the components to their proper stocking locations (or, in the case of special-ordered items, preparing them for immediate sale and delivery). For sales, the product is simply billed and handed across the counter, accompanied by a receipt that accounts for the transaction.

When items are returned, however, additional processing is required, and the steps involved (as well as their timing) become critical to maintaining the accuracy of our inventory count as well as our financial ledgers. New returns, cores, and defective returns all require a different set of processes to ensure that these transactions are effectively handled and properly recorded. New returns to stock are the simplest, with an associate verifying the content and condition of the returned items before accepting them back into inventory through a return transaction. At this point, the returned items must be divided into stock and non-stock categories, with stocking items returned to their assigned shelf location for later resale. Special orders and other non-stocking items should be staged in a specified holding area for further processing before being returned to the DC or vendor in a timely manner.

Cores and defects are not as easily accounted for, as they do not re-enter the inventory as a resalable item. They do have value, and are an asset that still requires traceability while they are held for further processing and return. These types of returns can also be a common source of inventory discrepancies if best practices are not followed at the counter and in the back room. When accepting a core return, the associate should perform the same “content and condition” checks as with a new return, then clearly mark the return as a core before crediting the customer for the core value. A “core return” acknowledges the receipt of a “dirty” core without affecting the on-hand count for that SKU in the physical inventory. Ideally, this transaction initiates the addition of the dirty core to a list of other cores destined for return to the DC or vendor. If this is not an automatic function of your store’s recordkeeping software, it must be entered manually to maintain a record of items for eventual return. Having a set schedule for these return shipments (weekly or monthly) helps ensure that deposits paid are recovered on a continuing basis, rather than tying up capital by sitting forgotten in a dusty corner. Marking core returns as such prevents them from being mistakenly re-shelved with new product, which not only affects inventory count, but can lead to inadvertently handing out a core to an unsuspecting customer.

Like cores, defective returns must be processed and stored separately from new returns, to prevent them from re-entering the active inventory. Defects may also be subject to specific warranty policies requiring documentation such as purchase information, VIN and mileage, or other terms and conditions. Keeping any associated documentation with the defective product helps pinpoint the circumstances of the claim, identify the individual transaction, and helps the manufacturer to identify quality issues with their products. Keeping accurate records of non-compliant or declined warranty returns can also help to identify customers who habitually misdiagnose failures or otherwise “use” your return policies to “try on” parts at your expense.

For many of us, commercial accounts represent a large percentage of our returns, and are also the most difficult to manage. Returned periodically in mixed batches, these items are often left “in limbo” longer than individual returns passed over the counter. Usually written up and returned by a salesperson or delivery driver, they may be temporarily stored in a separate return area until they can be verified, sorted, and reshelved as necessary. If these returns cannot be credited immediately, they should not re-enter the physical inventory. Coordinating a part’s re-entry into the computer inventory with its physical return to the shelf prevents other associates from reporting shortages (or overages) for a part hiding in plain sight.

Following a defined process for handling, storing, and sending back various types of returns ensures that the front counter operates smoothly, the sales floor and stockroom inventory is maintained efficiently, and that the back room doesn’t become a catch-all filled with forgotten products. The specific processes may vary, depending on the nature of your business and your customer mix, but handling all types of returns by the book will help ensure your staff is all on the same page!

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