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Diminishing Returns?

Clearer functionality yields better service and fewer headaches
  • Randall Schaefer
March/April 2016
How could something as simple as customer returns justify engaging a consultant?” he asked me, looking rather perplexed. The frustrated general manager was clearly unhappy that his vice president of operations had hired me to review and improve the company’s returns process. I had been expecting this attitude from the general manager because I knew that he had risen through the ranks having never been involved with customer returns.

For anyone reading this who is similarly unacquainted with returns, I offer this example: A customer calls your business claiming that your product is defective. An authorized employee creates a customer return authorization (CRA), which includes the part number being returned, a description of the product, the quantity, the nature of the defect, and the customer’s desired resolution. The resolution options are vast: Refund the purchase price; replace the product with the same product; replace it with a different product and charge or credit any price difference; charge or credit any price difference; extend credit toward a future purchase; and on and on.

The CRA manager approves the resolution with the understanding that the defects are as the customer described. Let’s say this instance is a return of 16 red candles the customer wants replaced because they are broken. However, when the customer’s return package arrives, it is discovered that there are not 16 but 60 items; they are not red, but black; and they are not candles, but candle holders.  

Things can become quite complex when a returned product’s description is wrong or the quantity is off. Other complications arise when any defects are the result of customer negligence; this may even change the resolution. Each discrepancy between the CRA and what actually arrives must be resolved with the customer. Often, the CRA manager has to re-explain everything many times, particularly when the customer’s company does not have a single person responsible for returns. Moreover, the degree of cooperation the CRA manager receives—and the amount of time the resolution takes—often depends on who answers the phone on the other end.

True simplicity

Now, at my aforementioned consulting job, I knew I could not prevent all the confusion generated by returning parts. But I was confident I could eliminate a good portion of it. I told the skeptical general manager that a few days of programming modifications to his company’s CRA software would help immensely. I explained to him that the CRA functionality apparently had been programmed by someone unfamiliar with returns practices.

As a result, whenever there was a conflict between the approved CRA and what actually arrived, the CRA could only be corrected by canceling it and starting over. The most elaborate CRAs often had to be canceled and redone multiple times. This cost the business time and money and took its toll on customer goodwill.

When the proposed programming changes were completed, CRA conflicts soon were being resolved in a fraction of the time, and the customer experience was significantly improved. But even then, that general manager remained convinced that it was all a waste of money. Nothing was going to change his mind—he had gotten a pass to the executive ranks without ever being involved with customer returns. Lucky him.

Do you have an anecdote that teaches, enlightens, or amuses? Consider sharing it with the readers of APICS magazine. Stories should be approximately 700 words. Email submissions to “Lessons Learned” editor Randall Schaefer at randallschaefer@att.net.

Randall Schaefer, CPIM, is an industrial philosopher and retired consultant. He may be contacted at randallschaefer@att.net.

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