Unlike mass-produced goods, make-to-order products often come with special circumstances regarding merchandise returns. Many products cannot simply be restocked and resold because they are custom-built based on a customer’s preferences. However, custom manufacturers still need to process returns for damages, quality issues, or order errors.
From initial customer requests to product rework, an efficient returns process is essential for businesses today. Not only does this process help to maintain customer satisfaction, but it also ensures that your operations run smoothly. This post explores how your ERP system supports returns management and helpful software integrations that expedite the process even further.
6 Common Reasons for Product Returns
The goal for every custom manufacturer is to never have products returned since the process is time-consuming and expensive. Of course, custom products still get returned for a variety of reasons. Here are six typical causes:
1. Shipping Damage
Unfortunately, some products can get damaged during shipping. Damages are often caused by inadequate packaging, mishandling by shipping companies, or accidents during transit. Damaged packages can result in product flaws such as dents, scratches, and broken components.
2. Quality Issues or Defects
Custom-built products may have defects or quality issues that do not meet the customer’s expectations or specifications. This could include poor craftsmanship, malfunctioning parts, or other defects that render the product unusable or below standard.
3. Incorrect Configurations
Product returns come in many forms including shipping damage, material defects, or configuration errors.
In some cases, the product may not match the customer’s specified requirements. This can happen no matter if your customer provides the information directly or works through a reseller or third party. Think authorized dealers, interior designers, or product installers. Configuration errors can also happen because of miscommunication or mistakes in quotes, orders, or production at the manufacturer’s end.
4. Change in Customer Needs
Customers’ needs or circumstances can change between the time they order a custom product and when it is delivered. This may occur because of budget changes, project modifications, or other unforeseen factors.
5. Delivery Delays
A customer may no longer need or want your products if they are not delivered within an agreed timeframe. Whether because of supply chain issues, labor shortages, or other circumstances, significant delays can lead to discontent and returns.
6. Misalignment with Expectations
Despite being made-to-order, a final product may not meet customer expectations for functionality, aesthetics, or performance. Custom blinds cut to fit a non-standard window or hard-close drawers vs soft-close drawers, for instance. If the delivered product does not align with what the customer envisioned or requires, they may return it.
Addressing these potential issues requires good communication, stringent quality control, and clear return policies to ensure customer satisfaction with custom-built products.
How ERPs Support Returns Management
Enterprise Resource Planning (ERP) systems provide an automated, data-driven approach to managing information about returns. Here are the key ways in which your ERP can help facilitate returns management:
Centralized Information
ERP systems provide a centralized platform for storing and accessing all business data in real time, including return-related data. Customers typically initiate a return request through a portal, email, or direct contact. The ERP system captures all relevant details, including order number, product information, and reason for return. Having a single source of real-time data ensures consistency and accuracy in handling returns.
Streamlined RMA/RGA Process
With ERP integration, custom manufacturers can automate the Returned Materials Authorization (RMA) or Returned Goods Authorization (RGA) process. Your RMA system generates a unique RMA number for linking the return to the original sales order and for internal tracking.
For defective items, the ERP system generates work orders for repair or rework. This ensures that the item can be returned to the customer in proper condition or resold. The ERP creates a new sales order linked to the original customer order/return for product replacements or exchanges. Items that cannot be repaired or restocked are logged for disposal or recycling. Manufacturer-set ERP definitions ensure that proper documentation and compliance with disposal regulations are automatically applied.
Automated ERP processes reduce manual errors and accelerate the returns process, enhancing customer satisfaction.
Improved Accuracy
ERPs streamline order processing, ensuring that customer specifications are accurately captured and communicated to the production team. This accuracy is critical in preventing incorrect configurations and lessening time spent on returns management.
The best manufacturing ERP systems include product configurators as part of Configure, Price, Quote (CPQ) software. CPQ tools help customers, dealers, and sales reps specify product requirements right from the start – the quoting process. Integrating your ERP with your CAD software can even provide 3D product visualizations during quoting and before production begins. This not only certifies order accuracy regarding specs, price, and delivery but also enhances the customer experience.
ERPs also automate the sales order workflow, reducing the risk of human error in order entry and production processes. Automation reduces the likelihood of returns because of incorrect configurations, misapplied pricing, and unrealistic delivery timelines.
Should products be returned because of configuration errors, immediately investigate the cause so corrective measures can be taken. Ensure that your ERP system is up-to-date, pricing rules are properly applied, and there are no glitches in the automated workflow.
Enhance Quality, Reduce Defects
Quality management is critical for any custom manufacturer. ERP software founded upon Manufacturing Execution Systems (MES) includes precise production tracking and reporting features. This ensures adherence to quality standards throughout the manufacturing process.
Returns because of poor quality or defects should immediately be inspected and recorded in the ERP. By doing so, the system can provide valuable insights into recurring issues, facilitating the implementation of corrective actions.
With Frontier ERP’s order tracking features, you can automatically update your customers about any delivery delays.
Subvert Delivery Delays
Enhanced production planning and scheduling capabilities from your ERP help you meet delivery deadlines. This is accomplished through optimizing resource utilization and reducing production bottlenecks. Real-time raw material tracking and alerts for potential delays enable proactive measures for mitigation and communication. ERPs help companies be proactive in keeping customers happy and decrease returns caused by late deliveries.
Supply Chain Management
Supply chain management is another area where ERPs excel, assuring the receipt of high-quality raw materials during procurement. By monitoring supplier performance, you can confirm that raw materials meet quality standards before they are used in production. This helps prevent defects and quality issues in the final products, reducing the number of returns.
Easier Financial Management
Managing the financial aspects of returns is crucial for accurate accounting and customer satisfaction. If a refund is due, the ERP processes it according to financial policies set forth by the manufacturer. This includes customer account credits and updating financial records. The system can also apply applicable charges like restocking fees, ensuring transparent communication with the customer.
Data-Driven Insights
ERP systems provide powerful analytics and reporting tools that help manufacturers identify patterns and root causes of returns. These can come in the form of ineffective production processes, inaccurate pricing, or miscommunication. By analyzing this data, manufacturers can implement strategies to reduce the incidence of returns. This data-driven approach can lead to continuous improvement in product quality and customer service.
Packaging Standards Optimization
ERP systems can significantly reduce the incidence of shipping damage by optimizing various aspects of packaging and shipping. Packaging procedures and standards can easily be accessed through product master data files within the ERP. ERPs outline packaging standards and provide detailed instructions for handling products. These procedures help ensure that products are packaged securely, reducing the likelihood of damage during shipping.
When products are returned due to damage from shipping, each item should be received and inspected to record damage. Inspection results are then recorded in the ERP system, triggering subsequent actions based on predefined criteria.
Better Shipment Tracking
ERP sales order management features provide access to real-time shipment tracking for customer updates. Seamless Warehouse Management System (WMS) software and logistics management integrations, enhance the system’s capabilities even more. They help you identify potential issues during transit such as mishandling or adverse conditions. This enables your team to take proactive measures to address problems immediately, if not before they happen.
Helpful Software Integrations
Besides an ERP system, it’s important to integrate WMS and shipping software for effective returns management. This is because the applications streamline the physical handling and movement of returned goods, ensuring accuracy and efficiency. By working together, the three systems can provide efficient returns management from the point of return to restocking or disposal.
WMS Software
Integrating WMS software with your ERP and other systems provides a seamless returns process. Here’s why:
- Enhanced Inventory Accuracy: WMS integration ensures that inventory levels are updated in real-time during returns management. This accuracy is crucial for custom manufacturers who need to keep track of unique or limited-stock items.
- Efficient Return Handling: A WMS automates the physical handling of returned goods, from receiving to restocking or refurbishing. This reduces manual labor and speeds up the operation, ensuring returned items are quickly processed.
- Optimized Warehouse Space: Effective WMS integration helps in optimizing warehouse space by tracking and managing the storage of returned goods. This is particularly beneficial for custom manufacturers stocking a variety of product types and sizes.
- Seamless Cross-Department Communication: Integration with your ERP and logistics ensures a seamless flow of information between departments. From sales to logistics to customer service. This holistic approach minimizes delays and errors in the returns process.
Logistics & Shipping
Efficient logistics integrations are essential for shipping orders and returns management. Here’s how they benefit custom manufacturers:
- Automated Return Shipping: Integrating logistics software with your ERP and WMS allows the automated generation of return shipping labels and tracking information. This not only speeds up the return process but also provides customers with a hassle-free return experience.
- Real-Time Tracking: Logistics integrations allow you to track returns in real time. This ensures that you always know the status and location of returned items. This visibility is critical for planning and managing resources effectively.
- Cost Management: Efficient logistics integrations help in managing return shipping costs through route optimization and shipment consolidation when possible. This cost-saving is particularly important for custom manufacturers, who may deal with returns of varying sizes and weights.
- Enhanced Customer Experience: Integrated logistics solutions ensure that customers are always in the loop and their returns are handled efficiently. Providing customers with timely return status updates aids in a smooth returns process and enhances customer satisfaction and loyalty.
Solutions for Better Returns Management
Frontier ERP can seamlessly integrate with both your WMS and Logistics software for more efficient returns management.
Frontier is the leading ERP system for make-to-order manufacturers wanting to streamline operations and boost efficiency. Along with our partners, Varsity Logistics and Logimax, we can help you improve your returns management and subsequent processes, saving you time and money.
Frontier offers an integrated suite of modules that facilitate and automate core business processes for your manufacturing company. With its robust data analytics and real-time reporting capabilities, Frontier ERP provides actionable insights that drive informed decision-making. The system can be customized for any size custom manufacturer, helping you increase productivity, save money, and reach your goals.
Varsity Logistics offers the only plug-and-play, once-and-done, multi-carrier shipping software specifically designed for IBM i (AS/400) Power systems. Varsity integrates easily with Frontier ERP and is tailored to support partners in the transportation, distribution, and manufacturing industries. The logistics provider holds certifications from all major parcel carriers and collaborates with numerous industry experts for better shipping and returns management.
Logimax WMS software seamlessly integrates with Frontier ERP for better returns management. Logimax offers the essential tools for mastering inventory management, whether you’re handling multi-warehouse operations, analyzing turnover trends, or generating customer-specific documents. Experience the convenience of automated data syncing with Logimax, keeping your financial records consistently updated and eliminating manual errors.
Conclusion
Effective returns management is crucial for custom manufacturers, where unique products and specific customer requirements present distinctive challenges. By leveraging advanced ERP systems, businesses can streamline their returns processes, from initial request to final resolution, ensuring high customer satisfaction and operational efficiency.
Integrating ERP with WMS and logistics software further optimizes the handling, tracking, and cost management of returned goods. By leveraging ERP systems like Frontier, combined with solutions from partners such as Varsity Logistics and Logimax, custom manufacturers can transform their returns management processes.
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