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Connected Customer Experience

Understanding the DNA of Reverse Logistics

Author Michael R Blumberg on Jan-31-2018

A common expression among Reverse Logistics (RL) professionals is that nothing happens until a product is returned. To be more precise, nothing gets done without a Return Material Authorization (RMA). Anyone who has experienced a situation where a product just shows up on the receiving dock without an RMA knows what I am talking about. As such, the RMA process is one of the most critical elements in the management of the Reverse Logistics (RL) Supply Chain.

The RMA can be considered the DNA of the reverse logistics process because it provides all the critical information about where the product has been and the reason for its return. This information in turn provides guidance about what should happen next to the product once it has been returned. For example, should it be tested, repaired, or destroyed? It also provides information that enables the service provider to complete financial transactions related to the returns process such as warranty entitlement, adjudication, and reimbursement.

When designed correctly, the RMA function enables a manufacturer or service provider to obtain critical information required for processing the return (e.g., reason codes) and tracking labor and material costs associated with this return process. That’s why it is important for information captured in the RMA process to be linked to other corporate information systems such as their ERP, CRM, and WMS applications. Data gathered from the RMA can be analyzed to anticipate and forecast future returns. More importantly, it can be evaluated to determine the root cause of the returns. With this root cause information in hand, manufacturers can take steps to reduce returns by designing better products or improving the service delivery process (e.g., troubleshooting, remote support, etc.). In short, capturing and analyzing data about the return process will lead to reduced operating costs, enhanced service quality, and improved corporate profits.

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