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Posts Tagged ‘returns processing’

3 Myths of Returns Processing in the Publishing Industry

returns-processingFor many publishers, processing returns happens a few times a year during “slow periods.” Some publishers will go out of their way to avoid even thinking about returns.

It’s amazing to me how publishing executives will skip the returns department during tours of their facility. I attribute this to flawed thinking – they must believe in one or more of the 3 three myths of returns processing. If they could only separate the truth from the myth and realize the impact of returns, they would never avoid processing returns again.

Myth #1: Returns are junk.

This is the most pervasive, and the largest, myth about returns. When you look at a publisher’s balance sheet, one of the largest assets is the inventory. The reality is that returns are not junk, and not only that, there is real money to be saved in handling them properly. In our experience, less than 6% of returns for associations and 10% to 15% of trade returns are actually defective. Even ‘hurt’ books have value and when processed properly, they can provide the publisher with additional cash flow.

Reducing the number of returns is the best way of eliminating costs. That’s why, when it comes to returns, publishers need to ask the following questions:

  • Why did the client return the book(s) to begin with?
  • Was it the wrong product?
  • Did the book not meet the customer’s expectations?
  • Did a sales rep over sell to one of the bookstores?

Myth #2: When processing product returns, take your time – there is no hurry.

The key to maximizing the value of returns is to process the returned product(s) as quickly as possible. Processing returns slowly creates problems with inventory reordering schedules, accounts receivable, and customer satisfaction with your company.

With print on demand or short run printing, having accurate and up-to-date inventory counts is an absolute must. If your returns have not been processed, you risk incurring unnecessary printing costs plus the carrying costs associated with extra handling of the inventory.

When dealing with trade receivables, how many times has your accounts receivable (A/R) person made a call to an account that is 90 days past due only to hear that the merchandise has been returned? Not only have you incurred the expense of shipping the books and processing the return, now you also have the added expense of the A/R person.

It always amazes me when I hear clients and managers suggest that Ware-Pak delay processing returns in hopes of saving money. They believe they will reduce costs by using the returns staff as flex labor for everything else in the warehouse. However, the amount of ill will that is created with a customer when the return is not processed quickly is immeasurable.

Today, publishers are beginning to think in terms of inventory turns per year, rather than in terms of printing a 10 to 15 year supply. This only adds to the need for timely returns processing. Remember, returns are more like bananas than wine – they will not get better with age. The costs of not knowing your actual inventory levels are much higher than any savings for only processing returns periodically.

Myth #3: You can use your warehouse management system (WMS) to process returns. You don’t need special returns software.

We have looked at a lot of different warehouse management systems and concluded that none of them are robust enough to handle the demands of the publishing industry. Each system seems to lack essential features that publishers need to run their business.

Ware-Pak has developed a returns management application (RMA) that allows us to process 85% of all returns the same day they arrive in the warehouse. Our RMA begins by capturing the tracking number, customer name and address of the return. Next, the return authorization number along with the original carton number, if available, is added with the reason for the return (if stated). Each item is scanned, counted and inspected for damage. If any damage is found it is coded with one or more of the 12 different damage codes. After inspection is completed, any repairs that can be made are taken care of, such as changing the dust jacket, removing stickers, cleaning the outside of the book and removing marks on the pages. The final step in our process is to place the good books back into inventory so they are ready to be resold.

Each Ware-Pak client is different, but generally, a customized file (meeting the individual publisher’s software criteria) is created every Monday and placed at our FTP site to be imported into his or her system with all the returns information. In addition to the electronic file, each client receives the returns label, any returns paperwork found in the carton and a copy of our return order.

Fact: Returns have a great impact on a company’s bottom line.

In some cases, trade returns can be as high as 30%. Managing returns can have a huge impact on the publisher. Processing returns in a timely manner will enhance your customer’s experience, reduce costly inventory ordering mistakes and lower you accounts receivables. Isn’t it about time to ask yourself if your returns processing is “best in class?”

What does accurate inventory management look like in your warehouse?

Recently, Ware-Pak completed the annual inventory for one of our clients and I wanted to share the results with you.

During this economic downturn, like many organizations, they have focused a great deal of energy on shrinking inventory, in order to meet market demand while managing the business of satisfying customers’ needs.

When their fiscal year began in August, 2008 the client’s warehousing profile contained 4,045 SKU’s with a total of 1,595,652 units in inventory. Over the course of the year, Ware-Pak processed 60,906 transactions – including order fulfillment, receipt of new product and returns processing. In total, these transactions consisted of 1,914,183 items.

As the economy slowed, the company took actions to reduce inventory. By the end of the year, they had reduced the number of unique SKU’s from 4,045 to 2,340, thus eliminating a total of 1,705 SKU’s from inventory, and experienced substantial savings on their storage fees.

From our perspective, everyone wins when inventory is for active stock and stale merchandise is removed from storage.

On an average day, Ware-Pak processed 239 transactions (order fulfillment, receiving, or returns processing), which consisted of 7,506 units. As you can see, this is a very active account with many transactions happening daily.

When we completed inventory of the product, it now stands at 2,340 unique SKU’s and an inventory level of 782,278 units. Ware-Pak’s inventory management has a positive accuracy rating of 99.81% for the year. When you look at the small amount of errors, 59% were for non-salable items such as pamphlets, marketing materials, packing materials, etc. Only 44 salable SKU’s showed any variance or discrepancy. Given the volume of transactions over the last year, we at Ware-pak are very proud of this accomplishment.

When is the last time you had the answer to the question – How accurate is your annual inventory?

Ware-Pak Reports August Performance

Ware-Pak experienced moderate growth during the month of August. Total activities increased 8.3% over the prior year. Returns processing (or reverse logistics) led the increase with a 17% jump over the same period in 2008.

The bright spot in our warehouse activity is the inbound numbers. During the month of August, we received an additional one million units for our retail publishers who are still preparing for the Christmas season. This is a good indication that the fall season will continue to be strong for the publishers we represent.

Below are Ware-Pak’s August Performance Numbers:

Orders: Units:
Outbound 22,563 Outbound 791,625
Inbound 1,453 Inbound 1,033,618
Returns 2,966 Returns 61,510
Total 26,982 Total 1,886,753

Speed and Accuracy Statistics:
Accuracy = 99.94%
Same Day Shipping = 92.2%
Shipped within 24 hours = 98%
Returns Processed Same Day = 89.2%

Ware-Pak Reports a Solid 2nd Quarter Performance

At the end of the 2nd quarter, order fulfillment has increased by 27% and the number of books shipped is up 10.44% compared to the prior year.

During the month of June, Ware-Pak experienced higher orders, but lower books shipped. Book orders fulfilled were up by 37%, while the number of books actually shipped was down by 10.19%.

Ware-Pak continues to see increased activity in all areas of the company, including order fulfillment/shipping, special projects/kitting, returns processing and the call center.

Below are Ware-Pak’s Outstanding June Performance Numbers:

Orders: Units:
Outbound 25,284 Outbound 761,405
Inbound 1,583 Inbound 1,144,715
Returns 5,541 Returns 96,629
Total 32,408 Total 2,002,749

Speed and Accuracy Statistics:
Accuracy = 99.96%
Same Day Shipping = 92%
Shipped within 24 hours = 99.35%
Returns Processed Same Day = 93.3%

The Right Fulfillment Partner Eases the Transition Process

For a publisher, making the decision to change warehousing and fulfillment vendors can be difficult. There are high costs associated with the move and the process is very tedious. Focusing on the services needed to become a better publisher can help determine who the right warehousing partner will be.

When the National Association of Home Builders (NAHB) had to make a decision to stick with their current fulfillment vendor or make a change, they began by developing a vision of what they were looking for in a fulfillment partner.

“We chose Ware-Pak because of what they did and did not do,” said NAHB Staff Vice President Lakisha Campbell. “They met our established criteria, but did not try to oversell. While other fulfillment companies on our short list always talked about add-ons and other things we weren’t really looking for, Ware Pak was very professional in their approach. When we asked questions, we got straight answers – and we got those answers quickly,” she added.

Ware-Pak prides itself on creating strategic partnerships with their clients. They know that a publisher’s success depends on their ability to control inventory, streamline product storage, assembly and distribution, and process returns efficiently. More importantly, they know that publishers, especially associations, don’t change fulfillment companies just for the sake of change. Reporting processes must be coordinated in order to provide the client with meaningful, actionable reports.

Since the transition began about two months ago, Ware-Pak has been diligent in taking the time to meet with the NAHB to evaluate progress and establish areas that need improvement in order for them to receive the exact reports and information they need.

In closing, Lakisha observed, “Transitioning from one fulfillment company to another is a process, and Ware-Pak is dedicating the time to work out the kinks.”

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