Your Customer Wants to Return WHAT???

Categories: Inventory Management

By Mark Tomalonis
Principal, WarehouseTWO, LLC

You know it the instant you see it:  a customer return request to which you want to respond with an emphatic “NO!”  But who wants to tell his customer “NO”?

Ironically, your more experienced customer service representatives (CSRs) can recognize a potentially costly return request long before that request is made.  That is, your savvy CSRs can recognize a future undesirable return request at the time of original order processing.

Before you accept a sales order for an item that you do not want to take back EVER, be proactive:  negotiate a “Special Order Item Acknowledgment” agreement with your customer.

What?  A printed document that is to be filled in manually, and then signed by the customer???  What are we thinking?  No worries.  The purpose of this article is to present a business process concept and a sample form.  How you implement the ideas expressed in this article, and whether you do so using a printed document or a paperless form is up to you.  We chose to present a printable form for instant deployment by those who are comfortable with managing such “classic” technology.

Pro-Actively Prevent Future Undesirable Return Requests

Accepting returns from customers is a necessary part of being a distributor.  Most returns are easy to handle:  give the customer credit or a refund, and return the item to stock.  But not all return requests are that simple.  An undesirable item return request meets all of these criteria:

• You have no other demand for the item or the item is no longer in sellable condition (e.g., it is out of warranty or it has been used)
  
  
• You cannot return it to your supplier for full credit (less a reasonable return fee)
  
  
• You cannot convert the item into a sellable item

With the exception of an item no longer being in sellable condition, all of the above criteria most likely existed when you took the order for the item.  That is, you were aware of the potential for an undesirable return request before you shipped the item.  Thus, the time to address/prevent a future undesirable return request is just before you accept the original purchase order from your customer.

“Special Order Item Acknowledgment” Form and Process

Reducing or eliminating the potential for an undesirable return (or cancelation) can be achieved with a one-page form and a few simple steps.

The form:  “Special Order Item Acknowledgment”

A form on which to identify items that a customer wants to buy from you that you do not want to take back.  A sample form is attached to this article as an addendum.

Process steps:

Tips on Avoiding or Mitigating an Undesirable Return/Cancelation

Negotiating a “Special Order Item Acknowledgment” agreement is an iterative process.  Be flexible.  It is, after all, a negotiation with your customer.  Consider these tips and alternative remedies:

1. Guide the customer to select an alternative item.  Just because the customer’s engineer can create a part number by studying the manufacturer’s catalog doesn’t mean that the item is the only acceptable choice.  Perhaps there is a more active item in your inventory that could meet the customer’s requirement?
   
   
2. Pre-negotiate terms of accepting a cancelation or return for the item.  The terms should include a hefty return or cancelation fee, high enough to cover your costs of disposing the inventory.  “OK, Mr. Customer, we can take these items back, but for a restocking fee of 50%.”
   
   
3. “Plan B”.  If you must take items back for which you have no other demand, try these resolutions:

1. Try to return the item to its supplier.  Accept whatever return fee is imposed.
   
   
2. Offer the item to peer distributors, via WarehouseTWO.  Perhaps another distributor needs it for his/her customers?
   
   
3. Expose the item to the world, via WarehouseTWO’s WEB MARKET functionality.
   
   

Who Creates Forms for Your Company?

Even if your company is completely “paperless”, the ability to create custom business forms (for internal or external use) can help your business processes run more smoothly.  Our favorite applications to create printable or electronic business forms are  MS Word, MS Excel and MS Visio.

To create a form that is printable by anyone without the PC application with which the form was created, create a copy of the form as a PDF document.  (Most applications allow you to save the document this way.)  PDF documents can be printed using Adobe’s free “Acrobat Reader” application.  Forms made in Excel or Word can be filled in electronically, and can perform basic calculations and field copying.  If you distribute electronic versions of forms, be sure to password-protect them from being edited.  (With Excel, you can prevent the document from being edited, but still allow selected fields to be filled in and saved.)  Who at your company knows how to create business forms?

Addendum:  Sample "Special Order Item Acknowledgement" Form and Instructions

Click on these links to download a sample form and instructions:

Sample Special Order Item Acknowledgment Form

Sample Special Order Item Acknowledgment Form Instructions

About the Author
After a successful career in sales and operations management in the wholesale-distribution industry, Mark Tomalonis is now principal of WarehouseTWO, LLC.  He amuses himself by writing articles, such as this one, to help wholesaler-distributors execute their operations better.  Mark’s articles and tips are published in WarehouseTWO’s monthly e-newsletters.  Click here to subscribe.

About WarehouseTWO
WarehouseTWO, LLC is an independent “inventory-sharing” service created exclusively for durable goods manufacturers and their authorized distributors, and for any group of durable goods “peer” wholesaler-distributors, such as members of a buying/marketing group or cooperative.  To learn how inventory-sharing with WarehouseTWO can help your business, visit the WarehouseTWO website, or email info@warehousetwo.com.