Warehouse returns have always been a large operational challenge, but today distributors are experiencing increased stress as the amount of returns surges. Statista reported that return delivery costs may rise above $550 billion, which is an increase of 75.2% over the last 4 years. Sadly this number doesn’t include restocking expenses or inventory loses. With all expenses accounted for, this number could exceed a trillion dollars, according to CEO of Optoro, Tobin Moore.
A UPS study focused exclusively on returns stated that returns don’t necessarily reflect poor fulfillment processes. In product areas like apparel or footwear, for example, many customers order multiple sizes of the same item with plans to keep only one and return the rest. So making returns easy is a key to providing exceptional customer service, and a cost of doing business online.
Warehouse Returns Sap Online Profitability
The real problem is the inefficient warehouse returns processes that sap online profitability, in large part because of the manual steps involved in processing returns and getting merchandise back into active inventory. With returns mounting in lock step with online sales, retailers need to create return processes that are as productive, accurate and flexible as their fulfillment practices.
How To Re-Engineer Your Manual Return Processes
One Lucas customer has a unique solution to this warehouse returns challenge that includes a separate returns-picking area and a pick-by-color picking process for multi-SKU locations. Their warehouse optimization solution includes a management console, mobile applications and Jennifer™, the brains, voice and orchestration engine that drives the Lucas system and communicates with their outbound automation systems and Tier One Warehouse Management System (WMS). This is a great example of how retailers can improve hands-on DC processes that neither WMS nor automation systems adequately address.
The customer in question has requested anonymity. What we can say is that it is a leader in omni-channel with a long history of in-store, online, and catalog sales. Sporting advanced automation systems and a Manhattan Associates WMS, this women’s apparel retailer offers best in class DC operations. They are consistently on the leading edge in warehouse technology and they are also a leading innovator in supply chain and distribution engineering. In short, they excel at marrying the right process and technologies to get the best results for their business.
While investigating new technologies to further improve operations, their WMS vendor suggested voice-enabling their existing workflows with the WMS vendor’s voice add-on, but the customer needed a solution that could optimize their unique returns picking process without customizing the WMS, in addition to improving upon their existing RF-based picking processes.
Working with Lucas, the customer implemented an optimized cart-picking process using Jennifer™ and voice-directed mobile applications, in addition to a unique method for tackling returns picking which improved upon their previous WMS-directed process.
Returns-Only Picking Area
After returned items are inspected and processed, all re-sellable items are stocked into a returns-only picking area, which avoids the time and expense of re-stocking returned goods in the main pick areas, potentially all the way across the DC. Creating a pick area for an unpredictable assortment of single items presents other challenges. For example, how can you efficiently slot thousands of single SKUs in a limited area?
Multi-SKU Pick Locations
The solution is to have multi-SKU pick locations, rather than slotting one SKU per pick location. In this case, every slot in the returns picking area has up to five different items, each a different SKU, each a different basic color (Red, Green, Blue, Black, White, Multi). The returned items and slots are tracked by the WMS, and when new orders are received the WMS determines which items can be picked from the returns picking inventory.
Optimized Cart Picking Assignments
Lucas uses the WMS pick data and Jennifer™ creates optimized cart-picking assignments, which are then picked by the users. Jennifer™ then tells users the pick slot and color of product to choose, and users confirm their pick by speaking the last few digits of the product UPC. This is a far easier, more efficient process than picking by product description or SKU using RF devices.
Getting Ahead Of The Curve
This retailer is clearly ahead of the curve in dealing with returns to their warehouse. While their particular solution may not be appropriate for other companies, the important point is that retailers shipping direct to consumer have a lot to gain by re-engineering their manual returns processes. In most instances, neither WMS nor automation systems fully address the challenge.
To learn how Lucas can improve your warehouse, DC or store operations – for returns, picking and other hands-on processes – please contact us.