Supplier Returns can be tricky. As we’ve covered previously, this is an area that can cause over millions of dollars in financial leakage a year and most are not aware of it. It’s off the financial books, and companies don’t have the necessary reporting and business intelligence to identify the issue – or its true impact.
The following are questions that every organization should be able to answer about their own Supplier Returns process. If these questions cannot be answered, or are not being continually monitored, your business may have a financial leak.
1. How much in supplier credits is currently in process?
One of the most important aspects of Supplier Returns is the amount of money you’ll be receiving back when the returns are fully processed. This amount should not only be on the radar of each person processing the returns, but should also be visible to supply chain and finance management.
When there is limited or no visibility to this information then there’s almost a 100% chance Payables is not receiving credits they should be resulting in financial leakage.
2. How much in supplier credits should Payables be processing?
The primary objective in supplier returns is to receive the credit back and make sure that credit is taken by Payables. In order to accomplish this there must be visibility to the amount of supplier credits Payables should be processing. This includes understanding which supplier the credit is from and the dept/cost center that should receive the credit.
If this information is partially available or not at all then there’s almost certainly financial leakage because Payables has no idea how much they should be processing and has no way to verify and validate they have processed everything they should have.
3. How much was returned by reason code, by department or cost center, and by item?
Why keep spending money on too many supplies when you can’t keep track of how many you need? By recording every return by reason code, supplier department (or cost center), and by item, you get a nice chunk of data relating to why the returns are necessary.
This data is indispensable for ordering from suppliers, as it saves your company both the time and resources it takes to initiate returns. Good data helps to identify problems – and those suppliers that are consistently sending incorrect items and damaged goods. It can even identify those suppliers who refuse to provide a return or charge elevated restocking fees.
If you are constantly needing to initiate Supplier Returns with specific suppliers because of damages, too much product, or poor quality, you will be able to see how much you need to be ordering – and whether the supplier is worth the amount of returns you are making.
4. How many days on average does it take to complete a return?
Just as you want to track the amount of supplier return credits back from Suppliers, you’ll want to make sure you’re keeping track of how long each return takes to process from start to finish. With this timeline of the process, you can see how efficient and effective your supplier return process is. Overall, the average should take days; not months or a year!
If these questions are not on your radar, you could be looking at massive amounts of money lost through supplier return financial leakage. If you haven’t been keeping up with your Supplier Returns due to staffing or resource issues, Belmero’s Supplier Returns Managed Service addresses all of these blind spots. For even more freedom, let us take care of them for you!
Are you thinking about managing supplier returns internally? It’s a large undertaking! We can help set you up for success with our proven supplier returns SaaS to help prevent financial leakage! Click here for more information.
Share this Post