Question

What is the reason that product returns should be handled separately from a firm's main warehouse? Returns can usually be reworked into saleable products Returns processing costs cannot be charged back to the customer Returns arrive infrequently and can be disruptive to normal operations Returns are usually scrapped so do not need to go through the warehouse

Answer 1

1) Returns arrive infrequently and can be disruptive to normal operations

The goods return are infrequent in nature. If it is merged with the existing operation, it may be disruptive to normal operations and can cause delay in the working. Hence, it needs to be handled separately

2) Improving internal product demand forecasting

The third party logistics/warehousing provider is helpful in regard to lower cost of operation, leveraging expertise. But, it doesn’t impact the demand forecasting for the company

3) Metrics chosen are consistent with overall company strategy and customer focus

The metrics chosen by the organization must be consistent with overall strategy and customer focus otherwise it will not give the desired result. The performance must be linked to strategy for long term success

4) Develop a forecast of customer demand

The first step in determining warehouse space requirement is to know about the customer demand. It will help to know the total area requirement.