Returns management process

When gifts become returns

Just when you thought things would start to calm down a little... Within 24 hours of being unwrapped, waves of unwanted Christmas gifts start to roll back towards their vendors. It is peak season for returns and year after year, many merchants struggle to cope. However, a sophisticated returns management process and a sound strategy can help you streamline the handling of returns and get items back in the shop windows more quickly. The specialists at Dematic know how to make this happen.



At Christmas, many gifts were placed under the tree with the best intentions, but failed to impress their new owners. Too small, too big, the wrong color, or even a duplicate present – there are many reasons why a lovingly selected gift might find itself making its way back to the warehouse after Christmas.

For online retailers, in particular, Christmas is not the end of the rush. A study compiled at the University of Regensburg in Germany shows that 40 percent of customers factor in returns when they shop online. For clothing, the likelihood of items being returned is even higher, at around 50 percent.

This situation is further complicated by the fact that procedures for handling returns are often very complex. Stefan Bonifer, product manager at Dematic, a company specializing in automation and supply chain solutions, explains: “When returns are received, they first have to be checked and re-entered in the system. Then, they go back into the stock and are available for shipping within 24 hours.” This means that in addition to the cost of re-turns and losses from damaged items, companies have to cope with a process that is highly labor-intensive and requires an enormous logistical effort. According to findings by the University of Bamberg, the average cost of a single return for a company is €7.93.

The key to success is an efficient returns management process. With the help of automa-tion systems, processing costs can be lowered, the storage density increased and turna-round times reduced. This last aspect is particularly important for business efficiency. “A large proportion of returned items can usually be resold within the next few days. The resale ratio can often be as high as 70 percent within three days of receipt of a return. The quicker the return is processed, the higher the likelihood that the items can be resold,” explains Juri Felker, solution consultant at Dematic.

Since 2005, Dematic – which became a KION Group company in 2016 – has been offer-ing highly sophisticated shuttle technology solutions that tackle precisely this challenge. “In intralogistics, we have seen very similar trends emerging across all sectors for a num-ber of years,” says product manager Stefan Bonifer. “They include rapid growth in the volume of items, shrinking batch sizes, ever greater performance demands, and the need for items to be delivered in a specified order. In order to address these trends and to pro-vide automated logistics solutions that are largely independent of changes in a company’s order structures or product range, the overriding design priority in the development of our Dematic Multishuttle 2 was flexible warehouse management.”

The Multishuttle system consists of shelf systems, lifts, shelf conveyors, a control unit, and the warehouse control system. It can be used to supply the order picking process, pack mixed pallets, and provide additional supplies for the order-picking shelves as need-ed, and it can also serve as short-term buffer storage for a wide range of container shapes and sizes. So any unwanted Christmas presents – from a gaming console to a pair of socks – can be easily reshipped to the next customer.

In addition, Dematic offers the MonaLisa pouch sorting system. “One of the key ad-vantages of this Dematic solution is that it provides reliable system security without re-quiring a high frequency of maintenance,” says Winnie Ahrens, sales manager at Dematic. “Its plastic chain conveyor system is based on rolling friction and is much more efficient than standard metal chain conveyor systems, because it requires less driving force.” The pouch sorter is also designed for the transportation of a wide variety of items, which can either be stowed in the pouches or hung directly on the conveyor, making this fast and effective system the ideal solution for a busy returns season.

At what point should companies consider investing in shuttle systems and similar tech-nology for their returns management process? “The trend that we see is that companies start to consider automating the returns handling process once the returns ratio exceeds 10 percent of total items shipped,” says solution consultant Juri Felker. And what happens when returns suddenly go through the roof at times like now after Christmas? “The effi-ciency of the shuttle system reflects the quality of the underlying storage and retrieval strategies,” explains Stefan Bonifer. “These can be adjusted to cope with exceptional re-quirements, which offers increased flexibility when occasions such as Black Friday or Christmas are coming up. The system will, for instance, reorganize itself overnight in such a way that items can be dispatched much more quickly the next morning.” At the end of the day, it is the right strategy that counts. With that in place, all those unloved presents will quickly find a new home.