Return to Vendor Automation

Keeping your inventory high quality and sale ready

At some point, all retailers must return inventory to their suppliers or vendors. That’s where the Return to Vendor (RTV) process comes into play.

There are a variety of reasons you may need to return product to your vendor. They may have shipped product that was not on the PO, was in greater quantities than you ordered, or was defective or damaged in transit. You may also have an agreement with your vendor to return product that doesn’t sell.

Imagine you run an electronics store and receive a shipment of smartphones. Upon inspection, you discover several units have cracked screens, which is a clear case for RTV. You initiate the process by documenting the damage, notifying the supplier, and arranging for the smartphones to be returned. The supplier then examines the returned units, agrees to the RTV claim, and provides replacements, ensuring your inventory remains high-quality and sale ready.

What are the Steps in a Typical RTV Process?

An ideal RTV process is smooth, efficient, and hassle-free, like a well-oiled machine. Here’s what it looks like:

Communicate clearly.

Your first step is to communicate with your supplier about how returns will be handled. Knowing who to call and what paperwork is needed makes everything easier.

Document everything:

Keep records of what is being returned and why. Retain all photos, descriptions, and correspondence.

Inspect and decide.

Check each item carefully. Is it what you ordered? If damaged, is it repairable, or should it be exchanged or refunded?

Make returns with efficiency.

Work out the logistics for returning items without breaking the bank or wasting time.

Close the Loop.

Once resolved, ensure you’re credited for the return and update your inventory accordingly.

What makes RTV Management so Difficult?

Returning a few damaged phones to a single supplier is not complicated. But now imagine hundreds of shipments for thousands of products from numerous suppliers across tens of retail locations. RTV is straightforward at the single shipment level: you report the issue, return the items, and get replacements. But if yours is a large-scale retail operation you're not just dealing with a handful of returns, but hundreds, each with its unique reason for return, from various suppliers across the globe.

Managing RTVs at scale becomes a complex challenge. It requires meticulous tracking, coordination, and negotiation to ensure each defective item is correctly processed without disrupting your business flow or customer satisfaction.

Consider also that these exceptions to business-as-usual affect numerous groups in your organization. For them, knowing what unproductive inventory exists, where it is, who sold it to you, what agreements you have in place governing returns, and where in the RTV process unproductive inventory has progressed presents significant challenges.

Finally, it is not uncommon for RTV management to be conducted in a labor-intensive manner via email and spreadsheets, which adds to the time, inaccuracy, and, ultimately, cost to the process. 

What is the Cost of RTV Mismanagement?

When unproductive inventory collects dust in the corner of your distribution center, it costs you valuable time, money, and resources. Without an effective and efficient process in place, it’s easy for persistent vendor and product issues to go unnoticed, and performance suffers. Products suspended in an inefficient RTV process are products you cannot sell and profit from.

Developing Your Own RTV Process

Having a solid RTV process is highly beneficial to your business in a number of ways;

• Cost Savings. Defined RTV processes mean fewer losses on damaged goods and better control over your inventory.
• Time Efficiency. Knowing how to handle returns quickly gets products off your shelves and either back to the supplier or replaced, keeping your stock fresh.
• Supplier Accountability. A clear process puts the onus on suppliers to meet your standards, improving product quality over time.
• Customer Satisfaction. Ultimately, ensuring that only top-notch products reach your customers boosts your reputation and bottom line.

Defining your own Return to Vendor process involves several key considerations. Your priority should be to ensure its efficiency and effectiveness.

• Ownership and participants. Before diving in, it's crucial to decide who owns the process. Typically, this might be your procurement or supply chain management team. Beyond ownership, involvement should include every department that interacts with inventory – receiving, quality control, and finance – to cover all aspects of the RTV process.
• Documentation. Documentation is another critical consideration, as a well-documented process helps track returns, communicate with suppliers, and analyze patterns over time.
• Procedures. Focus on clear, straightforward procedures that can be followed consistently, with well-defined roles and responsibilities for each team member involved in the RTV workflow.

Creating an RTV process that fits your business like a glove involves a few key steps:

• Set Clear Guidelines. Outline exactly what qualifies an item for return. This clarity will save you and your supplier from any future headaches.
• Embrace Technology. Use software to track returns from start to finish. This keeps everyone in the loop and makes your life easier.
• Educate Your Team. Make sure everyone involved knows the drill. Training goes a long way in making your RTV process run smoothly.
• Build Strong Relationships with Suppliers. Good relationships are based on understanding and cooperation. Work together to make the RTV process beneficial for both parties.

The Case for RTV Automation

Trying to stay on top of RTV with traditional systems comes at significant time and labor costs. Navigating a maze of returns, whether due to incorrect orders, excess quantities, or defective products, impacts numerous parts of your business. Phone calls and emails are inefficient. Manually moving data across systems increases the risk of errors, financial exposure, and compliance failures. And less-than-complete supplier/retailer integration can lead to inefficiencies or even breakdowns in your supply chain. 

Updating traditional manual processes with technology is a game changer. You’re on top of returns, automating communication, and ensuring you're aware of where your inventory stands and optimizing its flow. Transitioning to a software-driven approach minimizes errors, saves time, and, importantly, turns potential losses into opportunities for your business to thrive.

Our experience suggests that automating RTV processes offers significant labor savings, typically two or more FTEs. It also dramatically reduces costly and time-consuming data errors. Eliminating missteps, mistakes, and delays in the RTV process creates significant performance improvements. And automation within and across organizations breaks down organizational silos, which means fewer bottlenecks and speedier resolution of issues. 

Rivet Automates RTV

Rivet, Traverse Systems’ business process automation solution, combines software and professional services to automate your Return to Vendor process. 

Rivet automates previously manual and ad hoc business processes. It is a single platform that replaces email, spreadsheets, task management software, and the other software and manual processes you and your customers and partners use today.

Rivet streamlines RTV processes and reduces their cost by elevating the visibility of unproductive inventory and automating accountability for process completion. It also

• establishes a documentation trail that assists in dispute resolution.
• provides your Distribution Center, Accounting, and Management teams with real-time visibility into your unproductive inventory and its return status
• generates analytics of return trends by vendors and products and offers a continuous display of the next actions required to facilitate each given return and those responsible for the actions
• gets the right tasks to the right people in the correct order
• handles deadlines and reminders and makes inventory issues transparent

Incorporating Rivet into your RTV process adds visibility and accountability to a process vital to your business's profitability. It offers significant labor savings and improves response and Time to Resolution (TTR) by eliminating your traditional reliance on spreadsheets, emails, and phone calls to manage RTV processes. It also shortens the duration of RTV cycles by minimizing follow-up on vendor and inventory anomalies. A single source of truth that keeps everyone on the same page and offers definitive assignments, guidance, and alerts. In summary, with Rivet, unproductive inventory is identified and handled quickly and efficiently, allowing your people to focus on more valuable tasks in your business.