Asda returns well sorted

Norbert Dentressangle revamps the returns processes of Asda with boosted recovery rates and reduced dwell times

After refunds or exchanges had been made in store, Asda was finding that its subsequent returns process, which saw the consolidation of goods in its Wakefield warehouse, had become inefficient and costly. The result was poor recovery rates from returns and a lack of management information, stock visibility and store accountability.

Consequently Asda sought a returns management solution that could be implemented across the business to increase the recovery value from returns and provide full control and visibility of the reverse supply chain.

In addition, as part of a constant drive towards making its business kinder to the planet, Asda required a solution that enabled it, not only to fulfil its legal obligations under the Waste Electrical and Electronic Equipment (WEEE) Directive - but also exceed them.

With these issues in mind, Asda appointed Norbert Dentressangle Logistics UK (NB) to manage its returns operation and assist in the achievement of these objectives.

Unlike Europe, the US reverse logistics market is mature and, before embarking on the UK project, a team of NB specialists flew to the US to visit Wal-Mart's returns operation to gather firsthand information on their best practice. Once back in the UK, the team used this model to establish the Asda Returns Centre at Magna Park. From this central location, NB takes receipt of returned electrical items from every Asda store in the country in addition to unsold books,music, videos and games. The facility also receives and recycles cardboard and refurbishes plastic trays and garment rails. All returns arrive via Asda's own fleet.

Utilising a web-based warehouse management system, NB has complete visibility of the inventory from point of receipt at the centre through to final disposition.

With electrical products, this begins with each item being issued with a Returns Centre Transfer Request (RCTR) label at the store it was returned to. Upon arrival at the centre, the RCTRs are scanned to confirm receipt; product is then inspected, indentified and confirmed onto the system.

From here, the findings are reported through Asda's warehouse management system whereby, dependent on the product and its condition, an appropriate disposition route will be identified. In most cases this involves returning the item to the vendor/manufacturer; alternatively it will be channelled through the secondary - or jobbing - market.

NB maximises the value of returned goods on behalf of Asda by managing the relationships between the retailer's vendors and secondary markets to improve the recovery value that it recoups from returns.

Items that are assigned back to vendor are wrapped for protection, repackaged and allocated a racking location, which are grouped according to vendor.When product reaches a designated volume in any given location, this is flagged on the system and NB notifies the vendor and requests them to collect their products. Prior to NB's appointment, only 50% of returned products went back to the vendor. Since the returns centre has been in operation, NB has supported the ASDA trading team to enhance vendor agreement and therefore raise return to vendor to approximately 95%.

The remaining 5% of electrical returns are allocated to the secondary market. In this instance, NB negotiates a price for the product directly with a jobber. As part of this, NB consistently seeks to secure increased rates from jobbers on all returns. Under the terms of the agreement, jobbers are only permitted to sell products outside the UK and, to demonstrate this to Asda, NB retains a complete audit trail of where product has been sold to an intermediary and for what price.

In addition, as part of the vendor agreements that NB has put in place, vendors now collect their returns from the centre rather than ASDA utilising its own fleet.

The result is an increase in recovery rates, which has been made possible through the cooperative relationships that NB has built with Asda's vendors and the secondary market.

Effective warehouse management is also helping to significantly reduce dwell time for Asda, thereby improving working capital and cash flow. As part of this, NB regularly updates vendors on their stocks awaiting collection, which has helped Asda reduce dwell times from an average of 48 days to just 21.

The fully integrated warehouse management system at NB's dedicated Returns Centre provides Asda with comprehensive item level visibility and high quality management information at the point of entering the centre through to disposition.

More than 99% of all electrical returns are now accurately processed and NB has helped Asda to increase its recovery rates by 45.8%. This has been made possible through the engagement that NB has with Asda's vendors and the secondary market, which have maximised recovery value and improved the returns and collections processes.