Cross-Divisional Functions - Key Indicators

J1
Internal Effects

Returns management has diverse cross-divisional functions within a company. Firstly, networking with various divisions is required in order to comprehensively fulfil the function of returns processing. Secondly, the returns management can provide impulses to the various divisions.

Influence from
  • INFLUENCE
  • Marketing: Product information, pricing (prevention, avoidance, and promotion)

  • Sales: Pricing, target groups

  • Purchasing: Product quality, supplier

  • Customer Service: Customer communication, returns tasks (prevention, avoidance, and promotion)

  • Product Management: Quality of the product information and product presentation

Feedback to
  • FEEDBACK
  • Logistics: Delivery timeframe, service transparency, packaging

  • Research and Development: Product improvement

  • Production: Product improvement

  • Controlling: Key indicators for the optimization of costs and processes

  • Quality Assurance: Product improvement, contributions towards the general improvement process

J2
External Effects

Recent history shows1 that the business world in general and supply chains in particular are subject to disruptive changes in ever-shorter intervals. In addition to natural catastrophes and pandemics, there are countless man-made influences such as (trade) wars, market shifts and local political or business conflicts. Thus, it is indeed a fact that the Corona crisis has given e-commerce a leap forward of at least 32 (Europe) to 5 years3 (USA).

1 https://www.mckinsey.com/business-functions/operations/our-insights/why-now-is-the-time-to-stress-test-your-industrial-supply-chain
2 https://post-medien.ch/lage-beim-paketvolumen-hat-sich-etwas-entspannt-obs-2020-zu-einem-weiteren-paketrekord-reicht-ist-offen
3 https://techcrunch.com/2020/08/24/covid-19-pandemic-accelerated-shift-to-e-commerce-by-5-years-new-report-says

Pros
  • PRO
  • The awareness of permanent and fast change is these days an indispensable prerequisite for successful entrepreneurial action.

  • Digitalization provides essential tools and approaches in order to attain the required speed.

  • A resilient supply chain enables one to flexibly react to changes and to regard the resulting new challenges as opportunities.

Cons
  • CONTRA
  • If one is neither willing nor prepared to adapt to fast change, then companies are increasingly surprised by sudden disruptions.

  • Whenever this knowledge becomes apparent, it is generally nonetheless already too late for an orderly approach.

J3
Key Indicators

Due to the numerous processes, components and participants involved, relevant business management key indicators (KPIs – Key Performance Indicators) are created. If they are collected continuously, they provide insights regarding the status quo and improvement potential with regards to the three dimensions of customer satisfaction, customer loyalty and customer acquisition.

  • df
  • df
Digitally-Collectable Key Indicators
  • Customer Satisfaction

    • Returns rate
    • Returns processing costs
    • Delivery timeframe
    • Number of support cases (complaint, return, grievance)
    • Response time in Customer Service (first response time)
  • Customer Acquisition

    • Website traffic
    • Conversion rate in the online shop (CR)
    • Average session duration
    • Click through rate (CTR)
  • Customer Loyalty

    • Number of returning visitors
    • Contribution margin per visit
    • Breakdown of the payment methods
    • Customer Lifetime Value (CLV)
    • Net Promoter Score (NPS)
Only Analogously-Collectible Key Indicators
  • Customer Satisfaction

    • Reason for the return (often not collected digitally)
    • Quality of the product information and product presentation
    • Customer orientation in the service
  • Customer Acquisition

    • Image and brand development
  • Customer Loyalty

    • Quality and value of the product ratings
    • Brand loyalty

J4
Success Factors

Various – specific and general, internal as well as external – factors determine the success of the returns management.

Returns-Specific
  • Processing costs: Personnel, transport, infrastructure

  • Lead time

  • Recycling rate

  • Refund timeframe

  • Error rate

  • Percentage of returns with special processing steps

  • Customer-side process formalization through transparent information and clear instructions

Overarching Factors
  • Process formalization through standards, guidelines and qualification

  • Targeted deployment of information systems

  • Integration of systems with operational software

  • Capacity planning

  • Performance measurement based upon formalized key indicators

  • Support from the top management

  • Employee incentives