Executing and Running Customer Returns Management (BKP)

SAP S/4HANA Customer Returns Management is a comprehensive solution that manages all operations related to return orders. It allows businesses to handle returns efficiently by streamlining all related processes, including order initiation and receipt of returned goods, as well as the inspection and subsequent processing of returned items. It also provides opportunities to automate certain tasks, thereby improving operational efficiency. Return order processing identifies and captures details of the goods being returned, the reason for their return, and the subsequent assessment of their condition.

Returns management is a critical aspect of customer service and supply chain management. It involves managing the return of products from customers, processing them efficiently, while ensuring proper resolution, such as refund, replacement or repair. The goal is to provide a seamless and exemplary experience for customers, while minimizing costs and maximizing recovery value for the organization.

Refunds are a crucial part of the returns process in SAP S/4HANA Customer Returns Management. Once a return order is created and received, the system can issue a refund to the customer, based on the values of the returned items. The system can automatically calculate the refund amount, based on predefined criteria such as the condition of the product, reasons for return and the original price. The solution ensures that all refunds are processed accurately and promptly, thereby enhancing the overall customer experience.

Replacement goods are another key aspect of SAP S/4HANA Customer Returns Management processing. If a customer requests a replacement instead of a refund, the system can create and process a replacement order. Replacement goods are tracked, ensuring they are dispatched promptly and efficiently, while availability of inventory is checked to ensure that required replacement goods are available in stock. This enables the need for manual tracking to be eliminated, making the process less prone to errors, and again, improving customer service and satisfaction.

Inspection represents a critical step in the returns process. It is initiated once the customer's returned goods are received and involves physical examination of the returned goods to evaluate their condition. The outcome of the inspection directly influences subsequent processes, such as whether the goods will be resold, refurbished, returned to their supplier or discarded entirely. Results from the inspection process are stored in the system for later reference.

A customer complains they recently received damaged or defective materials. They wish to return them and obtain compensation, which could take the form of a refund, a free-of-charge replacement or a repair.

The customer request to return goods is captured in a return order. This document includes details of the impacted customer, product and quantity to be returned, and is usually created with reference to a preceding document, which can be either a sales order or a billing document.

1. The customer request to return goods is captured in a return order. This document includes details of the impacted customer, product and quantity to be returned, and is usually created with reference to a preceding document, which can be either a sales order or a billing document. The return order enables additional information to be captured that will help to determine how the returns process will move forward. This includes:
   1. The overall reason for the return, for example, standard return or sub-standard goods (recorded in the order header).
   2. For each returned material (order item):
      • The precise reason why the material is being returned. For example, this could be due to damage, poor quality or perhaps a product recall.
      • The follow-up activity. This may be to receive the goods back into the plant for inspection, perform immediate scrapping or perhaps perform an inspection at the customer site.
      • The settlement agreed with the customer. The customer may receive a refund, which may be full or partial, and which may depend on inspection. Alternatively, free-of-charge replacement for the returned goods may be agreed.
2. When the return order is saved, depending on which further processing has been agreed, additional documents may be created automatically. For example, if a physical return of goods is necessary, the system creates a returns delivery. If there is to be a free-of-charge replacement, a replacement order can be created (either automatically or manually). If a refund has been agreed, a credit memo request or credit memo (depending on the chosen option) can be created.
3. If the system has created a returns delivery, this must be put away and goods receipted, so that the material is visible in the plant, normally in blocked stock.
4. If it has been decided an inspection of the returned material is necessary, the results must be entered in the system. These include:
   1. An inspection code to record the condition of the returned material, usually either 'OK' or 'not OK'.
   2. An optional comment to record further details.
   3. Follow-up activity details to specify what should happen to the returned material. For example, depending on the inspection result, it may be scrapped, transferred to another stock type or plant, or perhaps returned to its supplier.
5. If a refund has been agreed and a credit memo request created, this can now be billed to create the credit memo to refund the customer.
6. Alternatively, if the customer is to receive free-of-charge replacement, the replacement order previously created can be delivered, picked and goods issued.

Full traceability and tracking of the returns process is available, enabling the user to monitor the progress of each return, and to see which subsequent steps have been performed and which remain to be completed.

Let's take a look at a typical example scenario using SAP S/4HANA Customer Returns Management.

Because Customer Returns Management is such a flexible and powerful tool set, we will focus on a specific scenario and process sequence. However, it is important to be aware that many other scenarios are supported.

Sarah is an internal sales representative responsible for a number of customers. She receives a call from one of them to complain about some damaged products they have received. The customer wants to return them and receive free-of-charge replacements.

Sarah captures further details of the damage. She accepts the customer’s request to return the product, as well as to receive replacements free-of-charge. In the SAP S/4HANA Cloud system, she creates a return order which includes details of the affected product and quantity, as well as the agreement to return and replace. When she saves the order, the system automatically creates a returns delivery document, which will be used to manage the physical return. In addition, the system automatically creates a free-of-charge replacement order.

Mike is the shipping specialist responsible for managing the flow of goods in and out of the warehouse. A few days after Sarah’s call with the customer, Mike takes delivery of the returned damaged goods. He checks their details against the returns delivery document in the system, and records that they have been put away and received. This means the returned goods are now visible in the SAP S/4HANA Cloud system.

Peter is the quality technician working alongside Mike in the warehouse. He is asked to perform an inspection of the damaged products and to record the results. In the SAP S/4HANA Cloud system, he enters an inspection result confirming that the products are damaged, adding some additional notes to document the damage. He also enters a decision to scrap the products, since the damage cannot be repaired. This removes the returned goods from the system.

Mike and the warehouse team are now able to use the SAP S/4HANA Cloud delivery processes to deliver, pick and goods issue the free-of-charge replacement order.

This completes this SAP S/4HANA Customer Returns Management business process flow.

Thomas, the sales manager, is able to access the Returns Overview app in the SAP S/4HANA Cloud system, and to use it to review the status of all steps in the customer returns process. He will also be interested in Peter’s inspection results, as these will provide valuable input in addressing the underlying causes of product damage.