he. That's because consumers are a fickle lot, returning items because the color didn't match their bathroom towels or the clock they bought ticked too loudly. In addition, retailers also frequently must return out-of-season or obsolete stock, goods damaged in transit, and items that have not been sold within a certain timeframe.Many retailers opt to keep the entire process in house. Others, though, find that outsourcing is an efficient, cost-effective means of keeping the returned-goods monster under control. One such company is Service Merchandise, based in Brentwood, Tenn. Service Merchandise sells a wide variety of consumer goods, including jewelry, furniture, kitchen items, and home electronics from 385 stores in 35 states. The company also has a mail-order business.All product returns are handled at a returns-processing center operated by Service Merchandise in Bowling Green, Ky., reports Paul Minor, director of transportation. Volume at the returns center averages between 30 and 40 million pounds annually, which represents a lot of inventory costs and lost revenues.About two years ago, company managers recognized that a more organized approach to managing returns offered the potential for significant cost savings. The logistics department, though, was unable to dedicate full-time resources to the project. The solution? Service Merchandise turned to a third-party logistics service provider to manage this aspect of its business. The third party operates a customer-service center for Service Merchandise with a toll-free number. When a store needs to return something, an employee calls to get authorization. Redwood also provides the stores with specific instructions for packaging, shipping, and documentation.Based on cost and volume guidelines established by Service Merchandise, the third party arranges transportation to the Bowling Green facility using pre-approved carriers. "Our volume guidelines are based on the number of skids an...
