Advanced Returns Management (LO-ARM)
You can use this process to manage customer returns and supplier returns.
Customer returns are returns from a customer to a company location or an external vendor. Supplier returns are either returns from a company location to an external vendor (return to vendor) or returns from one company location to another (stock transfer).
These returns processes can be short and simple or complex and fragmented.
Example
The following are examples of simple returns processes:
A customer comes to a counter, returns surplus goods, and immediately gets the money back. The returned goods are still in their original packaging and can therefore be posted to free-available stock.
A branch returns surplus seasonal products to a distribution center (DC). The returned goods are still in their original packaging and can therefore be posted to free-available stock. The DC credits the branch.
A company returns goods that were defective on arrival to the vendor and creates a debit memo for the vendor for the full amount.
Example
The following is an example of a complex returns process:
A customer calls a call center and states that they want to return defective goods. The goods are to be picked up by the company. A partial quantity of the returned goods is obviously damaged and therefore scrapped at the branch. The remainder has to be forwarded to the original vendor for inspection. To save transport costs, the return to vendor is done using the supply chain in reverse. After the vendor has inspected the returned goods, the credited amount is forwarded through all the plants in the supply chain back to the customer. The credited amount may differ at each stage in the process, even between different plants of the same company.
Prerequisites
You have made the required settings for advanced returns in Customizing
for Advanced Returns Management
by choosing 
Logistics – General
Advanced
Returns Management
.
For more information, see Customizing for Advanced Returns Management.
Process
Advanced Returns Management
provides
end-to-end support for both simple and complex returns scenarios by integrating
all the necessary steps.
Advanced Returns Management
Returns Document Creation
The returns document depends on the type of return.
A returns order (rO) is created when a customer returns material to a company location.
A returns purchase order (rPO) is created when a company location returns material to an external vendor.
A returns stock transport order (rSTO) is created when one company location returns material to another company location.
Depending on the nature of the return and the authorization of the user at the receiving location, all or some of the subsequent steps can be performed directly in the returns document, for example, entering inspection results, specifying the logistical follow-up activity, and issuing a refund. In more complex returns scenarios, the authorized user for each subsequent step in the process can generate a worklist of returns orders or deliveries that require processing, for example, a worklist of returns orders pending approval, a worklist of deliveries pending inspection, and so on.
For more information, see Returns Document Creation.
Inspection and Logistical Follow-Up (LFU)
When products are returned from a customer or another company location, they must be checked for completeness and damage. Returned goods can be inspected at the counter, at the customer site, in the warehouse, or at the vendor site. Depending on the complexity of the returns process and the authorizations of the users, inspection results can be entered directly in the returns document or in a separate step. If they are entered in a separate step, items can be split into subquantities if different inspection results are required.
After the returned material has been received and inspected, an authorized user must decide which follow-up activity to select. Logistical follow-up activities are used to specify the physical movement of the returned material, for example, move to scrap, ship to vendor, and transfer to free-available stock. Depending on the complexity of the returns process and the authorizations of the users involved, the logistical follow-up activity can be specified directly in the returns document with the inspection results, or in a separate step.
For more information, see Inspection and Logistical Follow-Up (LFU) and Follow-Up Activities.
Automatic Creation of Follow-Up Documents
Once the logistical follow-up activity for a returned material has been specified, the system automatically creates the necessary documents in the background, for example, returns stock transport orders, returns purchase orders, inbound and outbound deliveries, and goods movements. This frees the employees responsible for returns processes from having to manually create these documents from the original returns document.
For more information, see Automatic Creation of Follow-Up Documents and Follow-Up Activities.
Returns Refund Determination (RRD)
When a product is returned, an authorized user must decide how much to refund. This decision can be based on the returns reason, the inspection results, or on other business considerations. Depending on the complexity of the returns process and the authorizations of the users, this decision can be made directly in the returns document, or in a separate step — either customer refund determination (CRD) or internal refund determination (IRD). Similarly to inspection, items can be split if different refunds are required.
For more information, see Returns Refund Determination (RRD).
Process Step Authorization
Each step of the advanced returns process can be associated with different roles. For example, the warehouse employee is responsible for entering inspection results, and the returns manager is responsible for logistical follow-up. The following steps can be subject to authorization checks:
Creating returns orders
Entering inspection results
Performing logistical follow-up
Performing returns refund determination
Releasing credit memos
Process Tracking for Returns Overview
All of the documents created for a returns process are collected and grouped in a returns overview. The user can check the status of the different steps in the overview (such as whether the inspection has been performed or whether LFU has been specified), and reprocess follow-up documents that have been created with errors in the background.
For more information, see Returns Overview.