Return Goods Handling - Meaning & Definition

Published in Operations and Supply Chain Terms by MBA Skool Team

What is Return Goods Handling?

Return Goods Handling is the method by which returned goods i.e. goods returned to the manufacturer by the customer are handled and taken care of. Goods are generally returned to the manufacturer if they do not meet the specifications which were desired by the customer or the actual product is something completely different from what the customer had perceived it would be. This a very undesirable thing for the organization because that creates problems with the customers as well as shows that the goods are not upto the mark and all the money invested in the product i.e. manufacturing and shipping it is gone waste as it is returned by the customer.

Different companies have different ways of handling the returned goods, some companies which are very strict with quality standards even discard the product and don’t use it any further or sell it at a scrap value. Other companies which do not have such stringent standards try reprocessing it to meet the required specifications so that the entire cost built in manufacturing the product is not lost.

For example: A company which produces bags got an entire consignment returned by the customer who had ordered in bulk as the chain in all the bags are not upto the quality that they desire and expect most of them to go defunct within a few days which would mean that the customer would then lose relationship with its own customers. So the company manufacturing bags now has an option of doing what it wants with the returned goods, this process is called Return Goods Handling.

Hence, this concludes the definition of Return Goods Handling along with its overview.

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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