The UK Industry Returns Initiative

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The UK Industry Returns Initiative

• Brian Green
• BISAC SCEDI, 10 March 2006

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The scale of the problem

• Returns approx 14 by value in UK
• Around 40 million books
• 100 million per year

3
How it started

• 1997/98 KPMG supply chain report identifies
  returns as a major potential area for cost saving
• 1998/99 KPMG commissioned to carry out Tackling
  returns project
• Consensus reached on a new process

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KPMGs conclusion
the issues are complex, and few solutions are
in the gift of any one company. It is an issue
best addressed on an industry-wide, or systemic,
level. KPMG
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Principles of the project

• Returns are a necessary evil if more books are to
  be sold
• Eliminate waste of time and money associated with
  returns
• Automate labour-intensive procedures
• Establish a standard returns policy for the
  industry

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Returns as handled now

• Entirely manual process
• Authorised on individual publisher terms mainly
  by sales staff
• Returns as part of buying negotiation
• Delays in processing returns
• Books refurbished and returned to stock
• Pre-emptive debit notes

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Returns the new way

• Open returns within industry-standard parameters
• Consolidation by distributor
• Automatic authorisation by distributors
• Pre-agreed credit value
• Simplified handling processes
• Standard commercial documents

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Timing parameters

• Books may not be returned until three months
  after publication
• Books may not be returned after fifteen months
  have elapsed since the last dispatch
• Quantity not to exceed volume bought in last 15
  months

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Other parameters

• Unit volume rejection of quantities in excess of
  lifetime sales
• Value capping parameters apply if within
  existing capping agreements
• Firm sales titles supplied on firm sale will be
  rejected for return

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Credit valuation and timing

• Quantity-weighted average cost price of all
  transactions over 12 month period leading up to
  latest invoice
• Credit aged back to date of return
• Same terms for returns credits as apply to
  invoices between trading partners

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How it works in practice

• Bookseller sends electronic request
• Distributors system automatically vets request
  and responds within hours
• Bookseller sends electronic confirmation of
  quantity and dispatches returns
• Distributor scans and credits

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How it works in practice

• Bookseller sends electronic request
• RETANN message
• Distributors system automatically vets request
  and responds within hours
• RETINS (for returns authorisation)
• Bookseller sends electronic confirmation of
  quantity and dispatches returns
• RETINS (for returns adjustments)

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Added functionality

• Separate track for books required back for
  restocking and for those to be pulped (green
  and red boxes)
• Process can be used to claim credit on damaged
  books or imperfects
• or report short deliveries

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Who benefits, and how?
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Benefits for booksellers

• Returns authorisation guaranteed subject to
  transparent parameters
• Just one returns policy for all books
• Quick response to returns requests
• Certainty about credit valuation
• Consolidation of returns by distributor
• Improved cash flow

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Benefits for distributors

• Automatic processing of returns requests no
  rekeying
• Benefits of preauthorisation
• Single reference point for transactions
• Simplified handling
• Common returns policy for all clients

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How everyone benefits

• Time, effort and cost savings
• End to accounting disputes
• Better management information
• Better trading relationships
• More books sold

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Has it worked?

• Major distributors now live
• All major retailers in support
• The batch.co.uk initiative
• All parties report significant benefits

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The messages - EDIFACT

• RETANN (Request)
• Can include overstocks and non-conformance
• RETINS (Authorisation)
• Separate messages for green and red boxes
• RETINS (Confirmation/adjustment)
• Back to supplier one for each RETINS received
• Based on EDIFACT D.99A

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For further information go to www.bic.org or
contact Peter Kilborn peter_at_bic.org.uk