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Demand & Supply Chain Management Evolution

Document Detail
Language: English

The role of functional integration in managing commercial returns in the fashion industry


Company: Università di Verona - LogiMaster

Many companies see, from a practical perspective, customers’ product returns as a major inconvenience and an eroder of profits; after all, products returns cost manufacturers and retailers more than $ 100 billion per year, on an average loss per company of about 3.8% in profit.

Customer returns routinely reduce the profitability of retailers by 4.3 percent and that of manufacturers by 3.8 percent. In view of this transformation in the distribution and supply area, we have observed therefore an increased complexity in market management issues (sales predictions, orders management) which make the relationship be-tween the marketing, sales, logistics and production functions more critical.

Managing the flow of product returns is increasingly recognized as a strategically important activity that spans different functions within and across firms, particularly marketing and operations. Returns management can make it possible to gather information from the customers in an efficient way through the return flows. The focus of our paper is to investigate the returns management process in the shoemaking context. In particu-lar, our research questions are:

- what is the role of commercial returns across the different business functions?
- what is the role of returns management process in sales management strategy, specifically regarding gatekeeping, returns avoidance and returns policy in the footwear industry?

The gap in the literature we wish to fill specifically refers therefore to the management of returns in the footwear industry, paying special attention to functional integration, gatekeeping and avoidance in managing returns in the different activities in a business-to-business context.



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