Our customers face new market conditions, competition and new challenges every day. So they are counting on us to provide them with the technology and solutions that will help them survive and thrive in this dynamic and increasingly digital environment. SAP’s in-depth industry domain knowledge has enabled us to provide the best and most innovative business process support to our customers for nearly 50 years.
By continuously evolving our enterprise resource planning (ERP) solutions, we help our clients modernize their business processes and adapt to a new IT reality. As I said before, this reality combines flexibility, agility and choice for our customers: flexibility thanks to a modular but integrated approach to enterprise software, agility thanks to business processes that can be adapted according to the needs and choices for them. customers to operate their systems on the infrastructure of their choice. And we can certainly add here the need for collaborative, networked and sustainable solutions.
One of my favorite examples of how SAP is helping customers adapt and modernize their business processes comes from the retail industry and concerns the impact of the COVID-19 pandemic. E-commerce increased during the pandemic as consumers faced lockdowns and sought the relative safety of online shopping. This increase in e-commerce has had dramatic implications for traditional retailers who have had to move quickly from primarily in-store sales to online platforms, but also have to deal with much higher levels of returns.
Consumers are more likely to return something when purchased online compared to offline purchases. This is especially true in fashion retail, as there is a much higher probability that a particular size will not match or the color will not quite match what the consumer has expected. Customers online also often buy brackets – ordering multiple items or similar sizes to make sure one is the correct fit and return the others.
This is a significant problem for traditional retailers who were not used to handling such high levels of returns and who in the past often outsourced the processing of returns. Returns – or reverse logistics, as the process is sometimes called – is an expensive and time-consuming part of the day-to-day life of the supply chain.
Businesses must decide where to return inventory, how to handle inventory once returned, and whether the customer will receive a refund or a replacement. Typically, these operations were optimized over time in order to satisfy customers, even if it meant destroying the returned goods.
Retailers know that the return experience can break or build customer loyalty and trust, and that’s why they aim to process returns and reimburse customers as quickly as possible. But destroying – and even storing – returned items is potentially bad for the environment and represents a monetary loss. According to the UK Online Retail Association, 69% of shoppers confirm that the quality of the return service has a strong influence on which retailers they will shop at.
Recognizing these problems, SAP has developed an innovative solution that we call Intelligent SAP returns management, a returns optimization solution that guides products from customers’ hands to final disposition stages, maximizing both customer experience and business margins. It uses artificial intelligence (AI) driven routing and disposition decisions to maximize sales and profits for our customers.
SAP Intelligent Returns Management benefits consumers, retailers, and other stakeholders – and helps customers operate more sustainably. Consumers benefit because we help our customers streamline the returns process, and it delivers the desired customer experience. Our retail customers know that brand loyalty is fragile and can quickly be lost if the returns process is anything but simple and smooth. They need to optimize their returns process to be efficient and ensure a great customer experience. When goods arrive at their return centers, retailers want to be able to make quick decisions about what to do with them: should they dispose of the goods? Should they perform quality control and re-certify them for sale, or send them to an agent such as a point of sale or reseller?
Our solution intelligently recommends return options for consumers by optimizing both the customer and retailer experience and recommends disposition decisions to warehouse teams to limit value leakage. But it also gives business leaders new visibility into the end-to-end return process, enabling them to make data-driven decisions.
In particular, retailers can use the built-in analytics to understand what is selling and what is not. Does a particular item keep coming back because it doesn’t meet expectations in terms of size or look? Does a particular color not sell or is a style out of fashion? Whatever the reason, they can inform the design team and stem a problem at the source by failing to deliver products that fall short of expectations, and thus be more sustainable.
SAP has offered a back-end solution in the past, but it was a back-end logistics solution. Now, with SAP Intelligent Returns Management located at the intersection of cloud ERP and SAP’s industrial cloud, we have closed the gap between front office and back office. This is the biggest benefit our solutions bring to fashion retailers and others.
Thomas Saueressig is a member of the SAP SE executive committee for SAP Product Engineering.
This story was originally posted on LinkedIn.