Understanding Reasons for Goods Returns to Suppliers: Four Common Examples

Following are four examples of why goods can be returned to their supplier (several other reasons exist).

(i) Overstock/quantity error. Goods can be overordered by the warehouse or despatched in excessive quantity by the supplier. Quantity errors can be caused by inputting errors, calculation errors, or poor demand forecasting by the buyer. The cause of the quantity error may also lie with the supplier, with simple misreading, miscalculation, inputting error, or mislabelling often being the culprit. Because storage of the excess may incur loss of warehouse space or tying up of labour, warehouse management may return the goods to the supplier, especially if processing the quantity received imposes a serious efficiency constraint or resource challenge.

(ii) Quality failure. Goods and their packaging can be defective. These can be returned by customers. If checks confirm the customer’s complaint, the warehouse may return the goods to the manufacturer. In most cases, the warehouse cannot act as a large-scale quality gatekeeper. If the defect is invisible, becomes apparent only when the product is used or consumed, or is returned as a result of the manufacturer issuing a recall, the warehouse’s roll is to collect and consolidate the goods to be returned when direct-to-supplier returns are not possible.

(iii) Damage. Goods and their packaging can arrive damaged, resulting in unsaleable stock. Goods can be damaged in transit, in packaging for despatch, in packaging after manufacture, or at the manufacturing stage. Normally, only goods whose packaging is visibly damaged will be noticed by receipting operatives and returned to the manufacturer before they are put away, picked, or despatched to customers.

(iv) Goods sent in error. In rare cases, suppliers send entirely the wrong goods: Product A was ordered, but Product X was received. Product X must then be returned and fulfilment of the original order prepared for.