ADVANCED RETURNS MANAGEMENT FOR CUSTOMER RETURNS

Advanced Returns Management integrates all the steps involved in returns processing:

 Creating the returns order

 Recording the material inspection results
 Deciding what the logistical follow-up activity should be
 Refunding customer returns with a credit memo
 Delivering replacement materials free of charge
 Monitoring the process

Each step in Advanced Returns Management can be linked to various user roles with different
authorizations: sales representative, warehouse manager, warehouse worker, returns manager, returns
controller, accounts payable clerk, and inventory manager. If a user does not have the required
authorization, a workflow can be set up so that an authorized user can confirm the step, for example.

Advanced Returns Management also provides for the automatic creation and tracking of all the documents
necessary for logistical and financial processing. These include returns deliveries, goods movements,
returns purchase orders, returns stock transport orders, credit memo requests, subsequent deliveries free
of charge, and credit memos.

The following figure illustrates the customer returns process in Advanced Returns Management by means
of the associated document flow.
Returns Order

You trigger the customer returns process with a returns order. The returns order contains information that
serves as the basis for subsequent processing of the returned material in Logistics and Financial Accounting,
such as the automatic creation of logistical follow-up documents as well as documents for refunding the
customer.

Material Inspection

You can record the results of a material inspection in which the returned materials have been checked.

Sales representatives and warehouse employees can enter inspection results directly in the returns order
for materials that have been returned at the counter or have been shipped to the warehouse without prior
announcement.

For materials that have been returned to a company location, warehouse employees can use the Material
Inspection in Warehouse transaction to enter the inspection results for the returns delivery belonging to
the returns order.

Logistical Follow-Up Activities

You use logistical follow-up activities to specify the next step in the logistical processing of a returned
material. Examples of logistical follow-up activities include Immediately Move to Free Available Stock, Ship
to Vendor, and Transfer to Scrap. Sales representatives or warehouse employees can enter the information
required for the selected logistical follow-up activity directly in the returns order for materials that have
been returned at the counter or that have been shipped to the warehouse without prior announcement.
For materials that have been returned to a company location, warehouse employees can use the Material
Inspection in Warehouse transaction to enter the required information for the returns delivery belonging to
the returns order.

Automatic Creation of Follow-Up Documents

The system automatically creates the follow-up documents. It does so based on the logistical follow-up
activity and refund control that have been specified. Follow-up documents include returns deliveries, goods
movements, returns stock transport orders, returns purchase orders, and repair orders.

Compensation for Customer Returns

When a customer returns a material, you can issue a credit memo as refund or send a replacement material
as compensation. If you issue a credit memo, you specify the refund amount. If you send a replacement,
you specify the exact replacement material and quantity. You can trigger compensation at any time either
right in the returns order, in the Material Inspection in Warehouse transaction, or via the Customer Refund
Determination transaction.
If you release the refund in the returns order, the system creates a credit memo or a subsequent delivery
free of charge. If you release the refund in the Customer Refund Determination transaction, the system
creates a credit memo request or a subsequent delivery free of charge.

In the returns order, sales representatives specify how and when the customer should be compensated:
Even if a sales representative specifies that the customer should be compensated at a later time, he or she
can still specify the refund amount or replacement material. This is then available in the Material Inspection
in Warehouse and Customer Refund Determination transactions.

Non-Valuated Returns Stock

You have the option of initially posting the goods receipt for returned materials to non-valuated stock. The
logistical follow-up activities are then based on this non-valuated returns stock. In particular, you can use
non-valuated returns stock for forwarding processes such as store returns and supplier returns. You can
even scrap the materials from the non-valuated returns stock.

The returned materials are valuated when you decide that the material is to change ownership from the
customer to your company. The system then automatically triggers a goods movement to post the returned
material to valuated stock. A change in ownership occurs when you grant the customer a refund or
replacement for the returned material (a credit memo, a credit memo request without billing block, or a
subsequent delivery free of charge), or when you specify a logistical follow-up activity signaling that you
intend to take on ownership, such as by transferring the material to unrestricted-use ("free available")
stock.

Customer Returns Overview

The returns overview provides you with an overview of all the steps in the returns process, all the logistical
follow-up documents created as part of the process, as well as information on the status of logistical
processing and compensation

RETURNS ORDER

Entering Returns Information

You enter returns information in a returns order on the Returns tab page at item level. The system displays
this tab on the overview screen as well as on the detail screen for the returns order item.

Returns information includes the status of the returned material (inspection data), how it should be
logistically processed, details regarding customer refunding and approval, and the customer RMA (Return
Material Authorization) number.

There are a few ways in which you can speed up data entry:

 You can make changes to the returns information of several items at once by choosing Edit Fast
Change Of Returns Control .
 You can configure default values in Customizing for the logistical follow-up activity, the Material
Received checkbox, refund control, and the refunding type. The system then automatically enters
these values when you create new returns order items.
  You can also set default values in the returns order for new returns order items by choosing Default
Values in the header area of the Returns tab and then entering values for the return reason, the
Material Received checkbox, the logistical follow-up activity, refund control, and the refunding
type. These entries override the Customizing entries.

Entering Inspection Results

If you have already received the returned material when you enter the returns order (because it was
returned at the counter, for example), you can enter the inspection results directly in the returns order.
You do so by entering an inspection code and, if necessary, a comment. If you enter a logistical follow-up
activity that completes the logistical process, you must enter inspection data.

Even if you carry out the inspection at the customer site before the material is physically returned, you can
still enter the inspection results by selecting the Insp. at Customer Site checkbox.

You can also enter inspection data based on what the customer tells you (customer inspection). You would
use this if the customer calls or sends an e-mail to let you know they are returning something.

Inspection results can be used as the basis for determining the appropriate follow-up activity and the
appropriate customer refund.

Logistical Follow-Up Activity

The logistical follow-up activity code allows you to specify the next step in the logistical processing of the
return (such as Receive into Plant, Ship to Other Plant, or Ship to Vendor). Depending on the logistical
follow-up activity that you select, you may have to specify additional information such as the next plant or a
vendor. The logistical follow-up activity triggers the creation of the relevant logistical documents in the
background.

You can also specify what you propose to be the next logistical follow-up activity after the material has
been inspected. This is then automatically displayed as the logistical follow-up activity in the material
inspection transaction. You would typically do this if a customer calls or sends an e-mail informing you that
they are returning a material and you want to plan the logistical follow-up activity in advance when you
enter the returns order, based on what the customer tells you.

The following table lists all logistical follow-up activities that are available as standard in the returns order.

Follow-Up Default Description of Meaning

Activity Logistical Follow-Up
Code Activity

0001 Receive into Plant Returned materials are posted to the returns warehouse (usually to blocked stock).

0002 Immediately Move to Returned materials are posted to unrestricted-use stock (usually with stock type Unrestricted-Use Stock).
Free Available Stock

0003 Immediately Move to Returned materials are temporarily posted to returns stock and then a goods issue is posted to scrap.
Scrap

0004 Ship to Other Plant Returned materials are sent to another plant. The materials are posted to returns stock first.

0005 Ship to Vendor Returned materials are sent to an external vendor. The materials are posted to returns stock first.

0006 Ship to Vendor Via Returned materials are sent to an external vendor via another plant. The materials are posted to returns
Other Plant stock first.

0007 Direct Shipment to The customer sends the return material directly to an external vendor without returning it to your
Vendor company.
Follow-Up Default Description of Meaning
Activity Logistical Follow-Up
Code Activity

0008 Inspection at Customer You choose this activity if you want to inspect the material at the customer site before it is returned. Once
Site you have the inspection results, you decide whether the material should be sent back or if it should
remain with the customer. To do so, you change the logistical follow-up activity in the returns order.

0009 Delivery into Plant — Choose this activity if you cannot exactly specify the materials and quantities to be returned. A returns
Materials Still Unknown delivery is posted and when the goods are physically received, you can update the returns order with the
returned materials.

0013 Material Remains at Choose this activity if you decide after the inspection at the customer site that the material should stay
Customer Site with the customer. It might be scrapped there, for example. The customer can be refunded in the usual
way.

0014 Immediately Move to The returned material is posted to a specific kind of stock (such as stock for second-grade goods).
Specified Stock

0016 In-House Repair An in-house repair is triggered for the returned material using a corresponding repair order. You can
configure an automatic goods movement from the returns stock to the repair order stock.

0017 External Repair An external repair is triggered for the returned material using a corresponding repair order. You can
configure an automatic goods movement from the returns stock to the repair order stock.

0021 Send Back to Customer Returned materials are sent back to the customer.

Refunding Type: CREDIT MEMO

You have the following options for refund control:

 Choose I Immediately if you want to create a credit memo immediately for the returns order. This is
only possible if you have already received the material (and have therefore selected the Material
Received checkbox), if the sales document type of the returns order was configured accordingly in
Customizing, and if you are authorized to give a refund. If you have made the appropriate setting in
Customizing, the system can create the corresponding credit memo automatically. Otherwise, you
create it subsequently using standard billing procedures.
 Choose P Approved if you want the system to create a credit memo request. You can create the
credit memo request even if you have not received the material yet. Enter a rejection reason for
the credit memo request if you do not want the customer to receive a refund because, for example,
they are returning an overdelivery or they have already received a replacement delivery free of
charge.
 Choose R By Credit Memo Request if you want to postpone the decision regarding a refund to a
later time. In both the Material Inspection in Warehouse transaction and in the Customer Refund
Determination transaction you can then subsequently release a credit memo request (see
Compensation for Customer Returns).
 Choose A After Receipt of Credit Memo if you want to wait to determine the refund amount until
after the credit memo has been received either from an external vendor or from another company
code in the case of a cross-company-code store return. Use the Customer Refund Determination
transaction to do so. You can only use this refund control setting if you specify a logistical follow-up
activity in which the material is sent to an external vendor or is transferred to a plant with a
different company code.

Refund Amount

If you are authorized to issue a refund directly from the returns order by creating a credit memo, you can
determine the refund amount with the returns refund code and the return reason. The returns refund code
and the return reason are pricing parameters for the standard pricing function. Returns refund codes can
be configured, for example, to represent a percentage deduction from the paid sales net price. If you are
not authorized to issue a refund directly from the returns order, you can propose a returns refund code
that an authorized user can subsequently accept or change in the Customer Refund Determination
transaction (see Compensation for Customer Returns).

Refunding Type: REPLACEMENT MATERIAL

You have the following options for refund control:

 Choose I Immediately or P Approved if you want to create a subsequent delivery free of charge
(SDF) right away. This process depends on whether or not you have already received the material. If
you choose I Immediately, the system also creates the delivery for the SDF and posts the respective
goods issue.
 Choose R By Credit Memo Request or A After Receipt of Credit Memo if you want to postpone the
decision regarding a refund to a later time. You can then release an SDF in the Material Inspection
in Warehouse transaction and the Customer Refund Determination transaction. The refunding type
Replacement Material that is specified in the returns order is displayed in both of these
transactions so that the person making the next decision knows that the customer would like a
replacement material. You can only use refund control A if you specify a logistical follow-up activity
in which the material is sent to an external vendor or is transferred to a plant with a different
company code.

Replacement Material

To determine the replacement material delivery, enter the replacement material, the replacement
quantity, and the supplying plant. You can specify a different replacement material than the returned
material. The supplying plant can be different than the plant that received the returned material.

You trigger the replacement material delivery in the SD document Subsequent Delivery Free of Charge. You
can trigger the SDF when entering the returns order even if you have not yet received the material being
returned. If you specify immediate compensation, the system automatically creates the outbound delivery
for the SDF and posts the corresponding goods issue.

You can specify a delivery block depending on the SDF order type in Customizing so that certain users are
allowed to create an SDF but are not authorized to release it.

Valuation of the Returned Material

If you have defined a special requirement type in Customizing for the item categories used in the returns
order, the goods receipt is posted to non-valuated returns stock.

However, the system posts the goods receipt to valuated stock if you make one of the following entries in
the returns order item:

 You define a logistical follow-up activity that signals a change in ownership.

 You enter a receiving plant in a company code that deviates from the company code of the sales
organization specified in the header.
  You trigger compensation for the customer by releasing a credit memo request or a subsequent
delivery free of charge.

Any further logistical follow-up activities that are posted, such as a returns stock transfer, are then based
on the valuated returns stock. Logistical follow-up activities with a change in ownership are 0002
Immediately Move to Free Available Stock, 0003 Immediately Move to Scrap, and 0014 Immediately Move
to Specified Stock.

Display the Returns Overview

When you change or display a returns order, you can choose the Returns Overview function to display the
overview of the entire returns order or of individual returns order items.

Approval Block

You can set an approval block if you want an authorized user at the receiving plant to approve the returns
order before the customer actually returns the material. The system can also set this block if you are not
authorized to trigger a return to the selected plant.

Incompleteness Check

In addition to the rules that you have configured in Customizing for the incompleteness check for returns
orders, the system checks if you have entered the following information:

 You must enter a logistical follow-up activity and select the refund control.
 You must enter an inspection code if you choose logistical follow-up activity 0002 Immediately
Move to Free Available Stock, 0003 Immediately Move to Scrap, or 0014 Immediately Move to
Specified Stock, or if you select the Material Received checkbox and choose logistical follow-up
activity 0005 Ship to Vendor, 0004 Ship to Other Plant, or 0006 Ship to Vendor via Other Plant.
 You must enter the next plant if you choose logistical follow-up activity 0004 Ship to Other Plant or
0006 Ship to Vendor via Other Plant.
 You must enter a vendor if you choose logistical follow-up activity 0005 Ship to Vendor or 0006
Ship to Vendor via Other Plant.
 You must enter an RMA number if a vendor return material authorization (RMA) is required for a
returns purchase order (the RMA Required checkbox is selected).
 You must enter a replacement material, the replacement material quantity and unit of measure,
and a supplying plant for the replacement material delivery if you choose refunding type
Replacement Material and refund control P Approved or I Immediately.

If entries are missing, the system creates an entry in the incompleteness log.

ACTIVITIES

Create a returns order and enter the required returns information, such as the returns reason, inspection
code, logistical follow-up activity, and so on. Depending on the logistical follow-up activity, you might need
to enter additional information such as the next plant or a vendor. You create a returns order just like any
other sales document, for example, a sales order. Choose Logistics Sales and Distribution Sales Order
Create . You can create a returns order with reference to a preceding sales order or to the corresponding
billing document (invoice).

While you make your entries, the system checks the consistency of the returns-related data. For example,
you can only use refund control A After Receipt of Credit Memo if you specify a logistical follow-up activity
in which the material is sent to an external vendor or is transferred to a plant with a different company
code.

Once the returns order is complete, the system creates the relevant follow-up documents automatically.
This depends on the logistical follow-up activity, the refunding type, and the refund control setting you
selected. You can also save the returns order even if it is still incomplete and finish processing it later.

The following table lists the follow-up documents that are created according to logistical follow-up activity.

Logistical Follow-Up Activity System Action

All logistical follow-up activities except 0007 Direct The system creates a returns delivery for the returns order. Some refund control
Shipment to Vendor, 0008 Inspection at Customer settings result in a delivery split.
Site and 0013 Material Remains at Customer Site

 0001 Receive into Plant If you have selected the Material Received checkbox for returns order items, the system
posts the goods receipt for the corresponding returns delivery automatically. You can
 0002 Immediately Move to Free Available make specific stock settings for each logistical follow-up activity in Customizing.
Stock

 0003 Immediately Move to Scrap  Note

 0014 Immediately Move to Specified Stock If the Material Received checkbox is not selected and you receive the materials into
your warehouse after a shipment from the customer site, then you post the goods
receipt as part of returns delivery processing.

0003 Immediately Move to Scrap The system posts the corresponding goods issue to scrap.

0005 Ship to Vendor The system creates the corresponding returns purchase order for the specified vendor.
You then continue the returns process as described in Advanced Returns Management
for Supplier Returns.

0007 Direct Shipment to Vendor The system creates the corresponding returns purchase order for the specified vendor
with the customer's address as the pick-up address.

 Note

You can create an outbound delivery for this returns purchase order and post a
statistical goods issue. This allows you to record the results of a material inspection
performed by the vendor. For more information about returns purchase orders,
see Advanced Returns Management for Supplier Returns.

 0004 Ship to Other Plant The system creates the corresponding returns stock transport order for the specified
plant. You then continue the returns process as described in Advanced Returns
 0006 Ship to Vendor via Other Plant Management for Supplier Returns.

If you chose 0006 Ship to Vendor via Other Plant and process the return in the receiving
plant of the returns stock transport order in the Material Inspection in
Warehouse transaction, the system proposes 0005 Ship to Vendor as the next logistical
step.

0016 In-House Repair The system automatically creates the in-house repair order. You can configure in
Customizing that you want the system to automatically create a repair item in the repair
order and post the goods movement from the returns stock to the repair order stock.

0017 External Repair The system automatically creates the repair order for external repair. You can configure
in Customizing that you want the system to automatically post the goods movement
Logistical Follow-Up Activity System Action

from the returns stock to the repair order stock and create the subcontract order for
shipment to the external repair service.

0021 Send Back to Customer The system creates an outbound delivery with the customer as the ship-to party. This
outbound delivery completes the returns process from a logistical point of view.

CANCELLATION OF RETURNS STEPS

You can undo each step in a customer returns process if incorrect data was posted or you made a mistake
when triggering posting. You can then repeat the canceled step with the correct data or choose a different
processing step, as may be necessary with the logistical follow-up activities.

Activities

You cancel a process step by canceling or deleting the associated document(s). You can only cancel a step if
the next step in the process has not been completed yet. For example, you can only cancel a credit memo
request if the resulting credit memo has not been created yet. You can only reject the material inspection if
the follow-up documents associated with the selected logistical follow-up activity have been canceled. You
can only delete returns items if the returns delivery has not been posted yet, and so on.

The following table explains which document(s) you have to cancel or delete for each step in the customer
returns process:

Process Step to Be Action

Cancelled

Issue of refund You cancel one or more credit memo items or the entire document.

Customer refund You delete one or more credit memo request items or the entire document.
determination
It is now possible to call the Customer Refund Determination transaction, change the refund code, and create a new credit
memo request.

Subsequent delivery You delete one or more items in the SDF or the entire document.
free of charge (SDF)
If you have already created the outbound delivery for the SDF, you must first delete the outbound delivery. If you have
already posted the goods issue, you must first cancel the respective material document.

Logistical follow-up You cancel the document that the system created for the selected logistical follow-up activity.
activities
For example, if you selected 0011 Transfer to Free Available Stock, then you must enter a reversal posting for the
corresponding material document; if you selected 0021 Send Back to Customer, then you must delete the corresponding
outbound delivery.

 Note

Before you can delete the repair order that was created for logistical follow-up activity 0016 In-House
Repair or 0017 External Repair, you might need to first cancel the follow-up documents created for the repair order (such
as the service order for in-house repair).

 Note
Process Step to Be Action
Cancelled

No follow-up documents are created for logistical follow-up activity 0031 No Further Activities that you would need to
cancel. When you cancel this logistical follow-up activity, the inspection data remains ready-for-input even when you
confirm.

It is now possible to change the logistical follow-up activity on the Material Inspection in Warehouse screen. You can also
change the inspection code and the inspection comment, but not the inspection quantity or the inspection split items. In
order to be able to do that, you must reject the material inspection for split items.

 Note

If you have triggered valuation of the returned material by confirming the logistical follow-up activity, you must also
cancel the material document for the goods movement for valuation before you can change the logistical follow-up
activity.

Recorded material You reject the inspection item.

inspection results
It is now possible to delete inspection splits and change inspection quantities. You must save the data after rejecting items
before you can re-enter inspection data.

 Note

You cannot reject a split item of an inspection if the logistical follow-up activities have been confirmed for all the other
split items. Before you can reject the split item, you must create a new split item for which a logistical follow-up activity
has not been confirmed.

Receipt of returned You cancel the goods receipt.

materials
It is now possible to change the returns delivery and post the goods receipt again.

Created returns You delete the returns delivery.

delivery

Created returns order As long as you have not created a returns delivery, you can change, delete, or reject items in a returns order.

Tabelle importanti (SE16N) - MSR_D_EXECUTED – Overview ARM # Tracking of Executed Steps

TRANSAZIONI: MSR_CRD – Customer Refund Determination

Repair as Logistical Follow-Up Activity

You can define an in-house repair or an external repair as the logistical follow-up activity for a returned
material in a customer returns process. When you confirm the logistical follow-up activity, the system
automatically creates the relevant repair order.
You can configure the system so that it automatically posts the goods movement from the returns order
stock to the repair order stock. For an in-house repair, you can configure the system so that it automatically
creates a repair item in the repair order. For an external repair, you can specify that the system
automatically creates the necessary subcontract order that triggers shipment to the repair service provider.

This function simplifies and speeds up the transition from the returns process to the repair process. The
system automatically creates the relevant follow-up documents.