Returned Merchandise? NetGear Takes Charge of a Troublesome Process

Network equipment maker streamlines a cumbersome, paper-intensive task that vexes many manufacturers.
Accepting returned goods is a challenge for many manufacturers, but it's an acute need in the consumer electronics market, where products often have a shorter life span than the latest teen trends.

Netgear, the maker of switches, routers and other networking equipment, handles anywhere from 20 to 50 "return material authorization" (RMA) requests per month from distributors and major retailers. Until last year, it was a cumbersome manual approval process in which sales reps had to list the product numbers and quantities to be returned, look up and list pricing (both as billed and current), and validate shipping and receipt of goods. Once all this information was entered into an Excel spreadsheet, the form had to be routed to as many as four executives for approval. The whole process took up to two weeks, and what's more, it wasn't secure and easily auditable in accordance with Sarbanes-Oxley Act requirements.

In late 2005, Netgear implemented Savvion business process management (BPM) software to automate the paper-intensive aspects of the RMA process. The original plan was simply to replace the Excel spreadsheet with a Web-based form that could be routed and approved electronically, but Netgear soon determined a bit of desirable "scope creep" was in order.

"We decided we wanted automatic price checks and validation against shipping records, so we added integration to our [JD Edwards] ERP system," says Jim Dempsey, strategic applications manager. "Now, when a sales rep enters an item to be returned, the system automatically retrieves the pricing information from ERP, and is also validates the shipping records to confirm that the customer actually received the product."

Completed in early 2006, the BPM-driven RMA process eliminated the time and labor associated with research and routing, and approval times were cut from two weeks down to two to five days. Built-in rules ensure that returns are in compliance with contract allowances, and thanks to LDAP security, users need only click "approve" for a SOX-compliant authorization (without paper or signatures).

If the event of an audit, the software can generate a time-stamped log of who reviewed and who approved each RMA request. The process is accessible to as many as 75 users across sales, operations and finance, and those approving RMAs receive alerts that work items await their attention.

BPM successes usually beget new projects, and that's certainly the case at Netgear. During 2006, the company automated other paper-intensive processes such as Item Master Approval, a step required whenever new product numbers and descriptions need to be established in the company's Agile PDM system. A "Normal-Pricing" process handles the approvals and technical ERP system updates required for routine product price changes. Finally and most recently, Netgear created an End-of-Life process that automatically checks sales levels, inventories, replacement demand and other variables before triggering a termination process for aging products.

Netgear is not unlike thousands of other firms attempting to eliminate the last vestiges of manual, paper-intensive work processes. It's impossible (and very likely impractical) to stamp out every example, but where work volumes, time constraints and regulatory controls warrant, BPM offers benefits including efficiency and auditability.