Advanced Returns Management for Customer

Returns

In today's business climate, customers assume that accepting returns is a part of your sales
cycle. Returns from customers are occurring on a more frequent basis. Customers expect
high-quality products that meet or exceed their standards. Customers also order more
product than they require and return the extra. Customers expect quick and efficient
processing of their return deliveries and refunds. An inefficient returns process can affect
your ability to retain existing customers.

Comparing Customer Returns With and Without using Advanced Returns Management
(ARM)
The topic of this unit is Advanced Returns Management (ARM). ARM extends the traditional
returns functionality available in SAP S/4HANA Sales and Procurement: advanced processing
options are available for both customer and supplier returns.
So what is the traditional functionality for processing returns? Let's take customer returns as
an example. When you create a sales order in the SAP S/4HANA system using document type
RE (Returns) , you are creating a returns order using the traditional returns functionality; a
returns delivery can be created, a goods receipt into returns stock can be posted for this
returns delivery and a credit memo can be issues to the customer. No advanced processing
options are available when using this document type, like customer refund control using
refund codes, defining a set of logistical follow-up activities to be initiated automatically,
automatically creating a credit memo request for credit memo approval, etc.
When you create a sales order in the SAP S/4HANA system using document type RE2
(Advanced Returns) , you are triggering a returns process using the Advanced Returns
Management (ARM) functionality.
Advanced Returns Management (ARM) was originally released as a part of Enhancement
Package 4 for SAP ERP/ECC 6.0. Its roots are in the Retail industry solution that SAP created
in the past. Some retail terminology (like the concept of a Store) can still be seen within the
functionality.
 Lesson: Advanced Returns Management for Customer Returns

The business functions that contain the Advanced Returns Management (ARM) functionality
are called OPS_ADVRETURNS_1and OPS_ADVRETURNS_ . I2n an SAP S/4HANA system, they
are both part of the set of always_on business functions. In the so-called switch framework
(transaction code SFW5) where you can check the status of certain business functions and
switch them on and sometimes off again, they can be found in the folder S/
4H_ALWAYS_ON_FUNCTIONS. This means that the ARM functionality is available in every
standard SAP S/4HANA system.

Figure 90: Managing Returns in the Order-to-Cash Process

Using Advanced Returns Management, customer returns are treated as a part of an

integrated process. The advanced returns order, a returns delivery, a credit memo request
and the credit memo itself are examples of documents used in this integrated returns
process. Return orders can be created with or without reference to a sales order or billing
document.
The advanced returns (sales) order is the central document that controls the rest of the steps
in the advanced returns process. From within an advanced returns order, follow-on
documents can be created such as a returns delivery, a credit memo request, or a credit
memo. These documents can also can be created using separate apps/tiles present in the
SAP Fiori launchpad of the user.
Advanced Returns Management (ARM) also allows for the recording of quality inspection
results. Based on these results (i.e. the condition of the material), the correct refund can be
triggered: refund determination controls the amount that will be credited to the customer.
An advanced returns process can be monitored for progress and completion using the
Returns Overview which is also integrated into the advanced returns order.

Available Scenarios
ARM offers the ability to handle multiple returns scenarios that companies potentially face.
There are many variables that will cause one return to be handled differently from another
return.
In ARM, the user can select the scenarios and outcomes required from within the advanced
returns sales order. In sales order type RE2 (Advanced Returns) , the user can set-up the
required returns scenario on the Returns tab page. Some of the fields here are configured to
work together in various possible combinations. If a user is selecting an incompatible
combination of field values, the system will issue an error message. Some of the functionality
in certain scenarios will not work if the required Business-add in's (BAdI's) have not been
configured.
 Possibilities in Customer Returns

The advanced returns order type allows you to determine how the returns process will
proceed further and what the outcome will be. From within a single advanced returns order,
you can manage multiple line items, with each line item possibly having a different outcome
based on what is required for that item. Below is a set of questions that might influence the
chosen field values in the details of a returns order item.
What triggered the returns process?

Customer made a return at your site in person.

Customer called and received authorization for a planned return.

Customer sent the material to your location unplanned without authorization.

What should be done with the returned material?

The material needs to be sent to the supplier from which you purchased the material.

The material needs to be sent back to the customer.

The material needs to stay in the location where the return delivery was received.

The material needs to be sent to another plant.

The material needs to be returned from an administration point of view, but will physically
remain at the customer.

The material will be returned and moved immediately to a specific stock type such as
available stock or blocked stock.

When and where will a quality inspection occur?

 Inspection needs to happen in the receiving plant immediately upon receipt of return
delivery.

Inspection needs to happen at the customer's site prior to returning the materials to your
location.

Inspection needs to happen at your supplier after the material are returned to your
supplier.

When will the customer receive a refund?

A refund will be issued immediately upon saving the advanced returns order.

A refund will be issued after inspection of the returned materials.

A refund will be issued to your customer after you receive a refund from your supplier.

Options Available in the Advanced Returns Order

As stated before, to control the outcome of a customer returns process using an advanced
returns order, you make selections in key control fields on the Returns tab in the item details
of the advanced returns order.
Some of options are based on Business-add in's (BAdI's) developed specifically for these
options. Because of the flexibility offered when setting-up BAdI's, ARM in one SAP S/4HANA
system may have very different outcomes for certain field combinations compared to a
different SAP S/4HANA system using the same field combinations.

Options Available in the Advanced Returns Order

The Return Reason field allows you to store a return reason for an order item which serves as
identification for the order item. An example is Product Defective .
The Material Received check box identifies that the material is physically in your control and
that the SAP S/4HANA system should immediate create a returns delivery.
The Follow-Up Activity field determines what should be done with the material. Examples are:
Receive into Plant and Immediately Move to Scrap .
The Refund Control field determines if, how, and when a refund should be processed for the
returned materials.
The Refund Code field determines the refund amount as a percentage of the original sales
price of the item. Refund determination can be performed in a separate transaction as well.
Using the SAP GUI, choose Logistics Central Functions Advanced Returns
Management Returns Refund Determination or use transaction code MSR_CR.DOf course,
this transaction can also be made available for the user as a tile in the SAP Fiori launchpad.
The Inspection Code field allows for the recording of the condition of the returned material.
The inspection code could also be used to trigger a refund code. Inspection can take place in
your warehouse using the returns delivery document number, the handling unit number, or
the inspection number as a reference. Inspections can also be entered in the SAP S/4HANA
system using a separate transaction. Using SAP GUI, choose Logistics Central
Functions Advanced Returns Management Material Inspection or use transaction code
MSR_INSPW.HAgain: this transaction can be made available to a user as a tile in the SAP Fiori
launchpad of this user.
There are dependencies between field values on the Returns tab in the advanced returns
order. Depending on one field entry, there may be other fields that will be required for input;
an example is the follow-up activity Ship to Vendor . If you select this follow-up activity, you
also need to enter the vendor (supplier) to which the returned material needs to be shipped. If
you don't do this, the sales order will be considered as incomplete.

Advanced Returns Management Standard Scenarios for Customer Returns in SAP S/

4HANA
When analyzing the fields available on the Returns tab in the advanced returns order, there
are many field value combinations possible. This leads to a support for many different
customer returns scenarios in the SAP S/4HANA system. SAP has however identified five
standard customer returns scenarios that are supported by Advanced Returns Management
(ARM).

: Advanced Returns Management Standard Scenarios

Customer Returns: Materials Received

Materials that are sent back to your location from a customer without previous authorization
to do so or prior notification, are considered unplanned returns. In this customer returns
scenario, you create an advanced returns order upon the unplanned receipt of materials and
you select the flag Material Received on the Returns tab in the advanced returns order. You
then select the required follow-up activity for the specific case you are dealing with. You also
enter a material inspection for the returned materials. A returns delivery will be created
automatically by the SAP S/4HANA system and a goods receipt is also posted. A credit
memo request or credit memo may also be created automatically.
Customer Returns: Advanced Notice
In this scenario, the customer lets you know that they plan to return certain materials. Upon
receipt, these returned materials are processed. An advanced returns order is created prior to
receiving the materials. Upon receiving the materials, you select the Material Received flag on
the Returns tab of the advanced returns order. A returns inspection is again executed and
entered in the system. The required follow-up activity is chosen and a returns delivery will be
automatically created by the system. You can then post the goods receipt manually. A credit
memo request or credit memo may also be created either automatically or manually
depending on the field values selected in the advanced returns order.
Customer Returns: Inspection at Customer
In this scenario, the materials that the customer wants to return are first inspected at the
customer site prior to being returned to your location. Depending on the results of the
inspection, materials may remain at the customer site, be returned to your location or they
might be sent directly to your supplier. You start this scenario by creating an advanced
returns order with the Insp. at Customer flag set on the Returns tab and as a logistical follow-
up activity you also select 0008 Inspection at Customer Site . Upon inspection, the
inspection code is entered and you change the follow-up activity to the activity that is
required. Subsequent process steps dependent on the inspection outcome: returning the
materials to your plant or keeping them at the customer site. A credit memo request or credit
memo can also be created either automatically or manually.
Customer Returns: Direct Return to Supplier
The official name of this scenario is Direct Return to Vendor ; the customer returns the
materials directly to your supplier. You create an advanced returns order and select follow-up
activity 0007 Direct Shipment to Vendor . You need to then also enter the vendor
(supplier) in the advanced returns order. Upon saving the advanced returns order, a returns
purchase order is automatically created with the returned material(s) in it and this supplier
assigned to it. An outbound returns delivery is also automatically created for the returns
purchase order and you then manually post a goods issue for this delivery. The supplier
informs you about the quality of the returned materials; an inspection code can then be
entered manually. A credit memo (received from the supplier) is entered for the returns
purchase order. A credit memo can then be issued to your customer either automatically or
manually.
Customer Returns: Material Still Unknown
In this scenario, the materials returned by your customer, are not yet known at the time the
advanced returns order is created. You create an advanced returns order with a text item in it
as the line item. You add a shipping point to the text item manually. You then create a returns
delivery. Upon receiving the formerly unknown materials, the advanced returns order is
changed and the materials are entered as new line items. You then choose the required follow-
up activities and select the Material Received indicator. A returns delivery is automatically
created and the goods receipt is automatically posted. A credit memo request or credit
memo can be created either automatically or manually.

Monitoring Returns
You can use the so-called Returns Overview to monitor the status and the progress of a
certain advanced returns process for an item.
Figu Returns Overview

From within the returns overview, you can perform follow-on activities
such as creating the return delivery and credit memo or restarting a
certain document creation step. You can view the returns overview for
an individual line item within an advanced returns order (as can beseen
on the above screen-shot). You can also call the returns overview using a
separate transaction, which also allows you to view multiple return
items and documents simultaneously.
From the returns overview, you can see the related documents that
were created as result of a certain returns process. You can also adjust
the layout of the monitor. To start the returns overview via a separate
transaction, choose: Logistics Central
Functions Advanced Returns Management Returns
Overview and then Display Returns Overview for CustomerReturns if
you want to see the overview for customer returns. You can also use
transaction code MSR_TRC_Cto see the overview for customer returns.
This transaction can be integrated as a tile into the SAP Fiori
launchpad for a user of the SAP S/4HANA system.