Case Study: Company Success Using Tracking damaged and returned materials efficiently

In the building materials industry, damaged goods and returns are often treated as a necessary evil. They’re easy to overlook—thrown into a corner of the yard, marked with a sticky note, or forgotten until it’s time to clean up.

But for companies moving thousands of SKUs across multiple yards and job sites, poor return handling leads to:

Inventory inaccuracies

Lost revenue

Unrecoverable vendor credits

And worst of all—frustrated customers

In this case study, we highlight how one regional distributor of construction materials used ERP tools to gain control over their damaged and returned items, turning what used to be a costly blind spot into a measurable improvement in margin and customer experience.

The Company

A multi-location supplier serving residential and commercial builders across three states. Their core product lines included:

Cement and aggregate

Framing lumber

Windows, doors, and other job-site-delivered SKUs

Bagged materials and adhesives

Despite having an ERP system in place, their damaged and return workflows were still largely manual—relying on paper slips, ad hoc communication, and warehouse staff memory.

The Challenge

Before their improvement project, the company struggled with:

No consistent process for logging damage at receiving or during staging

Returned materials sitting in the yard unscanned and untracked

Vendor credits going unclaimed due to missing documentation

Difficulty analyzing why certain items had higher return or damage rates

Sales team frustration over unclear return eligibility for customers

It wasn’t just a warehouse problem—it was affecting purchasing, accounting, and customer service too.

The Solution

The company worked with its ERP partner to roll out a structured, system-driven approach to damage and return tracking across all locations.

Step 1: Damage Logging at Point of Discovery

Yard teams were trained to scan and log damaged materials as soon as they were received or identified, using mobile devices synced with the ERP.

Each damage record included:

SKU

Quantity

Damage type

Attached photos

Location (which yard, staging area, or inbound truck)

✅ Result: A clear, timestamped record of every damage event—no more guesswork later.

Step 2: Return Zones and SKU Status Updates

Dedicated return zones were created in each yard, and ERP logic was used to:

Flag SKUs as “Pending Return,” “Awaiting Vendor Response,” or “Quarantined”

Prevent damaged SKUs from being picked or shipped by accident

Automatically notify purchasing and accounting teams when new return cases were logged

✅ Result: Materials stopped falling through the cracks. Everything had a visible status—and next steps.

Step 3: Vendor Communication and Credit Recovery

The ERP system was used to generate return reports and send claim packets directly to vendors with:

Damage reports

Photos

Invoice numbers

Expected credit amounts

✅ Result: Vendor credit recovery increased by 60% in the first 6 months.

Step 4: Return Authorization for Customers

The company introduced a standardized return process with ERP-generated return authorization numbers (RANs) and policies tied to SKU types and timeframes.

Sales and support teams could:

Look up return eligibility by customer and product

View real-time return inventory in each yard

Trigger credit memos automatically upon inspection and approval

✅ Result: Customer trust increased. Returns were no longer a source of tension.

Step 5: Reporting and Analytics

With all damaged and returned materials tracked in the ERP, the company built dashboards showing:

Return rates by SKU or vendor

Recurring damage causes (e.g., poor packaging, loading issues)

Staff compliance with scanning and zone assignments

✅ Result: The operations team used this data to improve packaging protocols and reduce recurring damage.

Business Impact

After implementing the new workflow, the company achieved:

MetricBeforeAfter

Average time to process a return4+ days< 24 hours

Vendor credits recovered per quarter$11,000$17,800

Return errors or unclaimed materialsFrequentRare

Customer complaints about returnsWeekly< 1 per month

More importantly, the warehouse staff, sales reps, and finance teams were all working off the same system—with clear visibility and accountability.

Final Thoughts

Returns and damage are part of the business—but losing money on them doesn’t have to be. With the right ERP strategy, you can track, control, and learn from every damaged or returned SKU.

This case study shows that when you connect the dots—from yard to vendor to customer—you don’t just clean up your yard, you clean up your bottom line.

📦 Want help building a damage and returns workflow that works? We’ll show you how to set it up inside your ERP, from day one.