Return To Vendor RTV Procedure for Defective Material
Defective material represents a direct hit to your gross margin. This policy defines the mandatory steps — from identification to credit recovery — to ensure every non-conforming item is documented, quarantined, and returned to the vendor within contractual terms.
Every inbound delivery that fails quality inspection triggers a formal Return To Vendor (RTV) process. This policy mandates immediate segregation of defective material, digital documentation with photographic evidence, and a standardised credit request within 48 hours of discovery. The RTV procedure applies to all purchased goods — raw materials, consumables, finished components — regardless of vendor contract value. Departments must retain a copy of the packing slip, inspection report, and credit memo for a minimum of three fiscal years.
Non-compliance results in full absorption of material cost by the receiving department and a written corrective action plan. The Procurement Manager holds final authority to approve return freight deductions and chargeback percentages.
This policy applies to all material receipts processed by the Receiving Department and Inventory Control across all company sites. It covers defective, damaged, short-shipped, and mis-specified items. Exclusions: goods accepted under a signed deviation waiver, consignment stock not yet transferred to inventory, and goods purchased from auction or salvage sources. Vendor-specific RTV windows (e.g., 15-day or 30-day return periods) take precedence where they exist in the executed purchase order.
- All defective material must be placed in the Red Quarantine Zone within 1 hour of identification. No line employee may re-shelve or dispose of suspect material without an approved RTV number.
- Digital RTV form must include: vendor name, PO number, item SKU, quantity rejected, reason code (damage/defect/mis-ship), photo attachment, and original receiving timestamp. Blank entries will be rejected by the system.
- Credit request must be submitted to the vendor within 48 hours of quarantine. Failure to meet this deadline forfeits the company’s right to charge restocking fees back to the vendor.
- Monthly RTV audit: the Procurement Manager reviews all open RTVs older than 30 days. Unresolved cases are escalated to the Finance Director for potential supplier debit memo.
- Receiving Clerk – Identifies defects during inspection; applies quarantine tag; uploads photos and creates initial RTV ticket.
- Inventory Planner – Verifies quantity and reason code; coordinates replacement order if needed; updates ERP with RTV status.
- Procurement Manager – Approves RTV within 24 hours; negotiates credit or replacement with vendor; signs off on final disposition (return/scrap/rework).
- Accounts Payable – Holds payment for disputed items; applies credit memo against vendor balance; reports outstanding RTV credits monthly.