Returned Goods RMA Processing and Quarantine Protocol
This policy establishes mandatory procedures for requesting return material authorizations (RMAs), physically quarantining returned inventory, inspecting goods for credit or disposal, and reconciling vendor chargebacks. It applies to all inbound reverse logistics across procurement categories and aims to reduce write-off losses, improve vendor accountability, and maintain audit-ready records.
Every return of purchased goods — whether due to defect, overstock, shipping error, or vendor recall — must be processed through a formal Return Material Authorization (RMA) request prior to physically moving any inventory. This policy defines the end‑to‑end reverse logistics framework: from initiating an RMA with the vendor, through quarantine hold, inspection, grading, and final disposition (restock, refurbish, scrap, or return to vendor).
The protocol ensures that all returned goods are accounted for in the procurement system, that credit memos are pursued within contractual terms, and that inventory valuation is adjusted accurately. Non‑compliance with this policy exposes the organization to financial leakage, duplicate credits, and regulatory audit findings.
This policy applies to all employees, departments, and facilities that receive, inspect, or authorize returns of purchased materials, components, finished goods, and capital equipment. It covers:
- All inbound returns valued at or above $250 CAD per line item (below that threshold, a simplified departmental log may be used with Finance approval).
- All vendor-managed inventory (VMI) returns and consignment stock corrections.
- Customer-facing returns that flow back into procurement inventory (e.g., resale stock).
Excluded from this protocol: internal inter‑department transfers, disposals of fully depreciated assets, and scrap metal sales handled under the Environmental Waste Directive.
- No physical return may leave or enter the facility without an approved RMA number logged in the procurement system. Any unauthorized return shipment will be refused at the receiving dock and the cost charged back to the requestor's department.
- All returned goods must be placed in a designated Quarantine Hold Area within 2 hours of receipt. Items must be tagged with a bright yellow quarantine tag bearing the RMA number, date, and receiving clerk initials. No item may leave quarantine without a completed inspection report.
- Every quarantined item shall be inspected within 5 business days by a qualified inspector (Quality or Procurement). The inspection must classify the item as: Restockable, Vendor Credit Due, Repairable, or Scrap. Results must be entered into the ERP with a digital timestamp.
- Vendor credit memos must be initiated within 10 business days of inspection completion. Finance shall track open credit requests monthly and escalate any vendor that exceeds 45 days without resolution to the Procurement Manager.
- A quarterly audit of all closed RMAs must be performed by Internal Audit or a designated delegate. The audit shall verify that credit memos match agreed terms, that quarantine hold times are within limits, and that no inventory value is missing from the general ledger.
- Procurement Officer — Initiates the RMA request with the vendor, obtains the RMA number, communicates expected return dates to Receiving, and escalates vendor non‑compliance.
- Receiving Clerk — Physically segregates returned goods into the quarantine zone, attaches the quarantine tag, scans the RMA number into the system, and notifies the inspector via workflow.
- Quality / Inspection Lead — Performs the visual and functional inspection, determines disposition category, documents findings, and updates the inventory status flag.
- Finance / Accounts Payable — Tracks credit memo issuance, reconciles vendor credits against outstanding invoices, and reports overdue credit items to the Procurement Manager monthly.
- Procurement Manager — Owns this policy, approves deviations above $10,000 CAD, reviews the quarterly audit report, and authorizes vendor delisting for repeated return failures.