At the beginning of the chapter, we mentioned the shipping process from a bird's eye view. Before you can actually ship anything, you have to purchase goods as well (unless you dropship). By default, many facets of logistics are not handled by Magento. These will be briefly discussed later. The main goal of this is to give you an idea of what things should be arranged either outside of Magento or through Magento extensions. The reason Magento does not include functionality for the following aspects of logistics is because most of them are highly company-specific and as such difficult to include in a general e-commerce system like Magento. The fact that Magento has blind spots is not bad per se. Magento is an excellent marketing tool, product catalog, and transaction processor, and was built with the reasoning that more detailed business processes are better suited to be handled by other information systems that were built to support those processes specifically.
In the beginning phases of a new store, managing purchases to replenish stock is usually relatively easy. Volumes are still low and a large part of knowledge about what's available is often monitored by the people responsible for purchasing. Magento offers a low stock notification feed under Catalog | Manage Products, which can also be used to get an idea of which products to purchase.
However, Magento does not have a supplier management or purchasing component. When your purchasing processes get bigger, you will desire to know about each of your suppliers: about the purchases you've made, if they have been delivered, how good or bad each supplier is (what the open issues are), and also what the contractual agreements with each of them are. A proper purchasing support system also automatically monitors sale trends and matches those with delivery times of your suppliers, ensuring that the products are always reordered just in time. The biggest stores even have multiple suppliers for individual products and their purchasing systems advise which supplier to use for a product based on real-time prices and quality ratings.
Of course, not all of these functionalities are interesting for a starting shop immediately. If the need arises for detailed purchasing management, an outside business process support system should be sought.
Magento does not include functionality to manage your warehouse in much detail. For each product, a stock level can be set, and that's it. Some stores add product attributes that can help them find products in their storage facilities, for instance by adding an attribute called "Pick location", which indicates the shelf a product is placed on.
That was all about Magento regarding the warehouse management. If you need things such as managing stock on multiple stock locations (multiple warehouses), insights on what products are picked from stock, packed after picking, and offered to a shipper for sending to your customers, you will need customizations or an integration with another system.
Managing returns, when customers receive undesired or faulty goods, is something almost every store deals with. Magento Enterprise Edition actually has a returns management component included, but Magento Community Edition does not. As your volumes increase, managing returns becomes very hard if you try to do it through e-mail. It will become difficult to know which products still have to be inspected, what your most faulty products are, which customers still need a reply, and what is the total amount of money lost through refunds. Because proper returns management is such a vital part of online stores and because it's something that lends itself to be built as a standardized component, several Magento extension vendors have built commercial returns management extensions for Magento Community Edition. The one you decide to use is based on your demands of course; some of those available are:
http://ecommerce.aheadworks.com/magento-extensions/rma.html
http://www.magesolutions.com/#!__rma-module
http://mageconsult.net/rma-177.html.
Cheaper is not necessarily better and using a well-known supplier such as aheadWorks is usually safest.