In order to help efficiencies in their own warehouse’s most retailers today publish vendor guides. These guides provide specific requirements vendors are required to follow. Compliance is mandatory and the burden to comply rests with the vendor. Failure to comply could result in vendor fines, penalties, and chargebacks or removal from the warehouse.
The cost of noncompliance is high for both parties. Let’s look at this issue from both the Retailer and Vendor perspectives.
Retailer Perspective:
Retailers are typically attempting to address a wide range of supply chain problems through the standardization of warehouse/supply chain processes. Compliance with internal processes and rules is needed to control costs, provide safe work conditions, and ensure an efficient flow within a facility.
Examples of problems found in a retail warehouse that organizations are trying to solve for include:
Rack Height Restrictions – Facilities can only accept up to a certain pallet height.
Receiving accuracy – Did they get what the facility ordered?
Fill rates – Do I have enough good inventory on hand to fill orders?
Labeling, Documentation errors – Packing Slips, proper placards, product labeled correctly.
Damage – Did the product arrive in a saleable condition?
Tampering – Was anything pilfered in route?
Pallet Condition – Is the pallet safe for put away and shipping?
Late Shipping – Did the facility get what was needed on time, to fulfill outbound shipments?
Vendor Perspective:
Vendors clearly want to sell their products through retailer distribution channels. Vendor guides can be complex and dozens of pages long. What works for the Retailer may or may not work or be efficient for the vendor. Proving you were complaint is often very difficult and in most cases vendors are guilty until proven otherwise. The punishment for non-compliance doesn’t always fit the crime.
Examples of common vendor fines are shown below:
Carton Missing SKU # - $600
Missing Incomplete Pallet - $300
No Separation on Pallet - $300
Missing Packing Slip - $250
Broken Pallet - $55
Fines can add up quickly and are not typically included in retailer pricing, which causes margin strain for a vendor's bottom-line. There is wide variance across retailers on what is acceptable for compliance, as well as differences in the application of punishment. If a vendor is dealing with several retailers, trying to stay in compliance with everyone can be challenging.
Finally, if there is a problem, it can be difficult to determine who is responsible. Is it the vendor, the carrier, or the retailer? Did it leave the facility correctly? Was there a receiving error? Did the carrier cause the issue? Without proof, how do you know who did what and when?
Solution:
Having the right technology strategy, a sustainable/repeatable process, management attention, and unalterable documentation is the key for both the retailer and vendor in assuring compliance and reducing overall cost.
Technology – Do you have the right technology to easily capture the condition of the product at shipment or receipt? Can you associate specific data points to the condition of product – Bill of Lading #, Receiver #, Order # Carrier, Name and time of shipment or receipt, documentation of exceptions, and visual proof.
Do you have an easy, repeatable, and documentable shipping and receiving process driven by technology that you only complete once for each order?
Can management easily monitor and confirm internal compliance with standards? If there is a problem who is the correct accountable party?
Can the facility provide irrefutable proof of either compliance or noncompliance? Is providing this proof easy and do the right people have access?
In today’s world of technology, there are numerous solutions out there. Finding a solution that is simple, effective, and affordable is critical. CargoShot was designed with this in mind. Reach out to us to see how we can be of service to you!