Vendor Compliance Management chargebacks often total more than 1% of supplier revenue because of failure to comply with the customer order, billing, and shipping requirements.
“Vendor optimization” software has made generating deductions an automated process based on pre-set order guidelines and procedures, making it more critical than ever to ensure that your shipment accuracy is on-point with no margin for error. The retailer’s perspective is that it’s the most effective way of policing compliance with purchase order requirements. The result is that supplier mistakes that might have slipped through a few years ago are now charged back. Generating compliance penalties is on auto-pilot, enabled by smart, automated systems designed just for this purpose.
On the other hand, suppliers have control over their own destiny, so if you, as a supplier, fix the root causes, you will be more profitable and assure a satisfied customer. Suppliers that do not reach satisfactory operational quality levels will be weeded out by major retailers since they need error-free delivery in their automated supply-chain operations.
Operational Quality Assurance = Increased Profits
For big-box retailers, managing the supply chain is all about speed, optimum inventory levels, and process efficiency from door to store. Retailer compliance penalty chargebacks are the way to enforce those objectives.
- Suppliers’ processes are broken and must be fixed.
- For example, adherence to a customer’s labeling, EDI, packing, delivery, and other requirements of the purchase order contract is critical.
- Keeping up with the constant changes in these rules is complicated and time-consuming, but necessary. Whether it’s an online retailer portal, shipping and routing guide, or store-ready guidance, it needs to be constantly monitored.
The RVCF Compliance Clearinghouse application can help, It performs the retail compliance monitoring for you 24×7, so your staff can focus on getting the orders out. Contact us, and we’ll point you the right way.
Your Profits are at Stake
Non-compliance costs retailers billions of dollars in unexpected processing and rework and, in addition, costs suppliers even more in penalty violation charges and lost sales. It is common today for retailers to rate their suppliers using “Supplier Scorecards”, which measure order fulfillment percentages, EDI compliance, on-time delivery, packaging, proper labeling, etc. If your supplier scorecard is not good, your relationship and sales will suffer, and vice-versa. You can request a copy of your scorecard to understand your customer’s perception of your operations and get some actionable takeaways.
To get high marks on your Supplier Scorecard you’ll need a Vendor Compliance Plan – Here are some tips to help you craft a plan:
- Put someone in charge – Project Lead and an Executive Sponsor.
- Assign a staff member to be a Customer Portal Expert and take a look at using robotic process automation for this.
- Understand the vendor compliance manuals and keep up to date on changes.
- Identify your most costly mistakes, and ddress the shortcomings one by one to stop the bleeding.
- Identify who owns the expense when penalties can’t be reversed and charge their cost center.
- Develop a reporting scheme to keep an eye on trends and which process to fix first.
- Explore the cost-benefit of deduction management software automation.
Improving vendor compliance and deduction management is a constant process, and it requires steadfast attention and application of industry best practices. Significant gains can be made which will improve your company’s finances. For more in-depth information on this subject, use the Contact Us page to check our white papers on Deduction Management and accounts receivable automation.