You are a Supplier to Retail Warehouse Manager, you want to know how to avoid retail chargebacks | LoadProof

 

Your Business

• You manufacture great products or source great products from the far east and then you ship them to Retailers such as Walmart, Kohls, Home Depot, Lowes, Best Buy etc. and sell your product through them
• You are essentially paying rent to one or many of these retailers to carry your product on their shelves and make them available for shoppers that come to their stores, so the consumers or shoppers can buy them
• You ship your product to the Retailers, sometimes you will pay for the carrier and ship your product to the Retailer or sometimes or actually most of the times the Retailer will pick up the product by sending their own transportation company/Carrier from your warehouse as they can take advantage of the economies of scale and get a better transportation pricing, then they will process your product through their Supply chain, then get your product on their shelves and sell them.
• Meanwhile you will submit your invoice and they will pay your invoice, typically after all your product has been sold form their shelves, which is usually 60 days
• Then they will pay you once they sell your product from their store shelves
• While shipping your product to them, you have to follow their routing guide instructions that has all the rules to be followed on how the product needs to be packed, labelled, palletized, stretch wrapped, loaded and finally shipped, so that the product will travel through their Supply Chain smoothly, which contains complicated material handling equipment’s such as conveyors, carousels, robotic systems, pick to light systems, etc.
• Ideally the reason for the detailed instructions in the routing guide is that, the non-complaint box sizes, non-compliant labels, non-complaint pallets etc do not travel through the retailers complicated material handling systems, instead they get sent to the exception processing lanes, at which point the retailer has to manually handle these boxes, which means they have to spend extra labor to get your product to their shelves, which means they have to charge you for that extra labor, and hence the term Charge backs. And this was issues by the retailer hence the term Retail chargebacks
• But often what happens is
  1. There could be delays in getting the routing guide updated, so the retailer has changed their material handling equipment, but they have not updated their routing guide which means you did not know the new standards, so you followed what was in the routing guide at that time and you did everything correctly, still you got charge backs
  2. There was one retailer that found it very difficult to process the products through their Vendor Performance program accurately, so instead they decided to apply a flat 7% chargebacks to all of their suppliers, and this was both suppliers that thoroughly followed their routing guide and those that did not.
  3. Sometimes wrong people get into these Vendor Performance management roles and they issue heavy unreasonable chargebacks even for very minor faults
  4. Sometimes these Retailers start using this as a revenue source for the retailer and these chargebacks could be up to 14% of your invoice
• There is also an automatic deduction that gets applied to your invoices, meaning if you invoiced your customer for $10,000, they will only pay you $9,000 and the rest will be deducted automatically. There will be Supplier portal that is provided, through which the reasons are provided for that automatic deduction.
• Typically, this automatic deduction is sent to the Accounts receivable team, then the AR team will call you the Warehouse Manager asking for proof to demonstrate that the warehouse did a thorough job when shipping that shipment
• So with pictures in LoadProof, you have to create a PDF and upload those pictures to the retailer through the Supplier portal. Once you provide proof that you did your job right, you can get those chargebacks cancelled, or at least you can have a solid ground to have those conversations so you can start pushing back on them.
• You could also use it for Scenarios where if you had a Supplier that is shipping from China or any other international location directly to your Retail customer and you are getting chargebacks from the Retailer, then can also have your Supplier in China or in any other international location take pictures of the shipment and then share those pictures with the Retailer to get the chargebacks cancelled
• As a Supplier warehouse manager, you are responsible for the following
  • The Supplier Warehouse manager leads and coordinates all aspects of the distribution process within the Supply Chain network.
    Leads site’s planning, execution, and communication of all daily clerical and operational processes, including:
    1. Labor Planning & Driver Management
    2. OSHA, FDA and DOT Compliance
    3. General Administrative Duties
       • Employee hiring
       • Payroll
    4. Customer Service Responsibilities
    5. Human Resource Administration
    6. Product Functionality Checks and Cleaning
    7. Warehouse Functions/ Servant Leadership
    8. Load Planning, Routing, and Carrier Management
    9. Collection/Reporting of KPI data
    10. Sometimes you are responsible for the P&L of the site as well
• Just keep in mind – if you are handling products that require FDA approval – you have to maintain all the documentation for up to 12 years, it could be anywhere upto 3 or 7 or 12 years. We have a customer, these guys ship health related products, every return they get, they need to maintain that returns documentation for 12 years, they have this large warehouse that has only papers – all the returns documentation from the returns they received.
• Often you have to absorb costs even though it is not your fault

Your Supply Chain Community

Your Supply Chain community comprises of people that you do business with, usually it is made of all these people

• Manufacturers that manufacture products
• Carriers
  1. Trucking companies
  2. Ocean Carriers
  3. Rail Carriers
  4. Air Carriers
  5. Multi modal – Ocean, Land, Rail, Air
• Third Party Logistics Service Providers
• Vendors that you buy your products from
• Cross Dock Facility operators
• Consolidation Facility operators
• LTL Terminals
• Parcel Carriers
• Delivery Companies
• Freight Forwarders
• Freight Brokers

It is very important to keep in mind that you will work with all these people on a regular basis, so build and maintain professional relationships. While shipping products, moving products mistakes do happen, sometimes it is theirs, sometimes it is yours, whatever it is work with your partners, keep proof in LoadProof to demonstrate that you did your job right. So, you can have a professional conversation and articulate your position in a professional way, it is okay to say in a very professional and gentle manner, “Hey it is not fair for us to pay for mistakes that is not ours, here is a proof in the form of pictures”. However, do not burn bridges everybody is working very hard to make it for themselves. Also, people move on and change roles very quickly in this industry, so the same person could take up a different role and you might face them in a completely different side. So always build and maintain professional relationships, do not burn bridges. So, when you are working with such a community of Supply Chain service providers, having LoadProof and pictures to prove that you did your job right, gives you a solid ground to stand on, when something happens to your shipment.

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