Suppliers to large retailers struggle to avoid chargebacks due to some form of non-compliance such as an incorrect ASN, for example. Don’t let chargebacks lower your profit margins or negatively impact your scorecard presentation with your most strategic accounts.
Since maintaining compliance is an area where most suppliers struggle, we hope these articles will help in your efforts to be more consistently successful. Hopefully, you will be better equipped to keep your existing customers happy and to grow your business.
These best practices were developed exclusively for small to medium sized companies that are new to supplying national retailers, as well as for suppliers that are struggling with consistently meeting compliance requirements within their retail customer community.
Each retailer will publish detailed vendor guidelines that are effectively the “rules of trade.” These guidelines can be quite extensive and are usually posted to a vendor portal for easy access by suppliers. It is essential that the provider organization acquire sufficient knowledge of these guidelines in order to effectively adhere to them.
Even for suppliers that have a solid understanding of their retail customers’ requirements, attending vendor conformity workshops can provide many ancillary benefits. It demonstrates to the retail customer that the supplier is committed to the success of the business relationship. This is an area where an investment of a little time and money can go a long way in building rapport with the customer.
Attending workshops is also an opportunity to get advanced information on possible upcoming changes that may impact the operation. This enables suppliers to weigh in on the issues before they become part of the recognized requirements. Finally, it provides an opportunity to network with peers to discuss best practices and to establish a trusted advisor group that can work together on future issues.
Cross-functional teams consisting of a manager and subject matter expert from each core operational area (sales, customer service, information technology, operations, finance) should be established. These teams should jointly interpret requirements and implement required process changes. Having cross-functional teams ensures that all aspects of the business are painstaking and that changes are not made in silos potentially unexpectedly impacting other departments.
These teams should meet on a regular basis to review changes in the guidelines and to evaluate requirements for new customers. During these reoccurring meetings, the teams should also review all non-compliance events and chargebacks that have occurred in order to take corrective action when necessary.
The teams should be empowered to build processes that enable consistent support of retail compliance requirements. Members will also serve as the liaisons for their respective departments making sure that all members are trained in rewarding their role in meeting requirements.
The surest way to guarantee that violations are avoided is to embed compliance activities into the core business processes. This begins upstream with the assortment and order management functions, continues through distribution operations, and goes all the way through to financial document reconciliation
Building compliance into the process will include both the information flow and the physical product flow. These two key components should be in synch and harmonized with one another. Building compliance into the informational/data flows will start with a best-of-breed EDI platform. This ensures that each retailer’s EDI specifications will be configured into the system and when EDI documents are exchanged, they will always match the retailer’s specifications.
The same holds true for the product flows. A best-of-breed warehouse management system (WMS) will enable the supplier to build proper labeling and collection handling into the receiving and put away processes. As orders are received from specific retailers, the operations team can quickly and easily fill orders without having to break bulk and or completely construct orders based on retailer specific packing requirements. It will also ensure that all customer requirements are met upon shipment of orders, including customer specific labeling, packing slips, and shipment notifications.
Suppliers should take a critical look at their own operations as they work towards complying with retailer requirements. Changing processes to meet retailer requirements is a golden opportunity for suppliers to make improvements to their own operations. This helps to ensure that compliance is not just an added cost to the business, but that it also provides internal business value.
To be most effective, continuous improvement programs leverage the knowledge and ideas of the broader team. The team should be empowered to submit ideas on how compliance issues can be creatively solved. Team members that put forth effective ideas should be recognized and rewarded for their efforts. Rewarding employees for their efforts fosters an environment of continuous improvement where the people that do the jobs every day (and therefore have the deepest knowledge) will be the ones that drive progression change.