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Sanibel Harbour Marriott Resort & Spa
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Your First New Year's Resolution:
Check Your Routing Guide Compliance Pulse
Scott Weiss, Taylored Service
In the world of warehousing, the end of the year typically equates to a physical inventory so let's take this month to perform a physical inventory on your routing guide compliance success over the past year as you prepare for a healthy and chargeback free 2014.
- Review your chargebacks over the past year and place them in specific categories by reason code, number of infractions, dollar amount, percentage of total chargebacks, and retailer. How many chargebacks did you get by reason code? How many were EDI related? How many were for wrong labels? What percentage of the total chargebacks was for late shipments? What percentage of the total dollar amount was for inaccurate shipment? What was the chargeback dollar amount by retailer? Is there a specific retailer that stands out over the year? What areas are you particularly successful in and how can you replicate that success to other categories?
- Next, determine line by line whether or not each chargeback could have been avoided by the distribution center (i.e., avoidable vs. unavoidable). For example, maybe you had a container that had been rolled in Asia during peak season thereby missing the shipping window to the retailer - not much could have been done for that one. However, a label placed on the wrong side of the carton by a temporary employee could have been easily avoided.
- Now that you have a nice little chart for these categories, you can determine which should have top priority and what to attack in the coming year. Is there a specific reason code that is causing the biggest pain? Is there a retailer that seems "chargeback happy"? The initial assumption might be that you would want to start with the retailer or reason code that generated the highest dollar amount of chargebacks. But perhaps you have a retailer that provides you with very low margin and high chargebacks, which may result in you losing money to do business with them; or perhaps you were using a 3PL that was doing a poor job and already moved to a new provider. In order to make sure you make the biggest gains in 2014, you really need to think about which category to prioritize and to go after.
- Just like when you are working out at the gym, physically write down your goals for 2014 and make them time specific. For example:
- By March 2014, we want to have a one-on-one meeting with retailer "X"
- By April 2014, we want to ship out 99.7% of our orders complete
- By May 2014, we want our ASN's to be 99.8% accurate
It is common for many to feel that chargebacks are a "profit center for retailers." But what if routing guides and chargebacks did not exist? Retailers have thousands upon thousands of vendors that ship product to their DC's on a daily basis. They have heavily invested in very automated DC's that rely on the efficient flow of product through their supply chain so your product can arrive by the day they have committed the product to be available to their customers. Chargebacks exist to make sure that there are rules to follow and that chaos is circumvented.
The reality is that the disciplined vendors and 3PL's that have developed a comprehensive compliance program, and are constantly checking the pulse and health of their program, are very happy to have these rules in place as it means their product will get to stores efficiently. The quicker the product gets to the store, the quicker it can sell, and the quicker the retailer can order more from you.
Here's a toast to your great retail compliance health in 2014!
Based in Southern California, Scott Weiss has been a 3PL industry expert since 1996. As Vice President, Client Solutions for 3PL Taylored Services, Scott is responsible for new business development and client satisfaction. Taylored operates multiple distribution centers strategically located by the Ports of Los Angeles, Long Beach, and Newark and works with importers and manufacturers to ensure compliance with retailer routing guide requirements. Scott may be reached at email@example.com or (562) 977-7620.