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Retail Value Chain 101: Time to Clean Up Your Compliance Manual and Website

Posted By Administration, Thursday, December 7, 2017
Updated: Thursday, December 7, 2017


For retailers, a well-constructed compliance manual acts as the foundation upon which a supply chain scorecard and compliance program is built. By providing merchandise suppliers with all the information and direction they'll need to comply with the retailer's expectations, a compliance manual charts the course for successful execution. This set of "how to do business with us" requirements typically lives on the retailer's website or a separate web portal.

Ideally, all retailer compliance manuals would have a similar structure. Ideally, the suppliers would know exactly where to go on the retailer's website to access the compliance manual. Ideally, the compliance manual would be as easy to read and navigate as the table of contents in a book. Ideally, any changes to the compliance manual would be communicated to the supplier and clearly explained, allowing the supplier sufficient time to make changes, if necessary, to satisfy new or revised requirements.

That's the ideal scenario, but it's not the current reality. RVCF pours through retailer compliance manuals on a daily basis for the Compliance Clearinghouse, so we have the process down to a tee. For suppliers dealing with multiple retailers, it can be a nightmare. Finding a compliance manual, finding specific information within the compliance manual, and learning about changes to requirements within the compliance manual are often painstakingly complex.

To bring more uniformity to compliance manuals and website presentation, reduce confusion, and reduce shipping errors, RVCF recently published The Recommended Structure for Compliance Manuals and Websites. This reference tool should not be considered a standard, protocol, or guideline, but a basic framework used by best-in-class retailers to organize and present compliance requirements and notify suppliers of changes.

Ultimately, it's up to each individual retailer to determine what information to include in a compliance manual. RVCF is simply providing a common structure for laying out requirements in an orderly manner and making them easy for suppliers to access and navigate.

The Recommended Structure for Compliance Manuals and Websites is divided into three sections: structure for compliance manuals, compliance website presentation, and communicating changes and updates to requirements.

Structure for Compliance Manuals
The basic structure should include chapters, which reflect the high-level steps in the purchase order-to-cash process, provide instructions, and direct the reader to supporting appendices. Appendices are supporting documents and materials, which are more likely to evolve over time than chapters. Recommendations for structuring chapters, sub-sections, and appendices are also included.

Compliance Website Presentation
Overall, the goal is to make the website presentation as clear, concise, and easy to navigate as possible. To avoid having compliance information lumped in with other content and functionality, retailers should have a dedicated compliance section on their main website or a completely separate web portal where the compliance manual can be accessed. This section recommends formats for compliance information and which information should be clearly marked for readers.

Communicating Changes and Updates to Requirements
The last thing you want to hear from a supplier is that they were never alerted to or couldn't find requirement changes. This can help to justify requests for chargeback reversals and exemptions. The Recommended Structure for Compliance Manuals and Websites offers suggestions for alerting suppliers to changes to the compliance manual and/or website and making those changes easy to find.

How to Ensure Your Compliance Manual and Website Are Ready for Prime Time

  • Gather feedback internally, walk through every requirement, and confirm alignment and agreement. Compliance requirements should include exactly what you need – nothing more, nothing less.
  • Validate each requirement and the completeness and clarity of your compliance manual and website presentation externally with several trusted, respected supplier partners. Look to these suppliers to provide valuable input that you can act upon before "going live" to save you and your suppliers from confusion and frustration.
  • Use supplier questions and issues caused by confusion and complexity to create a frequently asked questions (FAQ) amendment to your compliance manual. This will be a valuable resource, especially for newer and smaller suppliers.

Keep in mind that your compliance manual is a living document, and your website or portal can be a living platform as well. Always look for ways to make these resources better, clearer, and easier to follow, and continue to solicit feedback from suppliers. Download your free copy of The Recommended Structure for Compliance Manuals and Websites here.

CLICK HERE to return to the DECEMBER 2017 RVCF LINK

Tags:  Compliance Management  Compliance Manual  Compliance Portal  The Recommended Structure for Compliance Manuals a  Vendor Compliance 

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Retail Value Chain 101: Retailers Need to Understand Compliance Management from the Supplier's Perspective

Posted By Administration, Thursday, June 8, 2017
Updated: Thursday, June 8, 2017


In the April 2017 issue of RVCF Link, we discussed the importance of having a high quality supplier onboarding process as part of a comprehensive supplier relationship management (SRM) program. Similar to customer relationship management (CRM), SRM is critical to maximizing the value of the trading partner relationship, and a properly managed onboarding process can put you on the path towards a successful, profitable relationship.

Building on this important first step, let's take a closer look at what we learned from the 2016 Merchandise Supplier Survey: Compliance Management. Based on feedback from 133 suppliers, RVCF published a white paper highlighting the survey's findings, which offer actionable insights that can assist retailers as they onboard and work with new suppliers. By better understanding the capability and resource issues faced by suppliers, retailers can better position themselves to fully manage and guide new supplier relationships, both internally and externally.

The white paper focused on five key areas:

  1. Compliance Requirement Management
  2. Deduction Management
  3. Retailer Onboarding Agreements
  4. Cross-Functional Teams
  5. Meetings with Retailers

Our objective was to learn, directly from suppliers, how they handle these five business processes and what factors they feel impact their performance. Suppliers were able to benchmark against others, identify challenges, and uncover best practices in all five areas. Suppliers gained practical knowledge that can be used to support their retailer compliance programs. As we said in the survey introduction, "Armed with this information, struggling suppliers can drive change where change is needed."

However, the survey responses also provide valuable insights that retailers can use to better understand their new supplier community. Let's examine a few interesting takeaways from a retailer's perspective.

First, you as a retailer are likely better positioned to help a supplier understand what they need to do to improve their performance than they are. Because a supplier's salesperson often reviews, negotiates and signs retailer compliance agreements, others within the supplier organization may lack visibility and input that would have added value. Ideally, the supplier's cross-functional team should be closely involved and consulted before closure. Once a supplier starts doing business with a new retailer, they frequently list "complexity of requirements and communication" as a primary challenge they face. Suppliers end up reacting to a compliance problem after the fact, which is not an ideal scenario for either trading partner.

Second, because many new suppliers' first impulse when facing a compliance requirement they cannot comply with is to ask their salesperson to go back to the buyer and seek an exception, you may want to consider taking a "head them off at the pass" attitude. Besides providing simple, easy-to-follow standards and supporting training materials, there is real value in inviting new suppliers to visit your distribution center and observe how their orders are received, handled and audited.

Ask suppliers to confirm, in advance of placing the first order, that they have internally reviewed your compliance requirements. and that each area of their company has confirmed their ability and readiness to comply. This could help catch suppliers that have overlooked this important step. You'll also want to be sure your merchandise buyers understand and respect the role they should and should not play in any compliance-related conversations with the supplier's sales team.

Finally, pre-deduction compliance notifications are now a best practice from the majority of retailers. Pre-deduction notifications provide more time for the supplier to dispute a pending violation. They may also represent the best opportunity for a retailer to "parachute in" to help a supplier identify the cause of a problem and quickly correct it to prevent future orders from being shipped incorrectly.

As a retailer, do you flag a new supplier's initial order so a member of your vendor relations/compliance team can quickly reach out in the event a pre-deduction notification is sent? In our survey, suppliers pointed out that they often don't feel they have adequate staffing in compliance to handle the complexity created from multiple retailer compliance programs.

To learn more about how suppliers are approaching compliance management and gain insights that can help retailers better understand the needs of suppliers, download the 2016 Merchandise Supplier Survey: Compliance Management from the RVCF Thought Leadership Store.

CLICK HERE to return to the JUNE 2017 RVCF LINK

Tags:  Compliance Management  Supplier Relationship Management 

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Tools Suppliers Can Use to Internally Communicate Retailer Requirements

Posted By Administration, Thursday, January 19, 2017
Updated: Tuesday, January 17, 2017


We often talk about the desire to automate and accelerate the sharing of information between trading partners. However, a major obstacle faced in the supplier community continues to be the internal sharing of information. It's one thing to obtain compliance requirements from retailers and ensure that contact information is current, but that's only the first step.

This information must be disseminated to the appropriate departments so shipments adhere to each retailer's requirements. Vendor compliance is typically the department that initially receives retailer requirements, but the folks responsible for actually addressing and complying with requirements must be able to access these documents quickly and easily.

A question we constantly see month after month for our supplier-only open forums involves the tools being used to internally communicate retailer requirement changes, shipment authorizations, vendor agreements and other documentation. We often hear crickets as suppliers go silent, hoping someone will speak up with the perfect solution.

In the RVCF white paper, Merchandise Supplier Survey: Compliance Management, we found that more than three in 10 survey respondents do not maintain a single, accessible document repository for information related to compliance and the research of deduction claims. That means these organizations are either e-mailing or delivering hard copies of these documents, or the documents simply aren't being shared with those who need them.

In 2017, there's no excuse for failing to use technology to simplify document sharing. As we pointed out in the white paper about compliance management, the tools are out there. Some have more bells and whistles. Some are more affordable than others. Some have more robust security features. There's a tool that suits the needs of every merchandise supplier. Here are some of the tools being used for internal document sharing.

Bare-Bones Tools
Dropbox Business and Box make it possible to share files that are too large for e-mail, such as video, audio and large presentations. Documents are automatically synced and can be accessed from any device to allow for collaboration and editing by multiple users. Google Drive for work and Microsoft OneDrive for Business are secure, affordable solutions that also offer sophisticated features such as user and device management. While these cloud-based platforms are not ideal, they do represent an upgrade from the consumer-grade versions and can be helpful if a more advanced solution is not in the cards.

Middle-of-the-Road Tools
Some suppliers are setting up customized intranet or internet sites that are password protected to limit access to authorized users. An IT department can set up and manage a shared drive within the organization's existing programs and capabilities. Shared drives can also be set up within e-mail clients or as standalone drives.

Advanced Third-Party Tools
SharePoint, Hightail and Communifire are examples of third-party bolt-ons and software that offer features such as customization, organization, search functionality and task management to enable the highest level of collaboration in a secure environment.

SharePoint: SharePoint is a password protected content management system and information portal that allows organizations to store, organize, share and access information from virtually any location and device. This Microsoft solution offers a number of advanced document management and collaboration capabilities and is available as a standalone service or part of Office 365.

Hightail: Formerly YouSendIt, Hightail allows users to send, receive, synchronize and digitally sign documents. Files are uploaded to a shared project area, where the user can give the file a name, add context and project goals, and share with specific users. In addition to sending project contributors a link to access the Space, access codes can be added to bolster security.

Communifier: Communifire claims to be the first company intranet software that connects people, documents and projects. Intranet software is tailored to business processes without training or IT assistance. Dubbed the social platform for work, Communifire enables you to collaborate in real time with coworkers, customers and partners to build stronger relationships.

No More Excuses
According to the survey data presented in the white paper, Merchandise Supplier Survey: Compliance Management, more than a quarter of respondents said it takes their organization a week or more to communicate requirement changes to various departments. Only about one third can accomplish this in one day. The longer it takes to communicate changes, the longer it takes to respond, and the greater the risk of noncompliance.

This is just a small sampling of the document sharing tools available on the market. The goal of using these tools is to simplify internal communication, minimize noncompliance, and ensure consistency of information across departments. There are solutions for all budgets, all levels of expertise, and all service and feature requirements. The right tool, when properly deployed and configured, can simplify or even automate the sharing of data. Just make sure the tool you choose is capable of meeting your organization's security standards.

If you want to reduce the headaches associated with updates to retailer compliance requirements, you need to ensure that this information is accessible to all who need it. Sending e-mails and pushing paper back and forth are unacceptable. The technology is available to do the job for you. No more excuses.

CLICK HERE to return to the JANUARY 2017 RVCF LINK

Tags:  Compliance Management  Vendor Compliance 

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What Is the State of Compliance Management?

Posted By Administration, Thursday, February 11, 2016
Updated: Tuesday, February 9, 2016


A few weeks ago, Retail Value Chain Federation (RVCF) introduced a survey for merchandise suppliers that is intended to help us assess the state of compliance management. We want to know how compliance requirements, onboarding, and various types of deductions and chargebacks are being managed, the prevalence and role of cross-functional teams in managing chargebacks, and the level of collaboration with retailers.

What processes are you following? What tools are you using? Who is managing these processes? What are your biggest challenges and successes? How can certain pitfalls be avoided? What ideas, processes and/or tools might benefit other merchandise suppliers?

The results of this survey will be presented during a session at the annual RVCF Spring Conference, being held April 17-20, 2016 at the Sanibel Harbour Marriott Resort and Spa in Fort Myers, FL. Your participation will help us determine what is working and what is not so we can share information that will improve compliance management across the board.

In addition to highlighting key data from the survey during this conference session, we would like to assemble a panel of merchandise supplier representatives to speak about various topics related to compliance management. Each panelist would deliver a brief presentation about how their organization is successfully handling a certain component of compliance management – what processes or best practices are being followed, how specific tools are being leveraged, and the ideal organizational structure for meeting compliance goals and building a cohesive trading partner relationship.

A sample of topics that we would like to cover during this session at the Spring Conference includes:

  • Process and/or tool used to manage chargebacks, including cataloging, researching and disputing
  • Compliance department structure and communication within the supplier organization, including cross-functional teams
  • Processes for obtaining, reviewing, communicating, and negotiating updates to compliance requirements within the supplier organization and, as appropriate, with the trading partner
  • Process for onboarding with the trading partner

The ultimate goal of conducting this research, presenting the findings at the Spring Conference, and having a panel share specific examples of best practices for compliance management is to provide people who attend this session with solutions that they can implement in their own organizations.

We want all audience members to walk away with ideas for reviewing compliance guides and researching deductions more efficiently, disproving and recovering money due to invalid deductions, and negotiating better agreements. We want you to become acquainted with technology that other suppliers are using and connect with the service providers who can help you deploy these tools. This session could even be an opportunity for you to prove to senior management that your organization is shorthanded in the area of compliance management.

The first step is to complete the compliance management survey thoroughly and thoughtfully. The second step is to let us know if you would like to participate in a panel during the Spring Conference session in which survey findings will be presented. Again, each panelist will have an opportunity to deliver a brief presentation about a specific example of how they are succeeding with compliance management.

If you're interested in participating in the compliance management survey, contact Evie Hooper. For more information about the RVCF Spring Conference, click here. Early bird pricing ends February 15, 2016, so register today!

CLICK HERE to return to the FEBRUARY 2016 RVCF LINK

Tags:  Chargebacks  Compliance Management  Cross-Functional Teams  Deductions  Sc 

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From the Desk of Kim Zablocky: A Year-end Message to Brands and Merchandise Suppliers

Posted By Administration, Thursday, November 13, 2014
Updated: Tuesday, November 11, 2014

Having fun yet? The retail industry is going through an evolutionary cycle, once again. Let me recap, back in the '90's retailers started to rollout their vendor compliance guidelines that included newly agreed upon floor ready requirements, e.g., casepack labels, product tags, UPC's, specific hanger types, GOH, polybag usage, etc. With the Millennium, CPFR, color-by-size, labels on shoes – just craziness. Then you have packaging, multi-packs, assortment packs, 6 to a pack, 12 to a pack, different required configurations, or, simply, your factory changed the configuration without you noticing. Shrink Wrap vs. no Shrink Wrap, new pallets vs. recycled pallets – one could lose their mind in distribution. Bring it forward to 2015. Most retailers will have installed exception-based shipment receiving software that bolts on to their order management systems. This software triangulates the purchase order to the ASN to the actual goods received. If one of those three don't match, the merchandise supplier pays a deduction. Images, photographs, proof of infraction, etc. are sent to the suppliers in an e-mail as well as supplied in the remittance advice. RVCF members over the years have been successful in reducing compliance deductions down to between 0.3 to 1.5% of gross sales, but with all those upgrades at the retailers receiving docks, expect those numbers to jump dramatically. Already, I'm hearing numbers like 2.5% of gross invoice and this is with sophisticated suppliers. Imagine the smaller supplier's dilemma – they're going to get crushed. Is there a solution? Is there still hope for shipping the perfect order, without the onslaught of deductions and profit dilution? Of course there is! But, you have to first admit your processes aren't perfect, you don't have the best team on earth, and most importantly, you have to admit it's not the retailers stealing your money, but that most deductions are self-inflicted.

RVCF will focus the entire next year on steps necessary for avoiding the retailers' chargeback machines. First, we'll focus on product set-up and inventory integrity, such as images and attributes, maintaining an up-to-date and accurate catalogue, data integration and flow; supporting your order fulfillment team with best practices in error-free EDI; working with offshore factories to assure accurate shipments, especially when practicing DC bypass; order pick and pack; RFID; barcoding; VAS; packaging and labeling; and, finally, on-time delivery. Another area where merchandise suppliers will need to tighten the ship is replenishment order fill rates; retailers as a whole are looking at this metric believing that it represents "lost sales opportunities." Brands and merchandise suppliers need now, more than ever, to improve your business processes.

No other organization takes you through the entire procurement cycle the way RVCF does. Our methods of helping you better understand retailers' requirements and expectations are second to none. Plus, we take you to the "horse's mouth" by setting up over 1,200 one-on-one meetings a year between you and your retail customers. Don't be dollarwise and pound foolish in 2015 because it won't be dollars – I assure you it will be many thousands of dollars lost. So heed our warning, this is not going to be easy. Exception-based software can be painful; it's unrelenting and once errors are found, it will continue to look for that infraction, order after order. To help, RVCF is working with Auburn University for our 2014 ASN Accuracy and Inventory Integrity Study and we'll have a benchmark by the first of the year. This is just a starting point for improving our business practices together.

(646) 442-3473

CLICK HERE to return to the NOVEMBER 2014 RVCF LINK

Tags:  Compliance Management  Vendor Compliance 

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The Value of Pre-Deduction Notifications

Posted By Administration, Thursday, September 18, 2014
Updated: Tuesday, September 16, 2014


Chargebacks are a frustrating reality in the world of retail.

A chargeback is the deduction taken by a retailer when a supplier fails to comply with their guidelines. For example, if a label doesn't scan properly, a label isn't coordinated with the advance ship notice (ASN), the barcode on a price ticket isn't accurate, or the contents of a carton don't match the purchase order, the retailer will charge the supplier an expense offset since they must correct the non-compliant shipment before it can be shipped to their stores or end consumers. Depending on the severity of the problem, the retailer may not accept the shipment at all.

However, many retailers provide pre-deduction notifications to inform the supplier that a violation has been committed so the supplier has the opportunity to research the issue before the deduction is taken. After looking into the notification, they can either dispute it or identify the cause of the problem and correct it.

The Notification Process
In order to facilitate pre-deduction notifications, the retailer will typically require the supplier to set up a group e-mail address – for example, – for notifications to be forwarded to. The supplier then has to make sure all appropriate personnel in the company are associated with this e-mail distribution. Another method of communication may be through the retailer's web portal.

If a supplier doesn't meet a retailer's guidelines, the retailer will send a pre-deduction notification that includes a short description of the violation or a code that indicates the type of violation. If the notification is sent via e-mail, it usually has an attachment with more detailed information about the violation. For example, the ASN said 10 blue shirts should be in the carton, but the carton actually contained 10 red shirts.

At this point, it's up to the supplier to research the issue. If the supplier can produce evidence that proves the reason for the deduction is invalid, they can dispute the claim and potentially avoid the chargeback.

How Suppliers and Retailers Benefit
The key benefit of a pre-deduction notification is that it gives suppliers the opportunity to identify and correct an issue before anything else is shipped. This is extremely important if the supplier has other purchase orders with similar issues in the queue. If the problem is fixed before those orders ship, the supplier can avoid additional chargebacks.

When compliance issues arise, shipments must be manually processed in some manner at the retailer's receiving facility. This requires a significant amount of time, money and labor to manage what should have been an automated process. That's why retailers provide pre-deduction notifications – so that suppliers can recognize errors quickly, thereby preventing additional shipments from suffering similar delays. After all, the ultimate goal is to make sure merchandise flows through the supply chain to increase speed to market. When suppliers and retailers collaborate to resolve these issues, everybody wins.

Making Pre-Deduction Notifications Work
A delay of a few days is like an eternity in the retail supply chain. In order for pre-deduction notifications to work, supplier compliance departments need a formal process in place for immediately reviewing notifications and getting problems fixed. Notifications need to be monitored and logged, and detailed records must be kept.

Unfortunately, many suppliers are unable to take advantage of pre-deduction notifications because no formal process exists or the compliance department lacks the manpower to research the notifications. Many suppliers are drowning in actual deductions and don't have time to investigate pre-deduction notifications, so purchase orders go out incorrectly when errors could have been prevented.

Another key factor to making pre-deduction notifications work is informing senior management of how investigations are being handled, the issues eliminated by these investigations, and how much money is being saved. In many cases, this isn't happening, and compliance departments are often woefully understaffed as a result.

For example, let's say the compliance department is on top of the situation. When they receive a pre-deduction notification, they conduct extensive research, make sure the problem is fixed and, in many cases, get the retailer to waive the deduction. They have the process down cold.

Three years from now, when the company isn't receiving nearly as many deductions, senior management may decide they don't need as many people in the compliance department. Because nobody is accounting for the work of the department in preventing these deductions in the first place and deductions aren't being factored into operational expenses, senior management may not realize what the compliance department has accomplished.

Next Steps
Suppliers should answer the following questions in order to determine whether pre-deduction notifications are being fully leveraged to move merchandise to store shelves as quickly as possible and reduce operational expenses:

  • How are you handling pre-deduction notifications? Do you have a formal process?
  • If notifications are consistently resulting in deductions, why is this happening? Are you lacking manpower? Are you unsure of the best way to handle pre-deduction notifications? Are you not receiving notifications when you should be?
  • Are you logging each pre-deduction notification? Are you keeping reports about how research is conducted, the results of that research, and money saved?
  • Is this information being shared with upper management and considered when the compliance department is reviewed?

We encourage supplier members to use the forum boards on the RVCF website to start a dialogue about how to best utilize and benefit from pre-deduction notifications. Share your concerns, ideas, strategies, success stories and horror stories. By collaborating and addressing these issues head on, we can solve problems and move forward together.

Supplier members can find instructions for utilizing the forum boards on the "Site Aids" page of the site. Not a member? Click here to learn how you can benefit from membership.

CLICK HERE to return to the SEPTEMBER 2014 RVCF LINK

Tags:  Chargeback  Compliance Management  Pre-Deduction Notification 

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