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Retail Value Chain 101: RVCF Spring Conference Insights: What's Negotiable and What's Not in a Compliance Program

Posted By Administration, Thursday, June 14, 2018
Updated: Thursday, June 14, 2018


by RVCF


At the recent RVCF Spring Conference in Clearwater Beach, we held two separate sessions – one with retailers and one with merchandise suppliers – in which we had very candid, honest discussions about compliance programs. More specifically, we talked about what's negotiable and what's not and how to approach negotiations. By hearing the viewpoints of both sides of the trading partner relationship, we gained valuable insights into the compliance landscape and a fair amount of consensus in several areas. Here are the highlights.

The Retailer's Perspective
When a supplier attempts to have a compliance chargeback reduced, we found that many retailers will be open to negotiation if the supplier acts quickly to resolve the issue to prevent future orders from shipping incorrectly. On the other hand, chargebacks resulting from the same errors that aren't addressed by the supplier in a timely manner are almost always viewed as non-negotiable.

Suppliers who think they can show up at the end of the quarter or fiscal year with a pile of chargebacks and expect to have them reversed have another thing coming. It's not happening. Not only will this approach fail, but it's also likely to strain the trading partner relationship. Also, ignorance is never a valid excuse. If you signed the retailer's contract and agreed to the compliance requirements, you can't say you weren't aware of those requirements and expect a reversal.

Circumstances beyond the supplier's control, such as a hurricane, a port shutdown due to a strike, or some other event could very well be a valid reason to ask for a pause in the enforcement of a compliance program. However, most retailers will view this as a short-term exception. The supplier will be expected to come up with an alternative or workaround solution and get back into compliance as quickly as possible.

The Supplier's Perspective
RVCF merchandise supplier members work with a large number of retailers and, as a result, must navigate a wide range of compliance programs. Many retailers are very fair and reasonable in their requirements, chargeback fees, and how chargebacks are communicated. Unfortunately, some retailers take an extreme and sometimes abusive approach.

For example, when chargebacks are issued, suppliers have every right to expect that the retailer will provide all data required to investigate and, more importantly, correct compliance errors. Suppliers need to know what happened, right down to the purchase order level and possibly the SKU level, so the problem can be resolved as quickly as possible.

Also, compliance fees should never be so high that they're considered excessive or punitive. If a shortage is discovered and a single $50 item is missing, a purchase order-level compliance charge should never be 10-20 times that amount. Chargebacks should cover the costs incurred by the retailer to deal with the issue at hand. Noncompliance should not be viewed as a profit center.

If compliance requirements are no longer needed due to enhancements to the retailer's systems and capabilities, those requirements should be eliminated. Compliance programs should adapt to and align with these changes. For example, if a retailer with a rigid carton labeling requirement installs tunnel scanners in the distribution center, the labeling requirement could be either relaxed or removed.

Retailers should keep in mind that they don't always get the candor they need from suppliers. In other words, a supplier's salesperson might not bring up a compliance issue with the merchant because they don't want to rock the boat or jeopardize the relationship in any way. The reality of the situation is that retailers need to hear from suppliers when compliance programs and behaviors are considered unfair or unreasonable. Honest, open communication is essential to a healthy, profitable trading partner relationship.

The Big Takeaway
Compliance programs are typically designed to support the retailer's goal of quickly and efficiently moving the products through the supply chain and into the hands of the consumer. To achieve this goal, both trading partners must have flexibility in their requirements. Both sides must be willing to sit down, listen to each other's concerns, make adjustments, and solve problems through collaboration.

The million-dollar question for retailers and merchandise suppliers is simple. Are you a collaborative, problem-solving trading partner, or are you practicing behaviors that get in the way of progress?

Success isn't just the product of the size of your organization and the level of sophistication in your supply chain. Success is achieved when the right people with the right skills and attitude work together.

The insights provided in this article represent a valuable but small portion of two extremely productive sessions at the RVCF Spring Conference. To get the full benefit, you have to be there. We strongly encourage industry professionals to attend the RVCF Fall Conference, October 14-17 at the Manchester Grand Hyatt San Diego in San Diego, CA. Speak with your trading partners and peers face-to-face and be a part of these conversations. More importantly, be a part of the solution.


CLICK HERE to return to the JUNE 2018 RVCF LINK

Tags:  Compliance Program  Negotiation  Vendor Compliance 

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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


by RVCF


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: What Suppliers Must Do Before Accepting a Purchase Order

Posted By Administration, Thursday, June 8, 2017
Updated: Wednesday, June 7, 2017


by RVCF


Merchandise suppliers bear just as much responsibility as retailers when it comes to starting a trading partner relationship on the right foot. Just like retailers need an effective supplier onboarding program, suppliers should have a formal onboarding process when bringing on a new retailer.

Due diligence is critical to ensure all ducks are in a row before a purchase order is accepted and that first shipment is sent. Remember, if you accept a purchase order and ship against it, that's the same as signing a document, and you'll be bound by those terms and conditions.

The first step for the supplier is to make sure salespeople are giving the rest of the organization a heads up that they're about to execute a business relationship with a retailer. Salespeople need to get their hands on the retailer's compliance guide, legal requirements, terms and conditions, vendor agreements, incentive programs and other documentation. The vendor compliance department or cross-functional team within the supplier organization needs access to this information so it can be reviewed before a purchase order is accepted.

A longstanding problem for suppliers is that salespeople often agree to terms before telling vendor compliance or the cross-functional team, who then have to figure out how to meet retailer requirements because the agreement has already been signed and the first purchase order has already been accepted.

As we discussed in RVCF's Compliance Management white paper, sales teams are not typically well-versed in compliance requirements or their own company's ability to meet those requirements. However, 43 percent of surveyed suppliers admitted that their salespeople tend to negotiate agreements with retailers, and 38 percent state salespeople sign agreements (and not usually with the consent of their company). In reality, there are a handful of people within the supplier organization – C-level executives and approved upper management – who should be signing agreements.

The legal team, as well as upper management, vendor compliance, finance and logistics, should be involved in reviewing terms and conditions, policies and other pertinent legal requirements. This will ensure that terms (payment, freight, risk, etc.), regulations (government, customs, etc.), and timeframes for implementations (EDI, etc.) are accepted or negotiated in a way that's agreeable for both sides.

For example, if the retailer wants to pay in 45 days and the supplier expects to be paid in 30 days, that discussion needs to take place before an agreement is signed and an order is shipped. Thorough documentation review will also protect the supplier from potential lawsuits.

Suppliers need to comb through the retailer's compliance guide, outline the retailer's requirements, and highlight requirements that might present problems. This information should be communicated internally to various departments that will be responsible for executing retailer requirements.

The next step is to create an agenda to discuss potential compliance issues with the retailer. Instead of seeking exemptions for every requirement that could be problematic, focus on finding alternative solutions. If there's a requirement you absolutely won't be able to satisfy in the first order, make sure you're prepared to explain the reasons. A retailer will be more likely to agree to a grace period or extension for that first order if you promise to make the necessary changes that will ensure compliance with future orders.

Finally, the supplier should find out if the retailer is offering programs that would apply to and be advantageous for the supplier. For example, if a supplier can show high accuracy with order fulfillment, pass retailer audits of merchandise, and properly perform value added services, they may qualify for a retailer's crossdocking program. Crossdocking allows the supplier's shipments to pass through the retailer's distribution center virtually untouched. This benefits both trading partners because it speeds the flow of merchandise by reducing or eliminating manual processing.

These are the basic but essential onboarding steps that a supplier should follow before accepting a purchase order from the retailer:

  • Make sure salespeople notify the appropriate departments about new retailer customers.
  • Have agreements negotiated and reviewed by authorized senior executives, not salespeople.
  • Have all terms and conditions, policies, legal requirements and regulations reviewed internally by the appropriate teams.
  • Comb through the retailer's compliance guide and collaborate with the retailer to find solutions to potential problems.
  • Find out about special programs offered by the retailer that can benefit the supplier.

RVCF created "All About Retail Compliance," an ongoing project and comprehensive reference that combines retailer requirements, industry standards and decades of retail supply chain knowledge to help anyone involved with retail compliance. As we roll out this series of informative references, we encourage suppliers to use this resource as a way to set a positive tone for new trading partner relationships, improve supply chain performance and increase profits. Learn more about this valuable reference on the Research & Studies page of the RVCF website.


CLICK HERE to return to the JUNE 2017 RVCF LINK

Tags:  Onboarding  Purchase Order  Vendor Agreements  Vendor Compliance 

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Retail Value Chain 101: What Is Vendor Compliance, and Why Does It Exist?

Posted By Administration, Thursday, April 6, 2017
Updated: Wednesday, April 5, 2017


by RVCF


Vendor compliance is achieved when a merchandise supplier, or vendor, ships a retailer's order in a way that satisfies the retailer's requirements. A compliant shipment makes it possible for goods to move as quickly and efficiently through the retailer's distribution center to their next stop, whether it's the selling floor of the retailer's brick-and-mortar store or the customer's home.

When vendor compliance is not achieved, the retailer must stop the flow of goods to correct errors. This requires time and labor. Time and labor cost money. Depending on the nature of error, the retailer may also have to purchase supplies and apply them to the shipment. Supplies cost money. To make up for lost time and meet the shipping deadline, the retailer might have to expedite the shipment to the store or customer. Additional freight charges cost money.

This is why retailers issue chargebacks or deductions to suppliers for non-compliant shipments. They need to offset the expense of fixing these orders rather than simply absorbing the cost of someone else's mistakes. This is perfectly reasonable.

Vendor compliance can be a source of tension in the trading partner relationship because it often has such a negative connotation. You hear terms like profit center, penalty, violation and punishment. You hear horror stories about "dialing up chargebacks for repeat offenders."

Granted, there were retailers who originally approached vendor compliance as an opportunity to pad their profits. A handful still do. However, the vast majority of retailers are driven by the need to streamline the process and make sure merchandise gets from point A to point B as quickly as possible, and at the lowest possible cost, without being touched by a human.

Retailers, especially those who RVCF members and attend RVCF conferences, are open to collaborating with suppliers to minimize non-compliance. Many are upgrading their technology and beefing up their onboarding efforts to better prepare new suppliers with the knowledge they need to satisfy compliance requirements.

Of course, it's in the best interest of both parties to make sure shipments get where they need to be, when they need to be there, in the correct manner. After all, suppliers incur additional costs for investigating and either validating or disputing chargebacks. Whether the chargeback is legitimate or not, it still costs the supplier money.

And let's not forget the most important person in this equation – the end consumer. When they go shopping, they don't want to find out that the product they want is out of stock. If they place an order online, they don't want to receive the wrong size or color. The long-term cost of failing to meet the increasingly high expectations of the end consumer can be higher than a chargeback in terms of lost consumer confidence, loyalty and sales.

In recent years, we've seen a lot of new faces in vendor compliance. Many of these folks don't have the old-school training that was common years ago, and some have very limited experience in the retail industry. By no fault of their own, they're thrown to the wolves and told to chase the money, which is the equivalent of chasing your tail. If you don't understand vendor compliance and why it exists, the root cause of deductions will never be addressed, and problems will never be solved.

When you succeed at vendor compliance, you don't have to chase money. The supply chain is optimized. Profits are maximized. Returns, out-of-stocks and markdowns are reduced. Customers are satisfied. Both sides of the trading partner relationship benefit.

This is why vendor compliance shouldn't be viewed negatively. Vendor compliance should be the goal of the retailer and the merchandise supplier, with both sides doing their part to streamline the process, control costs, boost profits and satisfy the end consumer.


CLICK HERE to return to the APRIL 2017 RVCF LINK

Tags:  Chargeback  Vendor Compliance 

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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


by RVCF


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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From the Desk of Kim Zablocky: Suppliers, It's Time to Tighten Up the Ship

Posted By Administration, Thursday, October 13, 2016
Updated: Tuesday, October 11, 2016


Walmart and Target have begun to power up their vendor compliance programs and get more aggressive with their requirements. Higher fill rates. Faster replenishment. Smaller shipping and delivery windows. Shorter lead times. Fewer early or late shipments.

Of course, it's not just the big guys. The rest of the industry is following suit.

The more accurate and predictable the retailer's inventory, the less inventory they need to carry, which means lower carrying costs. When retailer requirements are met, they minimize the risk of out-of-stocks. Fewer errors means merchandise gets on the shelf and into the hands of the customer more quickly.

Greater inventory accuracy also helps retailers get better at accommodating e-commerce orders. When a shopper goes online and clicks "buy," the retailer needs to know if they have the item and where it is. Can the order be fulfilled from a store? If so, which one? If not, where is the item and how quickly can it be in the hands of the customer?

This is why retailers are putting so much pressure on merchandise suppliers to clean up their act. These days, most retailers are using exception-based software to analyze data from the purchase order, the advance ship notice, and the physical order. If one of the three doesn't match up, the retailer will hit the supplier with a chargeback.

As retailers become more aggressive with their requirements and chargebacks, suppliers need to raise their game. They need to make sure their warehouses are up to snuff. They need to make sure orders are packed accurately. They need to make sure shipments are properly scheduled and shipped on time. They need to beef up their supply chain and shipping apparatus.

For example, if you're relying on seasonal and part-time warehouse workers who don't exactly have a vested interest in what your company is trying to achieve, you increase the risk of non-compliance. If you're using a system and technology that doesn't scan items as they're packed so you're automatically alerted of packing errors, you increase the risk of non-compliance.

Suppliers that have been frustrated with seemingly unrealistic retailer requirements for years could be in for a rude awakening. Compliance is about to go from triple A to the major leagues, and suppliers that fail to adapt could get left behind. If you want to work with the big retailers, you need to be able to hit a 100 mile per hour fastball.

Recently, I had a conversation with one of our supplier members about having the right mix of people to manage deductions, and the fact that quite a few long-time vendor compliance people are looking for jobs.

He said, "If I have $1 million in deductions, why would I spend $150,000 a year on someone who's only going to collect $150,000 of that $1 million in deductions?"

I'll give you a second to pick your jaw up off the floor.

Here's the problem (one of many) with that line of thinking. That $1 million in deductions could quickly turn into $2 million or $3 million as retailers get more aggressive with their compliance programs. Instead of accepting chargebacks and burying the expense in the cost of goods, suppliers need to make smart investments in people, processes and technology to prepare for what's coming.

Tougher requirements from Walmart and Target are just the beginning. It's just a matter of time before this becomes the new normal.

Merchandise suppliers, you need to engage and collaborate with retailers. You need to show up at RVCF conferences and hash out these issues in person. Find out what changes are on the way and determine what adjustments need to be made on your end to meet the new requirements. Keep channels of communication open instead of simply continuing with the status quo, begging for forgiveness, and accepting chargebacks as a cost of doing business.

In the very near future, that cost may be too much to absorb. It's time to tighten up the ship.

Kim
kzablocky@rvcf.com
(646) 442-3473

CLICK HERE to return to the OCTOBER 2016 RVCF LINK

Tags:  Chargebacks  Vendor Compliance 

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Ask a 3PL Expert: Compliance and Your New 3PL

Posted By Administration, Thursday, May 14, 2015
Updated: Tuesday, May 12, 2015


by Scott Weiss, Port Logistics Group


Advice on routing guide compliance, 3PL relationships, and domestic logistics topics creating supply chain challenges for your organization. If you have a question or challenge that you just can't solve, please send your questions to sweiss@portlogisticsgroup.com.  

Question
We are in the process of transitioning our business to a new warehouse provider in the Seattle area and have many questions about setting up routing guide compliance with our new 3PL.
- Andrea, Nelsonville, Ohio

What format should I use to provide my new 3PL with customer compliance requirements?
Routing guide compliance is a big part of a 3PL's business so you definitely want to lean on their expertise. To start off the relationship, it is very helpful to the 3PL if you provide a complete list of all retailers that you ship to; this can be something as easy as an Excel spreadsheet. The 3PL can then review this list and confirm back to you the retailers that they are already shipping to. This a good starting point, but even if the 3PL is already shipping to the same retailer, there is no guarantee that your requirements are the same for that retailer as the other customers the 3PL supports. For example, perhaps your product ships to another department or maybe your product ships out floor loaded versus palletized. The fact that the 3PL is already shipping to your customer is a positive; however, both sides should take nothing for granted and must be certain to go through the entire set-up process.

You should then have the 3PL provide a complete list of sample formats and all documentation needed. If you are already using an existing warehouse that is fulfilling orders on a daily basis, it's helpful to provide the 3PL with sample bills of lading and GS1-128 labels that you are presently using as they may be able to replicate these items. If you do not have an existing warehouse, cannot provide sample documents, or are setting up a new retailer, you will need to work together and start from scratch.

In either scenario, you will want to work collaboratively to highlight all of the key routing guide requirements for the retailer. Ultimately, the 3PL will provide you with all of the documents, allowing you to go back to the retailer for their sign-off and approval prior to going live. You should plan for this process to takes 8-12 weeks and plan to work with multiple retailers at the same time.

Should they have a template for us to fill out for each of our customers where necessary?
A routing guide template or cheat sheet is highly recommended. We have seen something as simple as an Excel spreadsheet all the way to a detailed company intranet site. The main theme is that routing guides are extremely complex and much of the information included in the routing guides relate to order fulfillment and distribution. The 3PL should work with you to highlight the key items that apply.

Should a 3PL have a compliance resource we can reach out to?
Any 3PL that is engaged in the world of routing guide compliance should have one or more resources available for you to reach out to. The resource can take many forms such as a Director of Operations, a Director of IT, or a Director of Vendor Compliance. Regardless of the title, if your chosen 3PL does not have a retail compliance resource available then you are probably looking at the wrong 3PL to work with.

Who should do the routing? Our company or the 3PL?
It is highly recommended that the 3PL perform all routing requirements. The primary reason is that the 3PL has real time access to outbound order pieces, weights, and cubes. Another reason is that they have access to the shipping and receiving schedules and they can coordinate carrier pick-up in an efficient manner. Finally, very often there is a time difference between where the customer is based and the 3PL. There are various schools of thought on who within the 3PL should do the routing and either can work just as well. We have seen the customer service person take the calls, respond to e-mails, and perform routing while other 3PL's have full time employees whose sole job function is to perform the routing.

In any event, it is important that both sides are on the same page regarding all aspects of shipment processing. Communication is key to the relationship.


As Vice President, Business Development, Scott Weiss works closely with apparel, footwear, and housewares manufacturers of all sizes to ensure compliance with retailer routing guide requirements.  Port Logistics Group is a market leader in gateway port logistics services, operating over 5 million square feet of warehouse space.  Services include port drayage, import deconsolidation, warehousing and distribution, retail compliance, local transportation, and store delivery in key port locations of Los Angeles/Long Beach, New York/New Jersey, Seattle, and Savannah.  Scott may be reached at sweiss@portlogisticsgroup.com or (562) 977-7620.

CLICK HERE to return to the MAY 2015 RVCF LINK

Tags:  3PL  Vendor Compliance 

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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.

Kim
kzablocky@rvcf.com
(646) 442-3473

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Tags:  Compliance Management  Vendor Compliance 

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Vendor Compliance from a 3PL Perspective: Taking a Lesson from Abraham Lincoln

Posted By Administration, Thursday, August 14, 2014
Updated: Tuesday, August 12, 2014

by Scott Weiss, Port Logistics Group


Perhaps you have seen the famous picture of President Abraham Lincoln standing on the battle field conferring with his Generals. He is in front of a tent, wearing his tuxedo and top hat and in between two uniformed men. One of his Generals is on his right and a lieutenant is standing to the left of him.


No doubt, this may have been history's first lesson on how to best approach vendor compliance:
  1. Management by wondering around. Lincoln liked to get on his horse and ride on the battle fields. Sitting behind a desk or a conference table is a sure way to fall behind. You need to get out there on the field and with the troops to stay on top of your people, processes, and systems. In this case, the field is the distribution center. Nothing beats feeling and touching the product and meeting the people. If you have your own warehouse, you can do this on a daily basis. If you outsource to a 3PL, be sure to visit the facility every 90-120 days to meet with the troops and see your product.
  2. Get both sides of the story. When there is a conflict, you need to get in the middle of the problem and obtain both sides of the story. Very often the answer is somewhere in the middle. We see too many vendors that don't fight chargebacks due to lack of systems, fear of getting cut off, or making an assumption that the chargebacks are valid. Retailers and their automated systems have been known to make mistakes and they have also been known to reduce or waive valid chargebacks.
  3. Meet regularly with your customers. Business is all about relationships, trust, and not commoditizing your product. You need to establish a direct relationship with key contacts within your customer's traffic, compliance, and logistics departments. Meet with them every 90-120 days to shake hands, review the past quarter, and assess opportunities for improvement in the next quarter. If you are having issues, these personal relationships will help you address them. If you do not have any issues, these personal relationships will be in the bank for you when you need to leverage it.
  4. Have the right people. President Lincoln certainly had to go through many generals before he found the right one to win the war. To do your job properly, you need to be surrounded by the right people within your organization and/or the 3PL's.
  5. Show respect for the office. We are not suggesting that you wear a top hat or tuxedo to your next meeting but you can certainly take a lesson from President Lincoln – after all, many manufacturers and 3PL's do not even have a person dedicated to vendor compliance. So if your company has identified you as that person within your organization in charge of vendor compliance, realize that you play a very important role.
  6. You are setting the tone for the future. President Lincoln soon became the bar which every other President was compared to going forward. Vendor compliance is still a relatively new industry in the grand scheme of things and vendor compliance specific positions are even newer. You have the opportunity to set the bar within your organization and blaze a trail for future employees.
  7. If you outsource, find a fit that shares your same values. During the Civil War, the Union Army suffered crushing defeats under the command of seven different generals. Many of the Generals would not listen to Lincoln or shared different values. It was the eighth and final general led the Union to victory.

As Vice President, Business Development, Scott Weiss works closely with apparel, footwear, and housewares manufacturers of all sizes to ensure compliance with retailer routing guide requirements.  Port Logistics Group is a market leader in gateway port logistics services, operating over 5 million square feet of warehouse space.  Services include port drayage, import deconsolidation, warehousing and distribution, retail compliance, local transportation, and store delivery in key port locations of Los Angeles/Long Beach, New York/New Jersey, Seattle, and Savannah.  Scott may be reached at sweiss@portlogisticsgroup.com or (562) 977-7620.

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Tags:  Collaboration  Vendor Compliance 

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Vendor Compliance from a 3PL Perspective: 5 Warning Signs That It Might Be Time for a Change

Posted By Administration, Thursday, July 10, 2014
Updated: Wednesday, July 9, 2014

by Scott Weiss, Port Logistics Group


Designing and manufacturing a great product with high demand while allowing your company to make a fair profit is challenging enough. Getting your product to market at the right place and at the right time involves many headaches and logistical challenges that can often be overwhelming so here are five signs that it might be time to make a change:

1) Too Many Chargebacks. Two weeks before Black Friday you sent out 10 truckloads of product to your biggest retail customer. Margins for the order were tight but you made it up in volume. 45 days later you receive an $80,000 chargeback from your customer for non-readable labels and late ASN's. This not only wiped out the profit from the order but gave you a loss. You can have the greatest product with the highest demand; however, if you are not able to properly follow the complex retail routing guide requirements set forth by your retail customer, you may receive a high dollar amount of chargebacks and/or invoice deductions that will directly reduce your bottom line margin and future orders from the retailer. Your inability to follow routing guides will also put you at a great disadvantage versus your competition. If both you and your competitor make a great product with equal demand, but your competitor complies better with outbound shipping requirements than chances are their product will be on the store shelves to sell before your product.

2) Running Out of Capacity. Your DC is 100,000 square feet and can hold approximately 6,500 pallet positions of product. You had a record Q1 and your biggest retailer has doubled their orders for Q2. They have also asked you to increase your safety stock by 30%. Suddenly you are placing pallets illegally in the aisles and product in containers in the yard. The customer does not care about your space problem. Operating your own DC means you have to have a facility that has enough size to handle your peak season inventory while making sure labor is managed efficiently. The saying that you have to "build the church for Easter Sunday" applies here. An optimal capacity level to operate a DC is 85%. Any level above that means that you might be storing product in a suboptimal manner which translates to inefficient productivity, hire costs, and opportunity for errors. Additionally, chances are your company wants to continue to grow so your peak inventory of today may not be the peak inventory of tomorrow and soon enough you may be out of space.

3) Too Much Space/Seasonality. You are a leading footwear company that has two peak seasons for initial orders: January/February and June/July. During these months inbound volume spikes substantially. The other 8 months are replenishment inbounds and volume decreases by 50%. In a perfect world, we would all have steady inbound and outbound volume 12 months out of the year but a footwear consumer does not care that you need to be busy 12 months out of the year. They only care that you have that size 6 in hot pink at the store to buy the night of their dance. And if it is not in stock, they will buy from your competitor. The reality is that most customers have seasonal business with inventory dropping at certain times of the year while peaking a few months out of the year plus there is that planned future growth. This is a very delicate balance that is a real challenge to manage. So the worse thing than having not enough capacity is too much capacity as you have to pay for the entire space 12 months out of the year while making sure you maintain a core labor force that understands your processes and business.

4) Speed to Market. Your factory ran late with product. The steamship line rolled your container by 1 week due to capacity constraints. The ports are renegotiating their contracts and the terminal is slow to unload the container at the arriving port. It is peak season and there is a 6 hour wait at the terminal to pick up your container. The DC is at capacity and the container sits at the warehouse door and does not get unloaded for 5 days. The global supply chain is a series of events that take place along the way. All it takes is for one of these events to be delayed and your orders are at risk. Your customer does not care about any of these events.

5) Poor Inventory Control and Visibility. Your product arrived at the DC three months ago but now the order picker cannot locate it. The truck arrived at the retailer's DC but no ASN was sent to alert the retailer of the arrival. A consumer ordered a blouse from your website 5 days ago and called your customer service number to complain she never received it. Owning or leasing your own physical DC is just one piece of the equation. You really need to be all in and being all in requires a substantial investment in people, processes, and systems.


As Vice President, Business Development, Scott Weiss works closely with apparel, footwear, and housewares manufacturers of all sizes to ensure compliance with retailer routing guide requirements.  Port Logistics Group is a market leader in gateway port logistics services, operating over 5 million square feet of warehouse space.  Services include port drayage, import deconsolidation, warehousing and distribution, retail compliance, local transportation, and store delivery in key port locations of Los Angeles/Long Beach, New York/New Jersey, Seattle, and Savannah.  Scott may be reached at sweiss@portlogisticsgroup.com or (562) 977-7620.

CLICK HERE to return to the JULY 2014 RVCF LINK

Tags:  Vendor Compliance 

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