In the retail sector, vendor compliance programs exist to reduce the time and effort it takes get the product to customers. To help reduce “time to customer”, retailers publish vendor compliance manuals with standards and expectations for doing business with them. (Note – if you do a web search for “vendor compliance manual” you can see examples from various retailers).
Compliance manuals may include rules about time to acknowledge an order and timing of advance shipment notifications (ASNs), adherence to delivery windows, and how shipments can vary in quantity from the original order. Rules designed reduce time and effort to get product ready for customers may include how products are packed/packaged, which can vary by product type – for instance, there may be a requirement that outerwear be packed on hangers to shorten time to store display or boxed individually for online sales, while all shoes are expected to be delivered in boxes.
When a vendor does not comply with compliance program rules, retailers are forced to spend time and effort sorting, repackaging, etc. products to get them ready for sale to customers. This extra cost is sometimes allocated back to the supplier in what is known as a chargeback or deduction.
To reduce vendor compliance infractions, retailers and suppliers need to collaborate, exchanging relevant information quickly – to prevent errors in future shipments. The process of documenting non-compliance, providing feedback and assessing penalties, allowing the vendor to review and challenge specific penalties and then billing or reducing payments can be complex and time-consuming. Since the real goal of penalties is not to generate revenue, but to reduce non-compliance, timely notification and clear communication is essential to a successful program.
So how can a retailer collaborate with suppliers in way that reduces non-compliance and increases the quality of relationships? That is the topic of the webinar, “Vendor Compliance is More than Just a Manual” hosted by SupplyChainBrain. Click here to register and join us live on February 28th at 1:00 PM Eastern.