Written by: Cory Raphaelson, Vendor Compliance Specialist at PBD Worldwide
Chargebacks are financial penalties for non-compliance with retailer’s shipping requirements. Chargebacks can be for something as simple as a carton not being labeled correctly, not being packed according to retailer specifications or sending a late or duplicate Advanced Shipping Notices (ASNs).
Did you know that there is a metric for chargebacks? Resellers are looking for chargebacks to be 2-3% of sales from a supplier. The premise is that chargebacks are designed to improve the supply chain process. The efficiency gained is supposed to create a shared savings to both the supplier and the reseller which ultimately reduces the consumers cost. So, how does your company reduce their number of reseller chargebacks? Here are some key points to keep in mind.
1. IDENTIFY - Capture the violation in detail.
2. REVIEW - Distinguish between Hard and Soft deductions. Hard deductions are generally for missing information on a label or in an ASN. Soft deductions are generally more subjective such as: Is the pallet quality compliant or is the ink on the bar code label dark enough.
Ask yourself: Are the deductions being identified in a consistent manner? Are the deductions accurate?
3. ASSESS - Does the supplier receive the deductions in a timely manner to have the opportunity to correct the problem? Is there sufficient detail as to what the deduction is for so the supplier can identify the cause of the problem?
4. DISPUTE - Is there a platform to submit the dispute in a timely manner? Does the platform accept the dispute documentation in a universal format? Is the dispute process a collaboration or a confrontation?
5. RESOLVE - Is there a clear resolution within a mutually suitable time frame or does the response drag on over several months or in some cases years?
6. REPORT - Are there METRICS to measure the supplier’s performance? Will the METRICS be updated for successful disputes?
Chargebacks are not an ongoing cost of doing business. Eliminating chargebacks requires collaboration between the supplier, the fulfillment group and the reseller.
PBD prevents and disputes chargebacks on an ongoing basis with the resellers and retailers our clients do business with. PBD's Retail Team reads and interprets Vendor Compliance Guides which can be a single page to well over 100 pages. We select the requirements that apply to your shipments and alert our team to what the shipment requirements are. Many resellers have chargebacks assessed when their Accounts Payable Team has an incomplete package of data received from their distribution team. Quite often PBD submits Proof of Deliveries that demonstrate that the shipment arrived on time and complete. Using these tips and key points, PBD's Retail Team has helped our clients recover over $300,000.00 in disputed chargebacks in the last 3 years.