Post Holiday Rush Part 2, The Supplier’s Story January 28, 2008
Posted by Jay Melton in Actionable Intelligence, Analytics and Business Intelligence, Inovis Solutions, News, Supply Chain Visibility, Technology.Tags: Actionable Intelligence, Chargeback Avoidance, chargebacks, Compliance Guides, Deductions, retail, supply chain
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As a vendor, chargebacks are your worse nightmare. You just made it through the busy holiday season, and now you start getting hit with chargebacks from your retailers. Or, maybe your holiday season was not as good as it could have been due to late shipments to retailers. This is a money drain. Sometimes without realizing it, you are throwing money away for problems you could have easily avoided. Without a solid Chargeback Avoidance solution, you may never put an end to this cyclical game.
A Chargeback Avoidance solution helps retail vendors and suppliers reduce the amount of the deductions from their retail customers due to preventable, data-related compliance errors. Keeping up with all of your retailer compliance guides is a manual process and can be a moving target, as some partners make frequent changes to compliance guides.
Industry studies show that up to 20% of trading partner transactions have errors, leading to compliance-related errors as high as 2% of sales. For a $300M supplier, this would mean up to $6M in avoidable deductions each year. That is a lot of money thrown down the drain. With longer days-sales-outstanding times, suppliers often have quite a bit of cash tied up in disputes.
A good Chargeback Avoidance solution identifies potential deductions as they happen by monitoring partner transactions against retailer compliance guides and buisness rules.
Stop losing money down the drain. Look into Chargeback Avoidance and lower your cost of goods sold!
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We are now outsourcing some of our product to a 3PL. What are best practices for the chargebacks that are incurred from the 3PL? Are the 3PL responsible for investigation and documentation for disputing the claims? If the claims are valid is the 3PL liable for the total charges or does the parent share in the cost? Since the parent company is getting the deductions from their invoices do they automatically cross charge the 3PL.
Would like to know how other companies are handling their charges incurred by the 3PL’s.
For chargebacks involving 3PLs, it’s best to “follow the money.”
If you pay the 3PL (and it sounds like you do), then you should cross charge the chargebacks to the 3PL. The most common preventable chargeback reason codes, such as late/missing ASNs or routing violations, should be well under the control of the 3PL.
In a perfect world, a 3PL will actively work to understand the nuances of retailer compliance guides and routing guides to avoid preventable data-related chargebacks.
But the reality is that most 3PLs don’t closely track compliance changes and aren’t in a financial position to absorb all the chargebacks they cause.
And as you likely know, it’s critical that the service levels provided by your 3PL meet or exceed the compliance guidelines from your customer. Otherwise, you’re stuck in a no-man’s-land with chargebacks coming your way and no recourse to the 3PL.