There are some books that we all enjoy reading. But, unfortunately, we must read others – whether we want to or not.
Retailers' routing guides and vendor manuals definitely fit into that second category. Like War and Peace, they can often be epically long – not to mention mind-numbingly detailed. Yet you can't skip over a single page or paragraph because anything you miss could hurt your company and its bottom line.
To learn more, we recently had a Question-and-Answer session with Orly Trieber, Director of Client Success – one of Amware’s key front-line people responsible for helping clients stay on the right side of retail compliance requirements.
Do brands struggle to meet retail compliance requirements?
It's an area most multi-channel and retail-only merchants struggle to stay ahead of. Every retailer has its own unique set of shipping and receiving expectations. And deciding not to comply with them isn't a viable business option. Retail compliance is a key success factor in omni-channel fulfillment.
What kinds of struggles do they have?
Some retailers require branded packing slips, some have drop-ship programs, others have some stock that goes into stores and some into their distribution centers. They all seem to have different requirements for labeling, not only on the product, but sometimes on the packaging or case or pallet.
Setting up EDI transfers is another problem area. Specifically, ensuring information gets sent back to the retailer so they can close it out on their side. All in all, it's just difficult for brands to keep up with all the various routing guide changes. It's one of the reasons brands outsource to fulfillment 3PLs like Amware that may be tracking retailer routing guides for multiple customers.
Are brands sometimes surprised by retailers’ inbound shipping requirements?
A lot of times, a brand feels like their big day has come when they get accepted by a major retailer like a Walmart or a Target. They're ready to go right then and there. But if it's a brand-new setup, the industry standard to get a new retailer onboarded is about 4–6 weeks. Each retailer has different requirements, which can make it very time-consuming to set up.
How rigorous are retailers' compliance expectations?
It runs the gamut. Some retailers publish 200-page routing guides. Others outline their retail compliance requirements in 5 pages or less.
Many retailers have complex requirements for how they want to see incoming goods packaged, how labels should be applied, what kinds of dunnage should be used, and how high a pallet can be stacked. Many of them also have different requirements for various product categories, which can make matters even more complicated.
Regardless of whether requirements are simple or complex, all retailers can enforce their rules by assigning fines for non-compliance. These "chargeback fines" are deducted from future invoice payments to that suppler.
How much do chargebacks run?
We've seen some chargebacks that are just pennies and others that cost $200 per infraction. Either way, they can add up quickly and create financial havoc. Part of our job in the fulfillment center is to avoid infractions that would otherwise have resulted in a chargeback.
Are there any requirements that seem to trigger more chargebacks than others?
We pride ourselves on having very few chargebacks, so I can't speak for every company. But labels are a particular stumbling block for many businesses when it comes to retail compliance requirements.
That's because there's a wide range of information that a label can include – PO#, box contents, SKU# and quantities, just to name a few – and many ways that this information can be organized and presented. Plus, there's the question of where the label is placed on a package. Any deviation from these requirements, however small, can result in a chargeback, as can labels that are missing, ripped, or even dirty. When labels are incorrect or misplaced, retailers often can't process these boxes in an automated way at their distribution centers, so they become exceptions requiring added labor.
Another thing that can trigger chargebacks has to do with the timeliness of sending the advanced shipping notice (ASN) to the retailer to let them know the product has shipped before it hits their store or distribution center. For example, let's say the warehouse sends an LTL shipment but fails to close it out in the system right upon shipping it. The truck driver shows up at the dock the next morning, and if the shipping warehouse didn't close out the order to send the ASN, that violation of retail compliance requirements is a perfect condition for a chargeback. Facilities need to follow the process perfectly.
The most frequent chargebacks come from late, missing, or incorrect ASNs, and also inactive, defective, or missing labels.
Amware has a relatively low rate of chargebacks. How does the company help customers avoid them?
Among other things, we have people like me who eat, sleep, and drink retail compliance. We're focused on carefully going through every routing guide for every retailer that our clients deliver to, and we're fully committed to becoming subject matter experts and understanding each guide's contents.
Part of our job is creating the Cliffs Notes versions of these guides so that associates on the warehouse floor have easy access to the most important requirements. We're also heavily involved in employee training and coaching – and making sure that our associates are well-versed on all the essentials for shipping out to a particular retailer. We can create handy checklists for associates, and we even build large-scale reference boards that hang over pack-out areas in the warehouse (see image for an example).
And of course, our company has a lot of multi-channel fulfillment experience already, so we know how to comply with the shipping requirements of Amazon, Walmart, Target, Home Shopping Network and other large retailers. It's already part of our organizational DNA. This makes onboarding new clients who work with these retailers much easier, because we've already got the necessary compliance track record and knowledge.
How can systems help with retail compliance requirements?
The more automated the process, the better. Let's talk about labels again. Each carton shipped has a label that contains valuable information that the retailer must receive via an EDI feed.
Ideally, the WMS system in the fulfillment warehouse can auto-print a label as each carton is being prepared for shipment. When all the orders are done, that data is transmitted automatically to the system that sent the order via an ASN. When this process is not automated, the fulfillment associate must log into the customer's EDI portal, such as SPS or Commerce Hub, and operate from within that system.
What problems does this create?
Some brands might have 10 or 20 retailer partners. So, as orders are being processed for each retailer, the associate must go into the customer's EDI portal, print out labels for the orders and take them to the picker, who must match the correct label with the correct carton. Then, once a carrier pick up is arranged with a trucking company, the associate must also enter this carrier data into the EDI portal before transmitting all data. When you must operate out of this separate system, it's harder to execute steps efficiently and error free, so chargebacks are more likely.
Any time you're dealing with the retail world, you're dealing with EDI. Most retailers are stuck in an older model of EDI versus newer API-style integrations. So, it's a separate channel that flows into our systems. We have EDI setups and mapping, and dedicated people just to manage the EDI flows and maintain that side of the infrastructure, which is very different and distinct from other ways of getting orders to us.
So why not automate the process as you mentioned?
Ideally, you would. But it requires some commitment from the brand in terms of systems resources to make sure we are processing orders correctly for the retail partners. Often, these systems resources are in short supply and focused on other projects, so it can be hard to make this a priority. Often the brand doesn't associate chargeback fines with the manual process I described.
Does Amware have a solution for automating data transmission to retailers?
We do and it's in place for many of the brands we work with. For each order, our Amware 360 WMS system can automatically print UCC 128 labels at the pack station and the data embedded in those labels is transmitted automatically – without a need to log into the customer's EDI portal. This is very helpful in adhering to retail compliance requirements. And it’s pretty easy for our clients. It just involves going through each retailer during that initial setup and making sure all the compliance requirements and touchpoints get covered.
What are some other trouble spots with retail compliance requirements?
For some companies, the challenge is shipping – how to package different shipments that are going to different destinations. For example, if an item is being sent to a retailer's DC it may need to be palletized one way, whereas if it's going to a retailer's store, it may need to be sent and stacked differently. And if it's being drop-shipped, there may be some packaging changes required, because some retailers are okay with receiving branded shipping materials, while others aren't.
Other companies may struggle with what goes inside the package. Should there be dunnage or not? What kind? And where does the packing slip go?
How about products with a shelf life?
If the products have associated lot numbers or expiration dates, many retailers have different shelf-life requirements than what you might find with B2C orders. That's a complexity we often have to deal with. For example, let's say a retailer has a shelf-life requirement of 12 months. That might mean that when we get orders, we have to pull product out of reserve locations to process that order because what we have in our primary locations is within that 12-month expiration window, even though it's still good for 6–7 months. Those types of retail compliance requirements are something the account managers have to be in tune with.
How often do various retailer compliance requirements change?
Most routing guides or vendor manuals are good for about a year, and retailers are generally very good about letting companies know when there are updates. So even if you think you know everything there is to know about retail compliance today, don't get too comfortable, because some amount of change goes with the territory.
We usually see changes to retail compliance requirements when there's some shift in the way that product gets received on the retailer side. That's typically linked to some sort of system enhancement or upgrade, and they tell their vendors to make the change because it suits their operational needs. They pass those changes on with the expectation that vendors will adjust accordingly.
Do you need help meeting the retail compliance requirements for your multi-channel sales strategy?
Amware works with brands on a multi-channel fulfillment strategy to meet all distribution requirements. The company is equally adept at pick and pack services for direct-to-consumer orders and distribution to mass retail chains and specialty stores. If you are looking for a single fulfillment provider for all your sales channels, contact Amware today.