Chargebacks Part 3 – How Avoiding Chargebacks Benefits the Supplier

Avoiding chargebacks obviously saves the supplier unnecessary costs, but more importantly, it means the supplier is in compliance with their customer’s business rules. Consequently supply chain performance is improved, the supplier has a better scorecard, and the customer/supplier relationship is strengthened.

Receiving Dock Compliance

Let’s take a look again at the supply chain interface point that happens at your customer’s receiving dock. Many customers divide the receiving process into three different queues. The choice of receiving queue depends on the supplier’s past compliance performance. Here are the three types:

  1. All of the cartons are opened, inspected, and compared line by line against the ASN (EDI Advance Shipping Notice).
  2. The first several cartons of a shipment are opened and inspected as in method 1. If no errors are found, then the rest of the shipment is barcode label scanned and accepted per the ASN.
  3. All of the cartons of a shipment are placed on the cross dock automated conveyer belt system, mechanically barcode scanned, and accepted per the ASN. Periodic audits of the carton contents are performed.

Consistent compliance performance gets the supplier moved to the method 3 queue. Method 3 is better for the customer and better for the supplier because labor is reduced, inventory is received as ordered, and the product gets to the store faster. The delivery-to-store time will probably be twice as fast which can get the supplier’s product in the hands of consumers several weeks sooner.

Faster Payment

Suppliers who send compliant ASN’s during shipment and then compliant invoices are processed faster by the accounting department, contributing to faster payment and improving cash flow for the supplier.

Consistent Performance

Consistent compliance and a strong vendor scorecard will help position a supplier ahead of competitors for future orders and can provide hard data for negotiating better terms.

Summary

Reduced chargebacks and a strong vendor scorecard benefit the supplier through faster delivery of their product to consumers and improved cash flow. Compliance contributes to their customer’s efficient processes and positions the supplier for more orders in the future as well as potentially better terms.

Chargebacks Part 3 - How Avoiding Chargebacks Benefits the Supplier by

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