As we touched on in our Chargeback series of posts, many small suppliers are at risk for fees if they do not follow their customer’s shipping rules and procedures. In particular, failure to deliver shipments on time is one such problem our clients have dealt with. Retailers understandably enforce their requirements for on-time delivery, or they risk a decrease in customer satisfaction from out-of-stock product.
Unfortunately for many small businesses, even the definition of an on-time delivery is hazy. A study from WERC (Warehousing Education and Research Council) highlights the disconnect on this subject between suppliers and their customers. As illustrated in the following table, their survey found that distribution centers have widely different perceptions of what constitutes an on time delivery.
These varying interpretations of what determines timeliness is troublesome from the suppliers point of view. Their various customers are the ones who determine which definition is correct and, by extension, which deadline results in chargebacks and fees. So how can small businesses solve this problem? The first step is to carefully read the contract and guidelines for each customer. Optimally, everyone involved in shipping will understand these requirements.
An important point here is that many suppliers have no control over their shipments once they leave the warehouse. The orders may be leaving “on time” as specified by the advance ship notice (ASN), but transportation providers are not perfect. A solution mentioned by the study insists that suppliers should use carriers that provide Proof of Delivery. This betters suppliers’ visibility of their product and increases the accountability of the carrier.
At the very least, small suppliers dealing with this issue can use their own data to draw some conclusions about their performance. What percentage of shipments are leaving the distribution center on time? What percentage does the customer claim to receive on time? The size of the gap can help assess the severity of the problem.
Furthermore, the accuracy and expedition of documentation between suppliers and customers can affect punctuality problems. Are your ASN’s prompt and without errors? Concerns here lead many small businesses to fix these documentation issues through third party EDI providers like CovalentWorks.
To maintain good business relationships with their customers and to avoid undesirable chargeback fees, small suppliers should recognize the importance of ensuring that their shipments are delivered on time.The Importance of On Time Deliveries by Steve Brewer