How can you eliminate chargebacks?
For any company that supplies to large retailers, chargebacks can be a serious problem. Retailers use chargebacks or offset charges (a kinder moniker for the same action) as a way to motivate suppliers to comply with their supply chain requirements. Simply put, one simple vendor error can add up to rather severe financial penalties. The retailer’s Vendor Guide lists the financial penalty for each rule broken—chargeback fees can range from $100 for the smallest infraction to thousands of dollars for more serious errors. The charges can quickly accumulate and overwhelm your profit margins. It’s no wonder suppliers want to eliminate chargebacks from their order processing.
Let’s walk through one example: the Advanced Ship Notice (ASN), also know as the EDI 856. It is a complex and detailed EDI document that has plenty of opportunity for error. ASNs include shipment, item and packing information about each retailer order, and every retailer has different standards.
For many vendors, the GS1-128 shipping label creates the most problems. The GS1-128 needs to be absolutely perfect when it arrives at the retailer destination — if it can’t be scanned or doesn’t match the ASN, brace yourself for chargebacks. Careful selection of your EDI service provider and GS1-128 label production are two checkboxes is a critical component of any compliance strategy.
When you stay compliant, you’ll enjoy increased supply chain efficiency and reduced demands on human resources, along with enhanced with your retail trading partners. When you establish your ability to consistently meet compliance standards, you enhance business relationships. Nobody likes surprises and retailers want to work with companies they can count on.
You are far more likely to eliminate chargebacks if your EDI provider offers automation and validation. A software solution should:
- Eliminate the need for repetitive data entry. Auto-creation of EDI documents, including invoices from ASNs, not only saves time and resources, it minimize the chance of keystroke errors. With less manual data entry, document creation time is greatly reduced and you can be more confident about staying compliant.
- Provide batch processing. If you need to revise one item on 20 — or 2000 — ASNs, handling one at a time is inefficient and invites error. With unlimited batch processing and editing, you can create and update several — or even thousands — of invoices, ASNs, and other EDI documents at the same time.
- Validate outgoing electronic documents. If there is missing or incorrect information, your EDI solution should warn you and prevent transmission until the error is corrected.
- Create tickets that are fully compliant. Say goodbye to spreadsheets and external ticketing applications that require an additional step and a way for mistakes to creep in.
- Break ASNs by ship-to location. If your retailer sends a single order that is destined for multiple distribution centers, your EDI solution should automatically create separate ASNs by location. If you’re performing this task manually and you ship to the wrong center, you could be facing a chargeback. And you’ll need to figure out how to get paid for the overage while also paying to reship.
- Include established data connections to your retail trading partners. Maps should be constantly updated. The EDI standards of retailers are constantly changing — your EDI provider needs to keep up.
- Share data with integrated platforms. Whether it’s an ERP like NetSuite, accounting software like QuickBooks, Warehouse Management Software (WMS), or your 3PL, the EDI software solution should make it easy to seamlessly share information.
Finally, look for an EDI service provider who will be a true partner. This relationship is a crucial part of your connection to your retail partners. Whether it’s during setup, ongoing document exchange, or changes to specifications, your EDI provider should always know what the retailer demands. An effective EDI partner will not only deliver great service—their software will help you impress your trading partners.