By now, we’ve all heard about or experienced first-hand the various supply chain struggles that are running rampant throughout the U.S.
With ships backed up at ports, worker shortages, and insanely tight truck capacity, it’s extremely tough to meet the stringent On-Time In-Full (OTIF) requirements set by the big-box retailers.
In this stressful environment of constant disruptions, it’s also understandable that it’s difficult to stay on top of these OTIF requirements as mistakes and delays are bound to happen. However, it’s sometimes overlooked that the big-box retailers face many of these same issues which are causing a major uptick in retail claims and disputes regarding OTIF compliance.
Act swiftly to make timely corrections
We’re seeing a drastic increase in mistaken claims across all major retailers claiming that product was not delivered OTIF when it actually has been. If something is received incorrectly but then is found a week later, that makes it hard for a retailer to correct.
The system is set up as it was pre-COVID and isn’t designed to handle exclusions or errors. This includes human error for inputting incorrect processes, in which the system will automatically generate a fine or compliance fee.
The amount of effort that goes into trying to prove innocence has increased significantly. If it isn’t corrected swiftly, difficulties continue to pile on. An additional layer is that before 2020, many retailers were live unloading more frequently with a driver held with the load. Counting accuracy was also more hands-on.
Now there are many more drops where product may be sitting at a DC for weeks at a time, making reporting more prone to errors and inaccuracies. We’ve seen products sit for up to two weeks before being processed. Regardless, mistakes are going to happen. There is only so much a human can handle due to all of these outside stressors.
What can you do to address these issues and consistently stay on top of them?
Five important steps that you can take to safeguard yourself and dispute OTIF claims when they arise:
1. Don’t wait
We’ve seen customers wait three or more months to address issues. While systematically, the information should be there, the likelihood of retail reps taking it seriously or you getting paid back promptly will plummet as you’re placed on a long waiting list. Filing a claim no more than 3-5 days after you see the discrepancy is the sweet spot.
2. Be consistent
If the retailer is seeing timely and consistent disputes (as long as they’re warranted), that raises flags for the retailer to focus on your specific claim.
3. Continuously monitor OTIF reporting
When the OTIF report is released to suppliers, the In-Full portion can show lower than the actual count. This is because some DCs, especially during peak, can be slow to receive drop trailers. Often, we suggest that the supplier re-pull the Walmart fiscal week that shows a low In-Full percentage a week after the initial report. Typically, we’ll see the percentage increase as Walmart has processed the remaining orders. This is a clear sign that some DCs may be slow to receive product and can foreshadow an increase in claims from the retailer that you’ll have to dispute.
4. Collect a paper trail
You always want to have Proof of Delivery (POD) with a stamp from the retailer. Without a paper trail, you won’t be able to prove your innocence. If you’re utilizing a 3PL, they should have these prepared for you.
5. Promptly notify your 3PL
A good 3PL will have experience with disputes and can walk you through any issues that arise. They’ll also provide you with the POD paper trail to utilize during disputes.
Utilize your lifeline . . . the POD
Once a supplier receives a fine or claim, they’ll have the opportunity to dispute if they find that the claim is not warranted. The supplier is usually notified of a fine from the retailer via email which is sent a week before the retailer invoice is paid to the supplier.
If the supplier chooses to dispute the fine, the process will typically begin in the retailer’s supplier portal. The supplier will need to provide all reference numbers associated as well as total amounts.
The most important piece of the dispute is the POD, which can either be a master POD with a retailer stamp that includes a PO number (usually associated with a carrier dropping a trailer) or an underlying Bill of Lading with the retailer signature or stamp directly associated with that supplier (usually associated with a live unload).
The POD is the lifeline for being able to prove innocence. Even if the POD supplied is not complete it can be used to receive POD that is on file from the retailer. If the retailer finds no disputes on the copy they have, then usually the fine is removed, and the supplier is re-paid. As stressed previously, make sure you file a dispute within 3-5 days of receiving the fine. Consistency and timely action are the keys to receiving action on the side of the retailer in hopes of reducing fines.
A case study: FMCG client receives significant refund for improper shortage fines
A large GEODIS client that produces fast-moving consumer goods (FMCG) received a $500,000 refund by utilizing the aforementioned steps after noticing that they were being incorrectly charged. They immediately contacted us to inform us that they were being fined for shortages.
We captured every POD for each PO to make sure that they were delivered on time and that there were no written shortages. We provided the POD and the client was able to file the claim dispute along with a request for the original Bill of Lading to show proof and documentation of shortage.
We then uncovered a lot of false deductions and fines. The repayment process was lengthy, but through consistent outreach, our client was able to recover almost all of the claims. The lifeblood of this effort was the paper trail record we kept of every POD and provided all of the PODs with easy access to check each order.
Get in contact with GEODIS
Remember, the key to success in disputing claims is to be prompt and consistent with contacting the retailer and providing proof of innocence through extensive documentation. If you’re seeing, or are worried about disputes, contact us today and we’ll walk you through the process. It’s imperative to protect yourself in a time when the economy is tightening and each dollar counts.