You are a Supplier to Retail Warehouse Manager, you want to know how to avoid retail chargebacks, freight claims, damage claims and rejected loads using LoadProof
Vice President Operations
Capture the conditions of the loads you ship and share it with your customer through automated email's. Take photos of every product, pallet, and truck along with the packaging conditions such as shrink wrapping, addition of dunnage bags, stretch wrapping, etc., and win the trust of your customers.
Avoid Costly Freight Claims, Chargebacks, and Concealed Shortages with the Centralized Photo Documentation Solution - LoadProof
Continuous Improvement Engineer
- Post Cereal – Breakfast Cereal
- Ancerre Design – Fancy Bathroom Vanities
- Georgia Pacific – Paper Towels & Toilet Paper
- Mannington Mills – Flooring products – Carpets, Vinyl, Hardwood etc
- You could set up at the Site level or could set up at the Customer Account level
- You manufacture great products or source great products from the far east and then you ship them to Retailers such as Walmart, Kohls, Home Depot, Lowes, Best Buy etc. and sell your product through them
- You are essentially paying rent to one or many of these retailers to carry your product on their shelves and make them available for shoppers that come to their stores, so the consumers or shoppers can buy them
- You ship your product to the Retailers, sometimes you will pay for the carrier and ship your product to the Retailer or sometimes or actually most of the times the Retailer will pick up the product by sending their own transportation company/Carrier from your warehouse as they can take advantage of the economies of scale and get a better transportation pricing, then they will process your product through their Supply chain, then get your product on their shelves and sell them.
- Meanwhile you will submit your invoice and they will pay your invoice, typically after all your product has been sold form their shelves, which is usually 60 days
- Then they will pay you once they sell your product from their store shelves
- While shipping your product to them, you have to follow their routing guide instructions that has all the rules to be followed on how the product needs to be packed, labelled, palletized, stretch wrapped, loaded and finally shipped, so that the product will travel through their Supply Chain smoothly, which contains complicated material handling equipment’s such as conveyors, carousels, robotic systems, pick to light systems, etc.
- Ideally the reason for the detailed instructions in the routing guide is that, the non-complaint box sizes, non-compliant labels, non-complaint pallets etc do not travel through the retailers complicated material handling systems, instead they get sent to the exception processing lanes, at which point the retailer has to manually handle these boxes, which means they have to spend extra labor to get your product to their shelves, which means they have to charge you for that extra labor, and hence the term Charge backs. And this was issues by the retailer hence the term Retail chargebacks
- But often what happens is
- There could be delays in getting the routing guide updated, so the retailer has changed their material handling equipment, but they have not updated their routing guide which means you did not know the new standards, so you followed what was in the routing guide at that time and you did everything correctly, still you got charge backs
- There was one retailer that found it very difficult to process the products through their Vendor Performance program accurately, so instead they decided to apply a flat 7% chargebacks to all of their suppliers, and this was both suppliers that thoroughly followed their routing guide and those that did not.
- Sometimes wrong people get into these Vendor Performance management roles and they issue heavy unreasonable chargebacks even for very minor faults
- Sometimes these Retailers start using this as a revenue source for the retailer and these chargebacks could be up to 14% of your invoice
- There is also an automatic deduction that gets applied to your invoices, meaning if you invoiced your customer for $10,000, they will only pay you $9,000 and the rest will be deducted automatically. There will be Supplier portal that is provided, through which the reasons are provided for that automatic deduction.
- Typically, this automatic deduction is sent to the Accounts receivable team, then the AR team will call you the Warehouse Manager asking for proof to demonstrate that the warehouse did a thorough job when shipping that shipment
- So with pictures in LoadProof, you have to create a PDF and upload those pictures to the retailer through the Supplier portal. Once you provide proof that you did your job right, you can get those chargebacks cancelled, or at least you can have a solid ground to have those conversations so you can start pushing back on them.
- You could also use it for Scenarios where if you had a Supplier that is shipping from China or any other international location directly to your Retail customer and you are getting chargebacks from the Retailer, then can also have your Supplier in China or in any other international location take pictures of the shipment and then share those pictures with the Retailer to get the chargebacks cancelled
- As a Supplier warehouse manager, you are responsible for the following
- The Supplier Warehouse manager leads and coordinates all aspects of the distribution process within the Supply Chain network.
Leads site’s planning, execution, and communication of all daily clerical and operational processes, including:
- Labor Planning & Driver Management
- OSHA, FDA and DOT Compliance
- General Administrative Duties
- Employee hiring
- Customer Service Responsibilities
- Human Resource Administration
- Product Functionality Checks and Cleaning
- Warehouse Functions/ Servant Leadership
- Load Planning, Routing, and Carrier Management
- Collection/Reporting of KPI data
- Sometimes you are responsible for the P&L of the site as well
- The Supplier Warehouse manager leads and coordinates all aspects of the distribution process within the Supply Chain network.
- Just keep in mind – if you are handling products that require FDA approval – you have to maintain all the documentation for up to 12 years, it could be anywhere upto 3 or 7 or 12 years. We have a customer, these guys ship health related products, every return they get, they need to maintain that returns documentation for 12 years, they have this large warehouse that has only papers – all the returns documentation from the returns they received.
- Often you have to absorb costs even though it is not your fault
Your Supply Chain Community
Your Supply Chain community comprises of people that you do business with, usually it is made of all these people
- Manufacturers that manufacture products
- Trucking companies
- Ocean Carriers
- Rail Carriers
- Air Carriers
- Multi modal – Ocean, Land, Rail, Air
- Third Party Logistics Service Providers
- Vendors that you buy your products from
- Cross Dock Facility operators
- Consolidation Facility operators
- LTL Terminals
- Parcel Carriers
- Delivery Companies
- Freight Forwarders
- Freight Brokers
It is very important to keep in mind that you will work with all these people on a regular basis, so build and maintain professional relationships. While shipping products, moving products mistakes do happen, sometimes it is theirs, sometimes it is yours, whatever it is work with your partners, keep proof in LoadProof to demonstrate that you did your job right. So, you can have a professional conversation and articulate your position in a professional way, it is okay to say in a very professional and gentle manner, “Hey it is not fair for us to pay for mistakes that is not ours, here is a proof in the form of pictures”. However, do not burn bridges everybody is working very hard to make it for themselves. Also, people move on and change roles very quickly in this industry, so the same person could take up a different role and you might face them in a completely different side. So always build and maintain professional relationships, do not burn bridges. So, when you are working with such a community of Supply Chain service providers, having LoadProof and pictures to prove that you did your job right, gives you a solid ground to stand on, when something happens to your shipment.
- You are losing money on Retail chargebacks
- You are losing dollars due to freight claims
- You are losing money on damages – your customers are submitting damage claims to you
- You are losing money on rejected loads
- You want to keep that money in your customer’s pockets
- So, you started taking photos in your official Digital camera
- Some of your people started taking photos in their personal cell phones but the process had the following drawbacks
- Take photos in a device, either a digital camera or a smart phone
- Then you have to save the photos somewhere in a Google drive or Shared drive or Shared Folder
- Then manually have to search the photos to find the right ones when there are any questions
- Cumbersome to copy the photos from the camera
- Time consuming to organize photos for future reference
- No back up for the photos – What if your computer suddenly crashed?
- No visibility across the Supply Chain – Other operators in the Supply Chain cannot see the pictures – your vendors, customers, carriers, lumpers, personnel at the cross-dock facility, insurance companies cannot see them
What is a Retail Chargeback?
- You are shipping to a retailer
- The retailer is either issuing a chargeback or automatically detecting your invoice because they are citing noncompliance or damages
- If you have a genuine noncompliance issue based on the retailer’s routing guide, then you have to make sure that noncompliance issue is fixed first. If you are still getting chargebacks and the reasons that you are getting from the retailer doesn’t make sense, then you have to have a conversation with the retailer.
- So, you want to have a conversation with the retailer. It is not always easy because they are so big, you cannot get their attention easily, so you start with the pictures of the product you ship. Using Loadproof start taking pictures of the products you ship that demonstrate the condition of the product you are shipping.
- When you get a chargeback, you can share those pictures and demonstrate to them saying that the condition was perfectly fine, when the product left your facility
- Typically, you will have to submit the pictures through their portal. And with Loadproof you can do that very easily because with all the pictures you have taken, you can generate only one (not too many that complicates the process and requires a lot of labor to be spent just to upload pictures) PDF document and upload that one PDF document into the retailer portal and start the conversation.
- Often there are two scenarios at play here. The first scenario is the Retailer paying for transportation, which is what happens most often, and the second scenario is you paid for transportation.
- Scenario 1 – The retailer often pays for transportation because they can take advantage of their economies of scale and get a better deal from the transportation company or carrier. The problem is because you don’t have a contract with the carrier you cannot directly file a claim with the carrier. So, you will have to talk to the retailer and prove it to them that it is not your mistake. Sometimes even the insurance companies are involved because the carrier might insure the move, then insurance companies will ask for the pictures, so if you have LoadProof, it is even easier to provide the pictures to the insurance companies. It is not always easy to get the retailer to look into this right away, but work with them, keep pushing back, you might not succeed in the first attempt, but eventually you will succeed.
- Scenario 2 – You paid the carrier directly, then you can file a claim against the Carrier and get your damage reimbursed
- And also, often Retail Chargebacks come with automatic deductions, which means your Accounts Receivables team is going to see this first. Then they will call you the warehouse manager next to see if you have any proof to show that the warehouse team shipped the product in good condition without any of those damages cited by the retail customer. That is when you can show LoadProof and the pictures you took while shipping that shipment. You can also set up your AR people as users in LoadProof, so that they can login to LoadProof and retrieve the pictures without even calling you. And you can also set up anybody else that requires access to these pictures to show that your warehouse team did a great job. So everyone can push back and say – hey we did our job right, so it is not fair for us to pay for these issues.
- Always keep in mind, the Supply Chain is a small community of people, so you are going to see these people again and again and they all make moves and take up different roles in the same industry. So, you will see them again and again, all you have to do is go to a trade show and you will see them, so it is important to maintain the relationships so don’t burn bridges. You are going to see them in a different role at a different 3PL at a different retailer or at a different distributor. So, work with them maintain the relationships professionally, you will not get surprises when they take up other roles and might be on your opposition side. Also in the 3PL industry people jump ship so fast, so always keep that in mind while working with people in Supply Chain, overall your journey within the Supply Chain industry is not a sprint, it is a marathon.
What is a Freight Claim?
You shipped your product through a carrier to your customer. The carrier failed to deliver the product in a perfect manner, it was not delivered in the same condition as it left your facility. And often the carriers insure these transportation moves. So, if there is a problem or if there is an act of god, for example thunderstorm or a tornado or any natural disaster that damaged your shipment you can file a claim to the Carrier and then get compensated. We are actually a partner with Mercury Gate My Ez Claims, so if you have pictures in LoadProof and you are already using My Ez Claim, you can automatically pull the pictures from LoadProof into My Ez Claim and submit those pictures to the Carrier along with your Freight Claim. That makes getting compensated by the carrier easier. Because these shipments are insured, often the insurance companies get involved and you know what happens when an insurance company is involved, you got to submit all kinds of proof to prove that the shipment left your facility in perfect condition, that is where LoadProof comes in, using LoadProof you can exactly do that. You can take 1000s of pictures and within no time you can find those pictures and share them with whoever you need to share them with.
This could get really complicated if you did not pay for the transportation, which means you don’t have a contract with the carrier and you cannot even talk to them. Typically, this happens when you ship to a retailer, a retailer will often take advantage of the economies of scale and get their own carrier and the carrier will come to your facility and pick up the products. In that case if there is a damage then you really have to talk to the retailer and if they are one of those big retailers, and if you are small supplier, the 3PLs can help.
What is a Damage Claim?
A damage claim is submitted by a customer to you, when the product you shipped did not arrive in a good condition where the customer is doing extra work to get the product to work. This could potentially result in an automatic deduction in the invoice you submitted to your customer, meaning if you submitted an invoice for $10,000 the customer is going to pay only $9000 and quote the damage claim as the reason for the automatic deduction. That is where you can show pictures from LoadProof to demonstrate that you did your job correctly and it is not your fault. If it is a Carrier’s mistake you can submit a Freight Claim to the carrier if you paid for the carrier, or if your customer paid for the carrier, then you can tell that to your customer and get paid fully on the invoice.
What is a Rejected Load?
A rejected load is an extreme case, but you would be surprised to hear, how often it happens in the Food distribution business. Basically, the load was delivered in such a bad condition, the customer at the receiving end is so mad, they are completely rejecting the load, because they cannot take it and fix it, they don’t have the resources to take it and fix it. Now you have to take it back, bring it to another place, either another nearby facility or bring it back to your own facility, fix it and ship it back. So now you spent extra on the transportation both hauling it back and re-delivering, then also you spent on extra labor to fix it, also think about how bad this can be if these products are perishables, for example lettuce or cheese. So the loss could be a lot. So now imagine if you have pictures to prove that you did your job right, at least you can push back and say – Hey I am not going to pay for this, because it is not your fault and you can have the party that is responsible for the problem to pay for it.
Different Scenarios to take pictures of
- Outbound Loading and Shipping
- Inbound Receiving
- Inbound Damages
- Outbound Trailer Seals
- Trailer Conditions
- Trailer Cleanliness – especially when shipping food products
- DEA Licenses (Drug Enforcement Administration), FDA (Food and Drug Administration), sometimes even Drivers licenses of Drivers that are picking up your loads and making deliveries of your loads
- Bills of Lading
- Proof of Delivery
- Parcel Manifest
- GEMBA walks – Gemba (also written as genba) is a Japanese word meaning “the actual place.” In lean practices, the gemba refers to “the place where value is created,” such as the shop floor in manufacturing, the operating room in a hospital, the job site on a construction project, the kitchen of a restaurant, and the workstation of a software programmer. A popular approach in companies who implement lean principles is called “Gemba walks,” which denote the action of going to see the actual process, understand the work, ask questions, and learning from those who do the work (showing respect to them). It is an opportunity for management and support staff to break away from their day-to-day tasks to walk the floor of their workplace to identify wasteful activities. The objective is to understand the value stream and its problems, rather than review results or make superficial comments from their office or conference room.
- Trailer Numbers
- Proof of compliant loads
- Stretch Wrapping
- Using the wrapper with the right gauge – The gauge is even more important because if it is an LTL shipment the gauge you apply have to be higher because you are going to move the product too many times
- If it is an FTL shipment, then the gauge can be slightly less
- Cost Savings
- Labor Reduction – no need to manage all these photos
- Show that the product was shipped Outbound Damage Free – No damages
- Capture damages in the Inbound Product
- Prove that the correct quantity was shipped – No overages, No shortages
- Paper Trail – Supply Chain Visibility & transparency across multiple parties
- Significantly improved Customer Satisfaction
- Significantly improved Relationships with customers
- You are eating the cost yourself in order to not lose customer (even though it was not your mistake)
- 95% customer compliant reduction
- Overage, Shortage & Damage issues avoided
- Proof for Damage Claim
- Proof for Shortage or no shortage
- 75% cost reduction in labor spent on researching problems after they happened
- Whenever there was an issue the following happened
- Your OEM or the Name brand customer – would call & ask – hey what happened with that?
- Then as a 3PL warehouse Manager you will have to respond to that
- There will be a lot of back and forth on what was the problem, how exactly it happened, how come this happened blah blah – look at all the time that was spent on this
- But with Loadproof, the OEM Name Brand customers have access to the pictures themselves, so they can login and see the pictures for themselves – all the back and forth is avoided – so claims went down by 95% – All this was because the customers knew there were pictures and they can see those pictures anytime they want.
Additional Customer Results
- Customer Satisfaction through self-service portal – customers love this – no training needed
- DEA Compliance fine avoided – $10K
- Documentation – cost savings $20K
- Trailer Damage fine reduction – $5K
- Compliance for International Shipment – Cargo containers that go international, very often they would bounce around and move so many times in the ships and would get damaged very frequently by the time they reach the international destination after travelling through the ocean
- 20% Savings in Freight Claims
Without a Centralized Enterprise System of Record for your Photos, a Warehouse manager cannot show compelling proof that his team did their job right.
January 6, 2021
January 6, 2021