What are Warehouse Chargebacks


This is another interesting dynamic on LoadProof. The managers that we talked to, they hear about our product and “they’re like wow this is great, want to take advantage of this product in my distribution center or warehouse. They join the demo and one of the things we ask is how much is their chargeback. At the time they don’t know it’s just sometimes fascinating to see this dynamic. 

The organizations that have been operating all along they’re so siloed. They’ve so siloed and this warehouse manager, he’s operating a pretty good-sized facility. It was like 400K plus a squad for DC shipping, a lot of orders. This gentleman didn’t know about the chargebacks because it’s just that’s how they’ve been operating all along. The chargeback was something that was with the finance department, I mean obviously retailers when they pay the invoices they don’t pay the full invoice, they automatically take a portion of that because of these damages or this chargeback situation. It took awhile for him to find out that number from the finance department because that was not available there. He was all about “hey I want to incorporate all the best practices for our operations I want to make users accountable and I don’t know how to hold them accountable”. I want to help him run a great organization, I have seen operations guys when they publish a report saying “look at the number of orders that were fulfilled, this is the accuracy and this is how efficiently we did it. 

It’s like a status report they publish to show the rest of the organizations that they did their job great. This gentleman wanted to do it and I mean it’s a great idea. He wanted to show everyone in his  organization that he and his team did a great job, but unfortunately he didn’t even have that chargeback number. In an ideal organization you want to check if there is a chargeback and see whether it is because of damages or because of some kind of a compliance situation. 

You want to pass that information back as a leader, as the CEO, as the CFO, and as a Chief level operating officer you want to pass that information back to the operations. The people that need to know this are the people running the warehouse, the people that are fulfilling the orders, and the people that are shipping all these loads, pallets, and merchandise for the customers. You want to give that feedback to guide that business unit and then tell them “hey guys I’m gonna add it to your P&L, and it comes out of your P&L because that’s the right way to do it.

You people should need to be aware of the fact that we are losing money in terms of chargebacks, because somebody is not doing a great job and when these people are aware of such situation they will react saying “oh my god we people are sitting here and thinking we’re doing a great job, we are shipping product in great condition and we are shipping great putting great packaging. We are doing  all these things to make sure our customers have a great experience with our product. These guys are sitting here and thinking they’re doing a great job but they didn’t know because this information got stuck in the CFO’s office, if the finance department and nobody knew until they ran into this. I know that siloed thinking, siloed functioning, and siloed organizations is not good. That’s what this technology is doing well, as eliminating that silos and providing better visibility, providing access to anybody and everybody that needs that information. 

This is something to think about, I mean do you have this dynamic in your organization where the operations people that are running the DC, the people that fulfill the orders they know shipping these pallets to their customers and they do not know your company is receiving chargebacks and they are not being held accountable. They’re sitting and thinking that if they’re doing a great job, they are doing fantastic job, and fulfilling their customers to make them happy and making sure their products go to the customers to the right destination, DC., 

It’s important to have that feedback or have some kind of a mechanism where I mean ideally if I were the CEO of this company I would put that on the P&L for the DC people and say “hey guys you gotta be paying attention to this and you got to make sure we know we are not losing money like this right. Some of them run for 20 years and they’ve been in business for such a long time, that’s the culture, they have so that’s something to think about. You should know what your chargeback numbers are and you got to know if somebody is losing money or if somebody is not doing a great job but if somebody is doing a great job in spite of that you’re getting chargebacks that needs to be communicated and there has to be some kind of a feedback mechanism that goes back to that team, especially in the distribution center they need to know “hey this is your chargeback and do everything to prevent it so as an organization as a whole organization we benefit from this thing and we don’t want to lose money like that. So also think about that and let us know what you think, we’ll be happy to share our ideas, happy to share best practices with you.

Puga Sankara is the co-founder of Smart Gladiator LLC. Smart Gladiator designs, builds, and delivers market-leading mobile technology for retailers, distributors, and 3PL service providers. So far, Smart Gladiator Wearables have been used to ship, receive, and scan more than 50 million boxes. Users love them for the lightweight, easy-to-use soft overlay keyboard and video chatting ability, data collection ability etc. Puga is a supply chain technology professional with more than 17 years of experience in deploying capabilities in the logistics and supply chain domain. His prior roles involved managing complicated mission-critical programs driving revenue numbers, rolling out a multitude of capabilities involving more than a dozen systems, and managing a team of 30 to 50 personnel across multiple disciplines and departments in large corporations such as Hewlett Packard. He has deployed WMS for more than 30 distribution centers in his role as a senior manager with Manhattan Associates. He has also performed process analysis walk-throughs for more than 50 distribution centers for WMS process design and performance analysis review, optimizing processes for better productivity and visibility through the supply chain. Size of these DCs varied from 150,000 to 1.2 million SQFT. Puga Sankara has an MBA from Georgia Tech. He can be reached at [email protected] or visit the company at www.smartgladiator.com. Also follow him at www.pugasankara.com.

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