How to Make Vendor Compliance Programs Work For You
Of all the strategies for reducing costs in your catalog business, vendor compliance programs may be the most underdeveloped. A well-thought-out, formal vendor compliance policy can reduce warehousing and freight costs, speed up order processing, and lead directly to increased customer satisfaction. In order to achieve this it must spell out your requirements and the charge-backs for vendors’ non-compliance.
Without a formal vendor compliance policy, the warehouse has no recourse but to absorb both direct and hidden costs for noncompliance. Without compliance it is impossible for a merchant to implement advanced supply chain systems, ASNs, just-in-time inventory, source marking and ticketing, or RFID programs. A good vendor compliance policy will not only avoid pitfalls but will reduce the time spent dealing with vendor disputes, claims, and charge-backs.
Merchants are sometimes leery that more comprehensive accounting and charge-back policies may upset vendor relationships they’ve worked long and hard to develop. Besides weighing that possibility against the probability that improved vendor compliance will reduce costs and improve customer service over time, you need to consider that a well-defined document in which requirements, expectations and penalties are spelled out will ultimately remove ambiguities, end misunderstandings and result in even better vendor relationships. Anyway, if your vendors are dealing with large retail companies, they are already used to compliance policies.
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