Manage Compliance and Eliminate Non-Compliant Fines
Large retailers demand execution. They expect orders to be filled on-time and in full, with little tolerance for deviation. Most large retailers now impose fines for lack of compliance that can be substantial. These fines can wipe out much of the profit from these huge accounts. Even tougher is that these fines are typically deducted from invoice, so they can go unnoticed for weeks and months, significantly hurting a manufacturer’s financials.
Total Retail Group has developed expertise in select retailers to help manage compliance and reduce or eliminate non-compliant fines. Our process has the following steps:
- Gather data to understand the types and sources of non-compliance
- Convene a core team that encompasses order management forecasting, warehousing, production and fulfillment
- Dispute all fines that are not the fault of our client and set up a cadence to do so monthly (generally we successfully dispute 30-90% of fines even before more fundamental fixes can be made)
- Determine root cause of non-compliance and institute fixes to correct
- In our experience up to 50% of all compliance fines can be eliminated with simple process fixes that are costless to our clients
- For the remaining root causes, we institute production, forecasting and logistics solutions to be compliant and eliminate all fines.
- Monitor compliance weekly and convene the core team as needed to address new issues that pop up.
For one of our large and fast-growing clients, we discovered monthly fines of $90,000 or more from a major retailer. This was a significant hit to profitability, but due to their rapid growth rate, our client had failed to notice the deductions. Working with our client and the retailer, we were able to get most of the current fines forgiven. We quickly made small changes to the order management workflow to eliminate a whole class of on-time compliance issues and fines. We then set out to work on the more systemic forecasting and production issues that were driving down fill-rate. While those have improved, the company still has ongoing issues due to their rapid growth, so TRG monitors compliance issues closely and, where possible, we fight for fine reductions.
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