Growing companies like yours may find their markets in places they never expected, sometimes even having the opportunity to connect with much larger retailers.
There are a lot of benefits of these kinds of relationships, including access to even more customers than you’d ever raise alone. However, with great reward comes great responsibility in the form of the Vendor Compliance Manual.
Vendor Compliance Manuals Create Consistency
A vendor compliance manual includes all the requirements a vendor will have of your company when it comes to your shipments.
Vendor compliance includes everything from how products should be packaged and labeled and what timeframes are acceptable for shipping to how you’ll communicate information and social responsibility in manufacturing and adherence to government regulations.
Different retailers have their own Vendor Compliance Manuals, and may each have wildly different requirements. For example, while many will require that you use EDI (Electronic Data Interchange) for communication, they may vary in how the technology is applied. In the same way, all will require some kind of labels on your packages, but the configuration, location and information contained on those labels will always be different.
The goal of a Vendor Compliance Manual for the recipient is to ensure that packages arrive at their facility ready to be processed and moved into inventory. That’s why it is of the utmost importance that your fulfillment service or 3PL provider knows the requirements your company need to meet.
When products arrive incorrectly labeled or you don’t send an EDI transmission making the facility aware of an incoming shipment, it causes chaos in the warehouse. As a result, the retailer incurs considerable expense repacking products or shifting resources to make space for your unexpected delivery. This expense is then passed on to you in the form of a chargeback.
Avoiding Chargebacks with the Help of 3PLs
Small vendors often lack the manpower to meet each and every requirement in a Vendor Compliance Manual that may be dozens of pages long and include hundreds of directives specific to just one retailer. They can become a source of distress and unexpected expense, sometimes even threatening the health of the business as chargeback fees stack up.
This threat of chargebacks is why many wholesalers of all sizes turn to 3rd party logistics companies to handle their warehousing and distribution. Not only is a good 3PL equipped to handle a variety of shipping requirements based on destination, they have the ability to send the right EDI messages in the specified timeframes.
In fact, the best 3PLs are already familiar with many of the larger retailer’s specifications. They likely still require a copy of retailers’ Vendor Compliance Manuals to ensure you meet certain demands, but the additional automation, manpower and tools specially geared to fulfillment will end up saving many shippers significant amounts of money by reducing or even virtually eliminating chargebacks.
Understanding your Vendor Compliance Manuals and having the tools to put them into action is everything if you’re going to act as a wholesaler to retail outlets. The headache and expense of chargebacks can be avoided by paying close attention to the instructions inside and developing systems to ensure they’re met, or partnering with a fulfillment service or 3PL who will take care that no small detail is overlooked.
