Guide: Common Vendor Chargebacks That Hurt Your Bottomline

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Chargebacks are often called “expense offsets” because compliance issues caused by a supplier can disrupt the flow of operations for a retailer, resulting in additional operating costs for the retailer. Therefore, they will offset the unforeseen expenses on to the supplier.

These charges have become a bit of a cash cow in recent years, as retailers have implemented stricter delivery windows and other operations slap on-the-wrists. In fact, according to Supply Chain 24/7, all major retailers chargeback their customers, with fines making up as much as 13 percent of their account revenue.

These fees can be serious hits to your company’s revenue, especially if you’re a startup or small to mid-size CPG. Our “Definitive Guide to EDI and Vendor Chargebacks” is here to help. This free guide overviews chargebacks, their impact on an organization, and a full list of retailer fee documents.

Otif Part 3

Improving OTIF Performance

Making sure you are compliant with OTIF requirements can be tricky. You’ll need to do in-depth analysis into potential issues, such as warehouse issues and carrier delays. The various silos of your organization must interact with each other to ensure full compliance and prevent future chargebacks from happening.

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Why is OTIF Important?

Not complying with your purchasers’ OTIF requirements can be very costly, and result in hefty fines. For example, Walmart fines its vendors 3% of the cost of goods sold if the order fails OTIF requirements. In 2016, Target stores increased their OTIF penalties to 5% of the order cost, five times what it previously was. That kind of money adds up!

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How to explain OTIF to your 5-year-old

OTIF stands for On Time In Full and is a key performance indicator (KPI) of your products’ supply chain. OTIF is a crucial measurement of how well your operations team fulfills your orders according to the requirements of your customers.

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