By Lindsay McShane, Simpactful Senior Partner
Walmart and Amazon are leading the way in Distribution Center (DC) automation and efficiency. It is important to meet their expectations as other retailers will follow their lead. To achieve compliance, manufacturers will need to reevaluate their current case labeling, identify changes needed, and ensure they comply with retailer guidelines.
What is happening?
Walmart continues to roll out their Supplier Quality Excellence Program (SQEP). Chargebacks will be assessed for non-compliance of the requirements. Phase 1 of this program focused on Accuracy (Right Item, Right Invoice) and Phase 2 will focus on Barcode and Labeling Compliance (Right Item, Right Condition).
Today, random audits at Distribution Centers are performed manually. Chargebacks are assessed for noncompliance against the audited POs. Tomorrow, automated systems will assess every case that is received into a Distribution Center. Chargebacks will be assessed for all the cases that are non-compliant.
So what is the likely impact? Walmart case label chargebacks could escalate significantly as all the cases will be automatically scanned for compliance. There can be multiple defects per case and each defect will result in a $1/case charge. For example, if an item does not have an IFT GTIN 14 bar code on the case and is only labeled on one side, you will get charged $2/case for these defects.
Amazon’s core network is already set up with systematic and automatic receiving, and chargebacks are assessed today for non-compliance. Incorrect or incomplete case labels drive additional inefficiencies including “virtual shortages,” where items are received against the incorrect PO.
What companies need to do?
If you are receiving case label chargebacks currently due to the Walmart manual inspections, it is critical that you start to address them. It is essential to get in front of case labeling requirements as backend processes and systems may need to be changed or updated. The change to automation will happen quickly and scale from there. Focusing on compliance and making changes today will avoid chargebacks as well as “scrambling at the last minute” and taking resources from other projects to focus on case label compliance.
Cheryl Stark, Simpactful Senior Consultant, spent 7 years leading the eCommerce supply chain for Mondelez and shares, “Its imperative companies plan now for case labeling requirements. The complexities of ensuring case label requirements are met can be overwhelming. We have been able to provide pragmatic solutions to manufacturers that can be implemented now.”
Simpactful can quickly evaluate your current case labeling, providing options along with a risk assessment to enable swift leadership decisions and corrective actions.
Now is the time to evaluate your case labeling to ensure your chargebacks don’t escalate and impact your profits in 2023!
Simpactful’s team of experienced Supply Chain practitioners can help you every step of the way. Interested in learning more? Contact the Simpactful team today at contact@simpactful.com or 925-234-6394. Visit www.simpactful.com
