Executive Briefings

Chargebacks as Remedy, Not Punishment

Stage Stores' vision is to have no compliance violations on orders from suppliers and zero chargebacks, says Ken Lettre, vice president of compliance and supplier relations. Barring that, it wants any violation to occur only once. Lettre explains how Stage Stores is working to achieve those goals.

Stage Stores receives goods from thousands of suppliers for its 850 small-footprint department stores. "We cannot have thousands of vendors shipping to us in thousands of different ways. We need for them all to follow the same procedures, per our requirements," says Lettre.

Toward that end, Stage Stores has published a compliance guide that spells out these requirements, which Lettre says are designed to speed the flow of products through the DC and on to stores. The guide is posted outside the firewall on the company’s compliance site and can easily be downloaded and printed. "We also are happy to answer questions from suppliers," says Lettre. "But we really want them to call us before they ship. If a supplier has shipped incorrectly and then calls us, there is not much we can do."

In such cases, the company imposes violation fees in the form of chargebacks, though Lettre would much prefer that suppliers eliminate the violations. “We do not want to impose chargebacks; we do not want problems. But using a chargeback is sometimes the best way to get a supplier’s attention,” he says. “If we simply tell them that the ticket was wrong or the ASM was late, nothing changes.”

If suppliers read the compliance guide and communicate internally, they should be compliant on day one, says Lettre. If they do have a violation, however, the company wants it to be “one and done,” he says.

To help suppliers achieve that goal, the company provides the violator with all information about what was wrong with the order, including photos and comments. “As long as they internally communicate that information, there should be no repeats,” says Lettre. If they don’t, they are likely to have compliance charges again and again, which could put their status as a supplier in jeopardy.

“If we have a supplier repeating mistakes we reach out to them, but suppliers must do their part,” says Lettre. “Stage does not ticket, pack, transmit ASMs, or route goods, but we have identified processes that we need suppliers to use so that we are as efficient as we can be. If a supplier does that, he will never get a chargeback, which is what we both want.”

To view the video in its entirety, click here

Stage Stores receives goods from thousands of suppliers for its 850 small-footprint department stores. "We cannot have thousands of vendors shipping to us in thousands of different ways. We need for them all to follow the same procedures, per our requirements," says Lettre.

Toward that end, Stage Stores has published a compliance guide that spells out these requirements, which Lettre says are designed to speed the flow of products through the DC and on to stores. The guide is posted outside the firewall on the company’s compliance site and can easily be downloaded and printed. "We also are happy to answer questions from suppliers," says Lettre. "But we really want them to call us before they ship. If a supplier has shipped incorrectly and then calls us, there is not much we can do."

In such cases, the company imposes violation fees in the form of chargebacks, though Lettre would much prefer that suppliers eliminate the violations. “We do not want to impose chargebacks; we do not want problems. But using a chargeback is sometimes the best way to get a supplier’s attention,” he says. “If we simply tell them that the ticket was wrong or the ASM was late, nothing changes.”

If suppliers read the compliance guide and communicate internally, they should be compliant on day one, says Lettre. If they do have a violation, however, the company wants it to be “one and done,” he says.

To help suppliers achieve that goal, the company provides the violator with all information about what was wrong with the order, including photos and comments. “As long as they internally communicate that information, there should be no repeats,” says Lettre. If they don’t, they are likely to have compliance charges again and again, which could put their status as a supplier in jeopardy.

“If we have a supplier repeating mistakes we reach out to them, but suppliers must do their part,” says Lettre. “Stage does not ticket, pack, transmit ASMs, or route goods, but we have identified processes that we need suppliers to use so that we are as efficient as we can be. If a supplier does that, he will never get a chargeback, which is what we both want.”

To view the video in its entirety, click here