Analyst Insight: Thanks to the explosion of online shopping, numerous improvements to the brick-and-mortar shopping experience, and increasing competitiveness between retailers, consumers now have more control than ever before when it comes to how, when and where they purchase retail goods. 

Recent marketplace evolutions have significantly increased consumer demands and given them the upper hand in the purchasing dynamic. More competitive pricing and free, same-day shipping or in-store pickup are no longer nice perks — they’re table stakes. At the same time, retailers are working to reduce their overall inventory levels, so receiving products on time is critical for them to meet consumer expectations. They’re facing enormous pressure to streamline their supply chain capabilities to respond to all these demands. And they don’t, their competitor no doubt will.

However, this transformation isn’t just impacting retailers — it’s also affecting the shippers that sell into those stores. Short, damaged or late shipments due to shipper error have always been a challenge for retailers, hindering their ability to stock appropriate inventory levels. As a result, many major chains have started to implement even more stringent compliance programs and penalties for loads that don’t meet shipper requirements and on-time, in-full (OTIF) requirements.

Shippers that wish to maintain good relationships with retailers and maintain a stable bottom line — let alone grow it — must take a proactive approach and adapt their supply chain practices to mitigate financial losses.

Following are some ways that shippers can achieve this objective.

Know retailer requirements inside and out. As with any problem in life, you can’t properly address it until you fully understand it. Many retailers have different shipping requirements. Research and understand each one to know their unique expectations and their penalties. Once that’s done, tackle the largest fees first and move onto the less prohibitive ones from there.

Align more closely with your 3PL provider. Ensure that your shipping teams know and understand the requirements for each retailer, and automate those expectations as much as possible. Examples include setting shelf-life expectations or pallet platform information within your warehouse management system.

Additionally, work to standardize across retailers whenever possible, as many are adopting the same requirements. If one retailer requires multiple barcodes on its packaging, use them for all retailers.

Ensure that the data is being shared between your sales and supply chain teams. If there are regular calls between a retailer and your organization, ask to be included so you’re able to support the end solution.

Improve your technology. Supply chain data offers a wealth of information you can use to improve your OTIF shipments. Make sure you’re reviewing fines and penalties monthly by each retailer. This information will help you pinpoint what’s happening, which shipping or receiving distribution center it’s occurring in, and which items are affected. In some instances, it might cost more to fix the problem than to just pay the fine. However, those situations are few and far between. 

Outlook: If shippers don’t solve logistics challenges to meet retailer expectations, it will mean cutting into their own profits. Compliance penalties can be assessed monthly or quarterly, and can result in hundreds of thousands of dollars of unexpected expenses. Retailers are likely to become even more strict with their requirements in the future, thanks to the growth of market competition. 

Resource Link: https://america.cjlogistics.com/