The many different compliance demands of retailers are among the main issues facing suppliers today. Failure to accord with these restrictions can be costly. Chargebacks sometimes can amount to 15 percent or more of a purchase order, especially if it involves a shipment advertised in a Sunday newspaper circular, says Goosmann.
It's not uncommon for manufacturers to fall behind in production. If they ship by their normal mode, they will almost certainly be late with delivery and get hit with a penalty. Expedited delivery often can solve the time problem, but shippers may be reluctant because of the higher transportation cost.
Goosmann says they aren't doing the math. Sure, the delivery charge is greater than normal, but it's minor compared to dealing with the increased penalties.
"It's almost like buying an insurance policy on a shipment," Goosmann says. "A million-dollar purchase order with a five-percent chargeback is very high. For a couple of hundred dollars, an expedited shipping can make than wind down."
To view this video interview in its entirety, click here.
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