By Gregory S. Holder, Compliance Networks
Catch up on Part One here.
Vendor Compliance Review
For year’s retailers have used vendor requirements documents to communicate purchase order terms and conditions and shipping requirements to their vendor community. Included in these requirements are penalties when certain requirements are not met. This penalty is commonly referred to as a chargeback or expense offset. Retailers generally deduct the value of the penalties from vendor checks upon vendor invoicing and include a cryptic message on the remittance advice. The purpose of the penalty is to attract attention to a problem, recover unexpected costs and to facilitate behavioral change. Vendor requirements documents exist to help normalize receiving and order processing activities for both retailer and vendor and help reduce supply chain variability.
Best-in-class Vendor Compliance Programs
A previous article discussed the seven steps to implement a vendor compliance program as well as internal rejections to getting a program off the ground. In general, vendor compliance programs should be evolutionary and not revolutionary. Just like any successful retailer who continues to look for areas of opportunity to improve, the same should happen with a compliance program. Best-in-class programs are centered on three key areas: People, Process and Technology.
Typical Stages of Vendor Compliance Programs
Over the last thirteen years we have seen hundreds of programs in differing degrees of maturity. As such we have identified ten stages of vendor compliance programs. In presentations when we discuss this most people in the room begin to discuss which stage their program is in. As you read through the list, decide which stage your company is in. It might just be a fun exercise.