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Effective Compliance Program Key To Supply Chain Success
Simply filling orders is not enough to ensure retailers their customers are pleased with the products and services they receive from a company. In addition to fulfilling customer demands, retailers need to be concerned with the timeliness and accuracy of the orders they fill. Sales lost due to the shipment of incorrect or damaged products or even delayed delivery can lead to red ink coloring a bottom line. Certainly, that’s not an ideal situation.
The answer? An active and effective compliance program, even for small businesses. While it might seem unthinkable for larger retailers or multi-nationals not to have such a system in place, it does happen. And, says Kim Zablocky, founder of Retail Value Chain Federation (RVCF), it’s not only big business who overlook this important aspect of successful retailing.
“It’s surprising how many smaller retailers still don’t have effective compliance programs in place,” says Zablocky, who has been advising supply chain partners about how to resolve compliance issues since 1999.
According to Zablocky, the top concern for retailers is speed-to-market. Other matters demanding attention include inventory visibility and inventory integrity. Those two issues are intertwined because, for example, even if inventory is shipped quickly, sending the wrong products hinders the success of a transaction. Having a comprehensive supply chain compliance program in effect should alleviate problems associated with the shipping of products other than what was ordered.
Compliance starts with specifications
At the heart of an effective compliance program is the very basics of order processing: the purchase order (PO). Equally as important is ensuring the details of the purchase order are communicated clearly to every member of the supply chain, ranging from the retailer to the supplier.
The accuracy of the data and information contained in a purchase order are intrinsic to filling the order properly. According to a recently released RVCF survey, the average purchase order is amended 4.4 times.
While changes to a purchase order may be unavoidable, they also contribute to confusion, especially for the supplier tasked with fulfilling orders from multiple customers on time-sensitive deadlines. Meanwhile, POs can be changed at any point in the purchase and delivery process until the retailer receives an Advance Ship Notice (ASN).
Therefore, it is imperative for all retailers, from the smallest to the multi-nationals, to establish a set of business rules for such situations. Issues to be addressed in the rules include:
• How late in the delivery process a customer can change a PO
• How often changes to the PO can be made
• If amendments translate into additional charges
Having a succinct compliance program in effect allows any retailer measure the effectiveness of their supply chain.