The Power of Delivery Receipt Management
Receipts can be an effective tool for improving operational quality and efficiency. Route sales representatives can print delivery receipts and orders and review them with their customers to ensure that orders are accurate and that customers are satisfied with the delivery. Reviewing receipts during the delivery process provides route sales representatives an opportunity to resolve discrepancies immediately, leading to a timely, cost-effective resolution.
To understand the power of reviewing receipts and orders, companies first must understand how mistakes hurt their business. Assume a company has an invoice discrepancy rate of 10.5 percent, which is the average DSD error rate for small-format retailers according to a 2006 GMA report (Small format retailers include convenience stores, gas stations, etc. The discrepancy rate for supermarkets and other large-format retailers was measured at 15.4%). The 10.5 percent discrepancy rate should generate 105 inquiries to customer service repre- sentatives (CSRs) or account managers per 1,000 orders filled. If calls take an average of 12 minutes to resolve —a conservative assumption, considering the time required for order lookup, investigation, credit authorization, and computer entry — the company would spend 21 hours per month resolving errors. At the average shipment error rate, companies would need a full-time customer service representative dedicated to error resolution for approximately every 7,600 orders shipped per month.
How to Cut Costs
If CSRs earn $10 per hour, the direct labor cost for error resolution is $210 per month per 1,000 orders. If the company earns a healthy 10 percent margin, it must win $2,100 in new business to offset the cost of errors; at five percent margin the figure jumps to $4,200. The calculation does not include labor costs associated with returns processing, or savings from preventing rush shipments and additional deliveries to fulfill orders and lost-revenue from unreported over-shipments.
Eliminating DSD and other delivery errors can raise customer satisfaction and help make customers more prof- itable. The GMA calculated that based on its measured error rates and average DSD volumes, a 250-store small-format chain could have to reconcile 27,000 invoices per year, and a 250-store large-format chain would have 450,000.
Leveraging Direct Exchange (DEX)
Direct store delivery is often challenging for retailers and vendors. DSD drivers spend between 2.1 and 6.0 percent of their time in stores preparing invoices, according to the GMA study. Automating the invoicing process by eliminating handwritten entries and adjustments improves productivity.
Before the development of the DEX (Direct Exchange) UCS (Universal Communications Standard), a vendor typically delivered a certain quantity of items, scratched out an invoice for the retail store manager and then delivered a copy of that invoice back to the vendor’s own accounts receivable department for processing. The time lapses from invoice transmission to accounts receivable and further delay in data entry lengthened the cash cycle and often led to billing problems. Retailers frequently disputed bills submitted for payment because of pricing discrepancies, or charge-backs for unauthorized deliveries. Payments were slow and often incomplete.
As a result of this tedious process, retailers suffered from inaccurate inventories and sales ticket errors while vendors were troubled by lengthy check-in times, high administrative costs, and struggles with remittance. In response to these struggles, the DEX standard and related equipment were created to ease the DSD process. DEX allows direct store delivery vendors to transmit invoice details into a store’s receiving system automatically. Automated check-in processes for DSD drivers can reduce receiving time by 60 percent, according to the GMA study.
The most common method for uploading this information is via a DEX interface connector that is mounted to a wall in the retailer’s receiving area. The DSD representative uses a handheld computer to transmit delivery quantities and pricing data to the DEX connector, which is wired to the store’s computer system. Discrepancy messages would be sent to the vendor’s handheld computer for immediate on-site resolution.
Because the invoice could be uploaded directly to the store server via the DEX interface connector, retail accounts payable departments no longer require statements of information from the vendor, who benefited by receiving payment sooner after delivery.
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