In this article, learn about:
Understanding H-E-B's purchase order terms and conditions
Navigating cost changes with H-E-B
Compliance with FSMA 204(d) requirements
Understanding H-E-B's new UPC requirements
When trying to do business and maintain a smooth and efficient relationship with H-E-B, it is essential to understand the retailer’s requirements regarding product standards, financial policies, and supply chain logistics.
This article is designed for H-E-B suppliers and potential suppliers to get a solid understanding of these policies, to improve output and to help companies looking to work with H-E-B understand if the fit is right for them.
Understanding H-E-B's Purchase Order Terms and Conditions
The document H-E-B's General Terms and Conditions outlines the foundational rules for every purchase, sale, shipment, and delivery of products and services between a supplier and H-E-B. It is available on their supplier documentation website under Procurement Retail Merchandising > Supply Chain. These terms apply to all transactions unless a written agreement to the contrary exists. It's crucial for every supplier to familiarize themselves with these terms, as they may be amended by H-E-B over time and will apply to any new purchase orders (POs).
Pricing and Invoicing
Prices for products and services are considered firm for the term of a purchase order. They are quoted and payable in U.S. dollars and are inclusive of all fees and taxes. If a supplier wishes to propose a price revision for a subsequent purchase order, the request must be submitted in writing at least 90 days in advance of the proposed effective date. Any price increase requires the prior written agreement of H-E-B to be effective.
When it comes to invoices and payments, H-E-B and its Designees reserve the right of offset or the right to give deductions on payments. A supplier must have a valid purchase order, received either via Electronic Data Interchange (EDI) or as a system-generated hard copy, before shipping any items or providing services. The standard payment terms are net 30 days after whichever comes later between H-E-B's receipt of the invoice or the product/services. However, H-E-B offers an incentive: a 2% discount is applied to any invoice paid within net 10 days.
Invoices must be delivered to the correct H-E-B or Designee address and must include specific information to ensure proper processing. The invoice must be in English and include the following details:
H-E-B Purchase Order number
Carton and number of cartons in the shipment
Supplier's invoice number
Warehouse name
Supplier's assigned supplier number
Identification of H-E-B or its Designee as the buyer, identification of the seller, and a note of when and where the item was sold
A detailed description of the items
The quantity of items
The purchase price of each item
Itemization of all charges
Any rebates
Manufacturer name and address
For partial shipments, suppliers must note "Balance to Follow" or "Balance Cancelled" on the invoice.
Shipping and Deliveries
All products purchased from a supplier will be shipped to a designated ship point. The supplier is responsible for all shipping, storage, and related costs, as well as the risk of loss or damage until the product is transferred to H-E-B at the ship point. All products must be shipped on a "Ship to Arrive Date" and on a FIFO (First-In, First-Out) basis.
Time is of the essence with H-E-B deliveries, and suppliers must provide advance notice if a shipment will be late or subject to back order. H-E-B reserves the right to cancel any late shipments without liability. However, if H-E-B chooses to accept a late shipment, the supplier is responsible for any associated charges. The bill of lading must also contain specific information, including the PO number, carton details, invoice number, carrier name, and proper classification description for freight rating.
Related Reading: What is a Bill of Lading (BOL)?
Quality, Recalls, and Audits
H-E-B maintains a high standard for product quality. Products must be free from material defects and conform to all product specifications. They must also be "merchantable, safe, suitable and sufficient for [their] intended purpose," and comply with all applicable laws.
H-E-B has the right to inspect products before accepting them and can reject any products that do not conform to the terms, PO, or specifications. Rejected products will be returned at the supplier's expense, and if pickup is not arranged within seven days, they will be returned COD.
In the event of a product recall, whether by a government agency or by a determination from H-E-B or the supplier, the supplier is responsible for all costs and expenses. The supplier must cooperate fully with H-E-B during any recall or Corrective and Preventive Action, including providing at least 24 hours' notice and allowing H-E-B to direct the content and scope of the action.
H-E-B also reserves the right to conduct factory audits and inspections to ensure a safe, clean, healthy, and productive work environment. Factories must provide adequate medical facilities, fire exits, safety equipment, well-lit workstations, and clean restrooms. Suppliers who refuse an inspection or are found to have substandard practices that pose a risk to human health may have their POs cancelled immediately.
Navigating Cost Changes with H-E-B
H-E-B's Cost Change Policy is designed to deliver better products at better prices by evaluating each cost change and its potential impact on customers. To justify any proposed changes, suppliers are asked to provide as much detail as possible, including how they are mitigating costs on their end.
The process for all price changes must be submitted through the Cost Change Request Application within the Supplier Portal. The primary decision-maker for these changes is the Business Development Manager (BDM), unless the change affects multiple categories, in which case a more senior leader will be involved.
Timing and Inventory
Strict timelines are in place for submitting cost increases:
Domestic (Includes Mexico & Canada) Packaged products with UPC: 60 days before the proposed effective date.
Imported packaged products with UPC: 120 days before the proposed effective date.
Items on promotion must have their prices protected at the deal price until the promotion ends. For temporary price changes, the supplier must include an end date. H-E-B will buy in at its discretion on all price increases and promotions unless there is a prior written agreement.
For cost decreases, suppliers are required to pay floor stock protection on the net amount of the decline for inventory on hand at H-E-B's warehouses and stores on the effective date.
Compliance with FSMA 204(d) Requirements
To enhance food traceability and transparency, H-E-B requires its suppliers to be compliant with the Food Safety Modernization Act (FSMA) 204(d) regulations by January 2026. This rule establishes new record-keeping requirements for foods on the Food Traceability List (FTL).
H-E-B recommends that suppliers utilize the resources provided by GS1 to meet these new requirements. The first step for any supplier is to determine if their products are on the FTL.
Related Reading: Food Traceability, FSMA Ruling, and the Impact on Suppliers
Understanding H-E-B's New UPC Requirements
H-E-B is transitioning to the industry standard for 14-digit Global Trade Item Number (GTIN) case UPCs to address UPC quantity limitations. A GTIN is a unique, 14-digit number used to identify any item being traded. The GTIN consists of four main components:
Package Indicator: This single digit represents the type of package the UPC stands for.
Company Prefix: The unique prefix assigned to a company, which can be 5-7 digits long.
Item Reference: The item number, determined by the company.
Check Digit: A calculated digit based on the prior 13 numbers.
H-E-B is introducing a new company prefix for new items set up on or after August 1, 2023.
Current Company Prefix: 00-41220 (All items set up before August 1, 2023 using this prefix will stay in place).
New Company Prefix: 01-97870 (For items set up on or after August 1, 2023).
This change primarily impacts own-brand suppliers with new items. It's important to note that case UPCs using the old prefix (00-41220) will not change.
Related Reading: What are Walmart's GTIN Standards?
Guidelines for Pack One Items
For "pack one" items, where the case pack and unit pack are both a pack of one, the case and unit UPC can be the same. Examples of these items include large paper towel packs, diaper boxes, and bagged dog food.
The document provides a detailed guide on the package indicator setups for both the new and current company prefixes. For instance, a "Package Indicator" of 0 is for a point-of-sale UPC that scans at the register, while a 1 is for a case UPC for a point-of-sale item. A 5 indicates a "Shipper of a single private label own brand item."
If you are an own-brand supplier with new items, be sure to use the new company prefix (01-97870) for all new setups. If you have any questions, you can email supplier@supplier.heb.com.
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