Code 3: Promo cost difference (List Cost)
What is Deduction Code 3?
A deduction of the difference between the unit price of what was billed to Kroger vs. what Kroger expected to pay per unit.
How to Prevent Valid Code 3's
If Kroger sends a Purchase Order with the wrong unit cost of an item, the supplier should reject the PO, otherwise, if the order is accepted and fulfilled, then Kroger will expect to pay that amount on the PO, even if it's incorrect.
Note that Kroger's payment system will pay the lower amount between what was on the Purchase Order or the invoice.
This deduction can also happen around the time of a cost change of a particular item(s). Ensure that cost change proposals are shared via written notice and finalized via an accepted EDI transaction. Written notice of cost changes must be provided to Kroger in advance of the effective date of the change according to the following timelines:
General Merchandise : 90 days prior to effective date
Health and Beauty Care Products : 60 days prior to effective date
All Other Items : 30 days prior to effective date
How to Dispute Invalid Code 3's
Recommended Claim Type: LC - List Cost
Recommended Backup Documentation
Approval from the Category Manager of the repayment of the deduction
Approval from the Director of the repayment of the deduction
To dispute invalid code 3's, Kroger states that you must include approval emails from both the Category Manager and Director at Kroger. Your sales team should be able to reach out to their Kroger Category Management group to start this request.
You may have success if you can at least get approval from the Director in your Category Management Group.
In your request to the Director or Category Manager, ask for an approval of repayment for the specific PO number's deduction. Kroger states that direction from the Kroger personnel must be clear, such as "Approval to pay" or "proceed with payment".
It is best to attach the entire email approval to ensure that the Kroger personnel's full names and roles are included.
Written by The SupplyPike Team
About The SupplyPike Team
SupplyPike builds software to help retail suppliers fight deductions, meet compliance standards, and dig down to root cause issues in their supply chain.Read More