Target’s recently updated Compliance Policy explains all that suppliers need to know to remain compliant with Target’s shipping standards. Here, we want to give Target suppliers a sense of which compliance defects are most common.
We aggregated the data of over 160 Target Vendors to analyze compliance performance across a wide variety of departments. We are excited to be able to release this exclusive content to our readers. Through this we hope to empower suppliers with a better sense of Target’s goals and how to reach them.
“Fines,” “Deductions,” and “Defects”
The language of deductions at retail suppliers is not uniform. There is no standard across retailers for describing the many ways in which suppliers can lose revenue in the process of getting goods on shelves.
In Walmart’s documentation, a “deduction” signifies an AP deduction, and a “chargeback” an AR fine. They distinguish between “deductions” and “fines” along those lines. Most other major retailers use these terms interchangeably to describe the general revenue loss process for retailers.
At Target, however, “compliance defects” could refer to fines, deductions, or chargebacks synonymously. And while Target doesn’t use the acronym OTIF (On Time In Full), some may use OTFR (On Time Fill Rate). Throughout this article and most of our Target content, we’ll simply say Compliance to mean anything Target and On Time or Fill Rate related.
Compliance Type Fine Amounts by COGS
Target breaks down their compliance fines into four main types. For each major type of compliance defect at Target, there is a metric for calculating the total fine.
Each of these four major compliance types are comprised of many different “defect descriptions.” These are basically broken down by whether shipments are on time, in full, communicated clearly to Target via EDI, and if the shipment was prepaid or collect.
As is the case with compliance issues at other retailers, these defects are sometimes related to issues that could result in multiple deductions. A shipment that doesn’t meet FR standards, could be hit with both a compliance fine at 5% of COGs as well as a regular shortage deduction (A030).
Compliance Fine Defects & Dispute Documentation
P.O. Fill Rate-Revised
- Description: Suppliers need to ship according to the revised PO quantity (communicated in the EDI 860).
- Relevant Shipment Method: both Collect and Prepaid
- Recommended Documents for Disputing:
- EDI 810: Invoice
- EDI 850: Purchase Order
- EDI 860: Purchase Order Change Request
- EDI 856: Advance Ship Notice
- BOL or POD, depending on Collect or Prepaid
P.O. Shipped Late
- Description: Late shipment; oftentimes this means that the shipment arrived before the ASN or that there has been a different problem with Target reading the ASN.
- Relevant Shipment Method: both Collect and Prepaid
- Recommended Documents for Disputing:
- EDI 810: Invoice
- EDI 850: Purchase Order
- EDI 824: Application Advice (if applicable)
- EDI 856: Advance Ship Notice
- EDI 997: Functional Acknowledgment (of the ASN)
- BOL or POD, depending on Collect or Prepaid
ASN Missing
- Description: ASN missing, perhaps ASN was never sent or sent after the shipment arrived at Target, or there was a problem reading the ASN.
- Relevant Shipment Method: both Collect and Prepaid
- Recommended Documents for Disputing:
- EDI 824: Application Advice (if applicable)
- EDI 856: Advance Ship Notice
- EDI 997: Functional Acknowledgment (of the ASN)
- This is key for disputing.
P.O. Shipped Early
- Description: Early shipment; similarly, might be a miscommunication about arrive-by date.
- Relevant Shipment Method: both Collect and Prepaid
- Recommended Documents for Disputing:
- EDI 810: Invoice
- EDI 856: Advance Ship Notice
- EDI 997: Functional Acknowledgment (of the ASN)
- The timing of the acknowledgement relative to the arrival of the shipment will be key.
ASN Late
- Description: If the ASN arrives at Target after the shipment, it is considered late.
- Relevant Shipment Method: both Collect and Prepaid
- Recommended Documents for Disputing:
- EDI 856: Advance Ship Notice
- EDI 997: Functional Acknowledgment (of the ASN)
- The timing of the acknowledgement relative to the arrival of the shipment will be key.
P.O. Fill Rate-Revised-IPC
- Description: Same as P.O. Fill Rate-Revised, but with the new PO format (IPC-Inventory Planning and Control).
- Relevant Shipment Method: both Collect and Prepaid
- Recommended Documents for Disputing:
- EDI 810: Invoice
- EDI 850: Purchase Order
- EDI 860: Purchase Order Change Request
- EDI 856: Advance Ship Notice
- BOL or POD, depending on Collect or Prepaid
On Time Ship (S_C) Late Cons
- Description: For Collect shipments, a consolidated shipment arrives late.
- Relevant Shipment Method: Collect
- Recommended Documents for Disputing:
- EDI 810: Invoice
- EDI 856: Advance Ship Notice
- EDI 997: Functional Acknowledgment (of the ASN)
- POD
On Time Arrival (STA) Early LTL
- Description: For Prepaid shipments, a less than truckload shipment arrives early.
- Relevant Shipment Method: Prepaid
- Recommended Documents for Disputing:
- EDI 810: Invoice
- EDI 856: Advance Ship Notice
- EDI 997: Functional Acknowledgment (of the ASN)
- BOL &/or any other communication with relevant 3PL
On Time Arrival (STA) Late LTL
- Description: For Prepaid shipments, a less than truckload shipment arrives late.
- Relevant Shipment Method: Prepaid
- Recommended Documents for Disputing:
- EDI 810: Invoice
- EDI 856: Advance Ship Notice
- EDI 997: Functional Acknowledgment (of the ASN)
- BOL &/or any other communication with relevant 3PL
On Time Ship (S_C) Late LTL
- Description: For Collect shipments, a less than truckload shipment arrives late.
- Relevant Shipment Method: Collect
- Recommended Documents for Disputing:
- EDI 810: Invoice
- EDI 856: Advance Ship Notice
- EDI 997: Functional Acknowledgment (of the ASN)
- POD
On Time Ship (S_C) Early Cons
- Description: For Collect shipments, a consolidated shipment arrives early.
- Relevant Shipment Method: Collect
- Recommended Documents for Disputing:
- EDI 810: Invoice
- EDI 856: Advance Ship Notice
- EDI 997: Functional Acknowledgment (of the ASN)
- POD
On Time Arrival (STA) Late Con
- Description: For Prepaid shipments, a consolidated shipment arrives late.
- Relevant Shipment Method: Prepaid
- Recommended Documents for Disputing:
- EDI 810: Invoice
- EDI 856: Advance Ship Notice
- EDI 997: Functional Acknowledgment (of the ASN)
- BOL &/or any other communication with relevant 3PL
On Time Arrival (STA) Early TL
- Description: For Prepaid shipments, a truckload shipment arrives early.
- Relevant Shipment Method: Prepaid
- Recommended Documents for Disputing:
- EDI 810: Invoice
- EDI 856: Advance Ship Notice
- EDI 997: Functional Acknowledgment (of the ASN)
- BOL &/or any other communication with relevant 3PL
On Time Arrival (STA) Early Con
- Description: For Prepaid shipments, a consolidated shipment arrives early.
- Relevant Shipment Method: Prepaid
- Recommended Documents for Disputing:
- EDI 810: Invoice
- EDI 856: Advance Ship Notice
- EDI 997: Functional Acknowledgment (of the ASN)
- BOL &/or any other communication with relevant 3PL
FR Reliability Program
- Description: Fill Rate Reliability Program; likely a compliance program designed to disincentivize shortages in another form.
- Relevant Shipment Method: both Collect and Prepaid
- Recommended Documents for Disputing:
- EDI 850: Purchase Order
- EDI 860: Purchase Order Change Request
- EDI 856: Advance Ship Notice
- EDI 997: Functional Acknowledgment (of the ASN)
- BOL or POD, depending on Collect or Prepaid
On Time Ship (S_C) Early TL
- Description: For Collect shipments, a truckload shipment arrives early.
- Relevant Shipment Method: Collect
- Recommended Documents for Disputing:
- EDI 810: Invoice
- EDI 856: Advance Ship Notice
- EDI 997: Functional Acknowledgment (of the ASN)
- POD
ASN Not in a Status
- Description: Most likely an issue with ASN viewability on Target’s end; possibly an issue with EDI provider or transmission.
- Relevant Shipment Method: both Collect and Prepaid
- Recommended Documents for Disputing:
- EDI 856: Advance Ship Notice
- EDI 997: Functional Acknowledgment (of the ASN)
- All that should need to be proved is the readability of the ASN.