In this article, learn about:
How Kohl’s rollup affects suppliers
Deductions and remittances at Kohl’s
How to account for deductions in Kohl’s rollup process
Best practices for dealing with Kohl’s deduction rollup
Kohl’s utilizes deduction “rollups” as a means of offsetting overages and shortages.
In this article, we’ll be unpacking what this means for Kohl’s suppliers and recommending best practices for approaching this policy.
How Does Kohl’s Rollup Affect Suppliers?
These rollups happen at the POlevel as POs for a given DC will be combined together for their deductions to try to reconcile inventory and costs, potentially offsetting shortages and overages over a given period.
For example, if a DC receives a short shipment on a PO that they think may match an overage at a different DC on a different PO, they may rollup these together. At Amazon, they utilize “smart match” in a similar way to try to catch these before the standard deduction and dispute process gets too much underway.
Although this can be helpful for suppliers by saving them time on the disputing front, the rollup process does lose the DC on the deduction, which makes researching deductions a more manual process that requires working with the Kohl’s AP team.
Another side-effect of Kohl’s rollup is that suppliers generally get paid sooner rather than later. Rollup can also happen in tandem with cash discounts for early payment.
If a supplier has payment terms that are 2/10 net 30, then the supplier can expect to see a 2% discount on payments that are made within 10 days. These are usually decided together with the supplier at the supplier agreement/contract stage. Awareness of payment terms is important for saving time not disputing discounts as traditional deductions.
Before diving in to supplier best practices for Kohl’s rollups, let’s take a look at the general shape of deductions and remittances at Kohl’s.
Deductions and Remittances at Kohl’s
Like many retailers, Kohl’s has a few systems designed to track supplier performance. It is helpful to think of revenue loss for Kohl’s suppliers as belonging to two major categories: compliance deductions and AP deductions.
Kohl’s deductions rollup applies only to AP deductions. Their compliance policy functions as a separate entity from their AP deductions, with its own performance metrics, KPIs, and fining systems.
Related Reading: The Difference Between AP And AR Deductions
Compliance at Kohl’s
Kohl’s uses Traverse Systems as their compliance dispute management portal. Traverse has partnered with Kohl’s to develop a compliance program that holds suppliers accountable for:
ASN Accuracy
Shipping Documentation
Packaging and Labeling Requirements
Product Data Accuracy
Transportation Accuracy
And others
Kohl’s Deductions and Remittances
While compliance fines can be costly if issues are not addressed immediately, most Kohl’s suppliers will see bigger losses in their AP deductions. These deductions take the form of invoice remittances that are communicated to the supplier via EDI 820 documents.
These deductions are usually related to:
Overages, Shortages, and Damages (OSDs)
Pricing Discrepancies
Returns
Contractual Deductions
And others
By far the most costly form of unplanned and likely invalid deductions at Kohl’s and most retailers are OSDs, with shortages usually making up the largest margin.
When it comes to understanding Kohl’s deductions, having a reliable and thorough knowledge of the EDI platform or provider you use is essential. For each remittance line, it is important to know:
The deducted amount
The deduction adjustment number ID
PO number
Invoice number
Invoice date
Deduction date
Check number
Check date
This information is key to performing deduction validity checks and disputing invalid deductions.
Suppliers should request remit information in spreadsheet form from Kohl’s AP team and then use the AdjRefID from the corresponding EDI 820 document to understand the more granular types of deductions included in the rollup.
Kohl’s AP deductions can no longer be disputed after six months from the deduction date, and Kohl’s compliance deductions can no longer be disputed after 60 days from the deduction date.
Related Reading: Kohl’s Invoicing and AP Deductions Guide
How to Account for Deductions in Kohl’s Rollup Process
One of the benefits of Kohl's rollup is that occasionally Kohl’s will catch invalid deductions in the rollup period and remove the deduction before sending it out. For this reason, we recommend that Kohl’s suppliers wait 30 days from the deduction date to dispute shortage deductions.
This leaves Kohl’s suppliers with a narrower dispute window (30-60 days from the deduction date), which can make prioritizing disputing difficult. This is one of many reasons why we recommend using SupplyPike for disputing Kohl’s deductions. Automating disputing is a great way to make sure that nothing is slipping through the cracks.
Rollup at Kohl’s sometimes takes the form of deduction lumps for items with the same pricing as each other. In this case, it can be difficult to track deductions to items, making it trickier to perform validity checks and dispute accurately. Also, as mentioned above, the DC number gets lost in the rollup process, which makes proof documentation aggregation more important than ever when disputing Kohl’s shortages.
For this reason, there may be multiple PODs and BOLs on a deduction that has been “rolled up.”
Supplier Best Practices for Deduction Rollup at Kohl’s
Dealing with Kohl’s rollup effectively is connected to almost every other kind of major supply chain efficiency and best practice. The more information that can be clearly and effectively communicated to Kohl’s, the less likely it is that there will be rollup complications.
Furthermore, relative to the retail giants Walmart and Amazon, Kohl’s has more limited receiving and shipping capabilities. This places more onus on Kohl’s suppliers to make receiving as pain-free and simple as possible for the apparel retailer.
This can also make scheduling and routing difficult. The more issues suppliers have getting the items to Kohl’s, the more limited shelf time will be and the more likely items will be marked down.
In general, rollup can have an impact on these areas:
Kohl's finance and inventory systems could fall out of sync after they rollup.
What DCs and stores are expecting inventory-wise may be different from what they receive.
Inventory on hand and sales reporting could also be impacted.
Inventory and sales being impacted means that forecasting and replenishment could also be impacted.
Forecasting and replenishment being impacted means that new purchase orders Kohl's is sending could also be muddied.
There are three practical areas that suppliers can shore up to make Kohl’s rollups less complicated and easier to deal with:
1. Item and Shipping Data Accuracy
Careful item data accuracy will help suppliers avoid all kinds of fines, but it will help particularly with rollups at Kohl’s by keeping rollup deductions separated by item or item type.
Furthermore, communicating clearly with Kohl’s about the nature of the packaging and shipping will help. Let Kohl’s know:
What the item’s floor presentation is (i.e., hanging, shelf, etc.)
If the item is shipping in a polybag
How many boxes they should expect to receive
Case pack information (i.e., are there any mixed case packs?)
Shipment contents in the form of clear and scannable labels and barcodes
Shipping in assortments can be beneficial for suppliers trying to avoid rollup complications as well. Assortments that will set the floor will have less labeling and boxes, and replenishment assortments, like wire PDQs, will also put less strain on Kohl’s receiving.
Wire PDQs are set store assortments that go directly on the store floor. Then they can be replenished without corrugate shipping/boxing. Corrugate PDQs are items packed in cardboard displays or boxes that are later disposed. Not only do these create more waste, they also create more receiving for Kohl’s, leaving more opportunity for deductions and errors.
Related Reading: What Is PDQ (Pretty Darn Quick)?
2. Request Kohl’s PO Categorization by Item/Item Type
Given that rollup deductions are sometimes put together for items of the same price, getting Kohl’s POs to be based on item or item type is likely to reduce rollup complications and costs.
This process is less formalized than others, but if it can be done, it may work wonders for suppliers with items and item types that have similar pricing ranges. While segregating POs by item type may increase shipping costs for labelling and warehouse fulfillment, it may be worth the cost in the long run if it saves dollars on the back end. Item-segregated POs may also provide more visibility.
Suppliers can also consider adjusting costs by item or item type themselves to try to proactively sort Kohl’s rollup by item. If suppliers have pricing flexibility, that can work to segregate their rollups.
3. EDI and ASN Accuracy
As with all areas of potential revenue loss, EDI and ASN accuracy are key.
Connecting EDI with Kohl’s can be a time-consuming process starting out. It can also take a while for suppliers to get a sample label approved. Starting these processes as early as possible will help down the road.
When it comes to ASN accuracy it’s important to input all of the information correctly and to take advantage of as many data inputs as possible. Watch out for saved data inputs that are not being updated for each shipment.
Matching the ASN exactly back to the item shipment details is crucial as well. For example, shipping pallet or floor-loaded needs to be correctly completed on the ASN to avoid receiving errors.
Related Reading: EDI 856: Advance Ship Notice/Manifest
Let SupplyPike Roll it Up!
Kohl’s rollup is tricky. Partnering with SupplyPike reduces guesswork and helps put time back in your day, and money back in your wallet.