Lifecycle of a Shipment: Supplier and Distributor Roles

In this article, learn about: 

• Item data setup and management 

• The lifecycle of a shipment through the distribution system 

• Differentiation of responsibilities between suppliers and distributors 

There is no better way to understand the inner workings of the supply chain than following a shipment's lifecycle, from manufacturing the product to the final sale to the customer. Throughout the process, there are many different touch points, each handled by one or more players involved: the supplier, distributor, retailer, or carrier.  

Each distributor will have routing guides and shipping windows that they expect suppliers and carriers to work within. These expectations will vary from distributor to distributor and may also vary based on the division of responsibilities. For example, a shipping window may be larger or smaller depending on whether the supplier or distributor manages inventory. 

Distribution Routing Guides and Shipping Windows 

A Routing Guide lays out the carrier and transportation expectations and requirements from the distributor. A routing guide will include every aspect of the transportation process, from packaging and palletizing requirements to scheduling deliveries to distribution centers. Additionally, a routing guide will also provide expectations should a supplier be required to transport their products to a DC themselves; namely, which carriers can/should be used, and timelines for delivery.  

Shipping Windows are simply the timeframe in which a delivery must arrive at a DC. Late deliveries will often require rescheduling or expedited delivery at the supplier’s expense.  

Lifecycle of a Shipment 

From receipt of a Purchase Order to final billing and sale to the customer, a shipment goes through many different stages between those points. Some areas will be handled by the supplier, others by a distributor, and others may be jointly handled by both.  

Item Data Setup and Management 

Before a PO can be initiated and products shipped, the necessary item data for the product must be in the distributor’s system. Typically, this process occurs during onboarding to ensure the supplier and distributor have the same product information. 

The supplier will handle the initial item data setup and getting it into the distributor’s systems. The distributor will then ensure that the item data complies with the distributor’s processes. For example, if the distributor utilizes EDI, then the item data must adhere to EDI terminology and processes.  

Some best practices for successful item data setup and management for suppliers are:  

• Regularly vet item data to ensure it is up to date and accurate across all retailers and distributors. 

• Regularly check item data to ensure that it complies with retailers and distributors. 

By regularly checking that item data is both accurate and compliant, suppliers can reduce the possibility of fines relating directly to incorrect item data.  

For example, if item data is incorrectly listed in the system, POs and subsequent documentation will likely be incorrect, leading to shortages and, ultimately, deductions.  

Purchase Order 

Once the supplier and distributor have all the necessary item data in the system, a Purchase Order (PO) initiates the process of getting the product into the customer's hands. 

Suppliers and distributors must ensure that they understand the PO process and include all necessary information on the PO. Ensuring the PO process is consistent and compliant will set the rest of the supply chain up for success.  

Most distributors and retailers will expect similar requirements for PO compliance. These requirements involve what should be included on the PO, such as:  

• PO number 

• Supplier number, name, address, contact information 

• Buyer number, name, address, contact information 

• Ship to and ship from addresses 

• Billing address 

• Date of order and date of delivery 

• Item details: product description, quantities, pricing 

• Shipping details and terms, such as prepaid or collect 

Labeling, Packaging, and Palletizing 

The product has been manufactured, the item data is set up with the distributor, the PO has been sent and received, and it is time to package the product in preparation for shipping.  

• Labels, which include barcodes, must be correctly placed on the outer packaging and be legible for easy scanability.  

• Packaging includes both inner and outer packaging: 

• Inner packaging is the packaging immediately surrounding the product itself and is generally expected to be shelf-ready. 

• Outer packaging surrounds and protects the inner packaging and product.  

Some products do not require outer packaging and simply ship in their inner packaging, while others do not require inner packaging. Regardless, the purpose of packaging is to protect the product while in transit.  

When the supplier is responsible for packaging the product for shipment, including inner and outer packaging, they are likely also responsible for palletizing. Both distributors and retailers will have requirements for how products must be packaged and labeled, to ensure that pallets are utilized to their full capacity and products stay safe.  

Suppliers must ensure that all packaging and palletizing comply with all requirements before handing off the product to the distributor for shipping to the retailer.  

Additionally, a strong packaging and palletizing compliance system will help streamline communication with the distributor. For example, a retailer may impose a fee on the supplier for damaged packaging or pallets, but the supplier knows that the damage did not happen before being loaded onto a distribution vehicle. The supplier should use this opportunity to assess the supplier-distributor relationship and communication, to ensure that further mistakes don’t happen.  

Related Reading: Sysco Packaging Guidelines: Artwork, Materials, and Compliance 

Carriers, Transportation, and Shipping 

The next step in a package's lifecycle involves the actual movement of the product to its destination. The distributor handles this portion of the process almost exclusively.   

Depending on how the supplier and distributor choose to work together, the supplier may ship the product during the first part of its journey to a Distribution Center, and the distributor will take over the shipment from there. Most of the time, distributors will utilize Less Than Truckload (LTL) shipping, combining multiple shipments into one truck. 

Even if a distributor manages the entire shipping process, suppliers must still be vigilant in ensuring that the product is ready to be shipped. For example, if Sysco receives a short shipment at one of its Redistribution Centers (RDC), the supplier must re-ship the product in full at their own expense.  

Distinction of Responsibilities Between Suppliers and Distributors 

The distinction between the responsibilities of the supplier versus the distributor can be laid out as follows. However, it is important to understand that there will always be exceptions, and some of these distinctions vary from distributor to distributor.