Packaging compliance means meeting the specific standards each retailer sets for how products are labeled, packaged, and shipped. Although these guidelines may seem burdensome at times, their purpose is to facilitate a sustainable and efficient supply chain.
The difficulty for suppliers frequently arises when an error results in a delay or chargeback. Inaccurately labeled cartons or packaging that violates sustainability standards can cause additional steps in distribution centers and, eventually, supplier fines. Even though those fines can be a bit frustrating, they accomplish two goals: they acknowledge mistakes and stop them from spreading to millions of products and thousands of stores.
The bigger picture is that packaging compliance can benefit both parties. The retailer gains efficiencies and consistency, while the supplier can continue to build stronger relationships.
Retailer Specific Compliance
Each Retailer typically has their own set of standards/requirements for labeling, packaging, shipping, etc.
These requirements often arise from a desire for:
Operational efficiency: A smooth process of logistics, inventory management, and shelf stocking.
Brand alignment: Consistency in how a brand displays and presents the product for visibility.
Legal compliance: Industry or government requirements to protect the product for consumer safety.
Sustainability: Eco-friendly packaging requirements while reducing waste.
Industry Regulations for Packaging
The Fair Packaging and Labeling Act of 1966 (FPLA) was a turning point, which mandated that consumer goods carry, “labels that disclose the net contents, identity of commodity, and name and place of the business of the product’s manufacturer, packer, or distributor.”
Following a spike in child poisonings a few years later, the Poison Prevention Packaging Act of 1970 (PPPA) was passed. According to a subsequent report by the Consumer Product Safety Commission, since the law's implementation in the first ten years, the number of poisoning deaths among children under the age of five has dropped by almost 40%.
Because of sustainability, regulations have changed in recent years. The Plastic Pollution Prevention and Packaging Producer Responsibility Act, California Senate Bill 54 of 2022, requires that all packaging sold in California be recyclable or compostable by 2032.
Compliance extends even further on a global level. Packaging strategies worldwide are influenced by the EU Packaging and Packaging Waste Directive (94/62/EC), which establishes recycling and minimization standards for 27 nations.
Even if retailers do not call out the above regulations directly, the suppliers are still accountable and could potentially be fined if not compliant, experience product recalls, or even face lawsuits.
Related Reading: Food Traceability, FSMA Ruling, and the Impact on Suppliers
Supplier Risks of Packaging Non-Compliance
Even with strong systems in place, mistakes happen, and when they do, the costs add up quickly. Non-compliant packaging may lead to:
Chargebacks or deductions, reducing supplier margins.
Shipment delays or rejections, creating extra freight and storage costs.
Extra labor in warehouses or stores, when associates have to relabel or repackage goods.
Customer dissatisfaction, if packaging errors affect the shopping experience.
For example, a supplier shipping beauty products to multiple retailers might accidently place a label on the wrong product. This error would lead to multiple different deduction types, compliance scorecards would be impacted, and more work would be created, slowing down processes. Each misstep not only impacts the bottom line but also strains the supplier retailer relationship.
By contrast, suppliers who prioritize compliance upfront often find their operations run more predictably, shipments move faster, and retailer satisfaction stays higher.
Retailer Specific Packaging Standards
Walmart
Walmart imposes some of the most comprehensive packaging standards in retail distribution, using the Supplier Quality Excellence Program (SQEP) to monitor performance. The SQEP dashboard captures ASN Compliance, PO Line Accuracy, Case Compliance, Pallet Compliance, Packaging Compliance, and Load Compliance.
Packaging Compliance
Even small packaging mistakes can generate deductions on a supplier’s SQEP report. A shipment with crushed cartons, labels that are difficult to read, or pallets that don’t hold up under pressure will almost always be flagged.
Walmart’s Packaging Compliance defects include:
Missing Bottom Tray or Lid
Poor Perforations
Insufficient Fragile Item Packaging
Selling Units Not Secured
Loose or Metal Scraps
Packaging Easily Crushed
Overpacked/ Bulging Case
Carton Requirements and Pallet Requirements
Shipments need to be built on a 48” x 40” pallet, secured and packed tightly with zero overhang, and stretch wrapped to withstand handling through Walmart’s high concentration distribution centers. Cartons must have durability standards (usually passes 200 lb burst strength or 32 ECT edge crush test) to endure conveyor systems. Cartons also need to be sized to minimize wasted space; cartons must not be overpacked or damaged, or it will be considered non-compliant.
Walmart’s Pallet defects include:
Pallet Labeling: Mixed Dates Labeling Missing/ Incorrect
Pallet Securement: Bagged Items Missing Pallet Barrier
Pallet Quality: Non-Compliant Pallet Size
Barcode and Labeling Requirements
Walmart mandates that cartons are properly labeled with scannable labels including item numbers, descriptions, and barcodes. Any confusion with inaccurate or misplaced labels leads to increased processing times at DCs because it disables an automated system to effectively route the freight. SQEP will also track the accuracy of the purchase order label, which means mixing multiple POs or SKUs in a carton can lead to deductions.
Walmart’s Barcode Defects include:
Barcode Not on Two Sides
VNPK GTIN Does Not Match Item Setup
Walmart’s Label Compliance Defects include:
Carton Marking Not On Two Sides
Missing Required Product Date
Incorrect STOP Label (Incorrect Master Pack Labeling)
Missing STOP Label (Missing Master Pack Labeling)
Dollar General
Dollar General has clear expectations when it comes to packaging, and those details matter when moving products through its 17 distribution centers. Pallets must follow strict specs—48” x 40”, no higher than 68 inches, and no heavier than 2,500 pounds. Cartons also have size limits and need to be sturdy enough to hold up on conveyor systems.
Labels are a key part of compliance too. For example, cartons need to identify the style or description of what’s inside as well as the appropriate quantity, as in “72” or “72/12” if units packed in break packs. Additionally, some items may require additional labels, such as the marking “ASSORTMENT,” an expiration date, or a bold “FRAGILE” for the crate. As a result, actions that may seem harmless are now flagged as non-compliance, such as gluing cartons to one another or carrying multiple POs on one pallet, as they cause potential complications once they arrive at the DC.
Related Reading: Dollar General Packaging & Marking Guidelines: Avoid Chargebacks and Delays
How to Avoid Packaging Fines and Chargebacks
Packaging fines may feel like a frustrating cost of doing business, but most can be prevented with the right systems in place. While it is easier said than done, below are a few practical steps that can be included when building compliance into processes:
Checking retailer guidelines regularly, especially before launching a new item or any packaging change.
Standardizing tasks internally e.g., having production/logistics/quality teams know what compliance looks like.
Auditing shipments before they leave the dock; catching issues/issues early, pre ships.
Designing with sustainability; this allows suppliers to plan the waste process and comply as well with a lot of the retailer sustainability initiatives.
Staying ahead of the changing regulations or retailer scorecards; it seems that either can change any year.
Suppliers also improve compliance processes with good technology. Barcoding systems, automated labeling software, and compliance dashboards can minimize human error and give suppliers a live view of performance.
