If it’s not on your radar already, you’ll want to watch how vendor chargebacks impact your supply chain spend.

WalmartTarget and other retailers have been putting together plans to impose tighter controls on suppliers.

It’s part of a growing trend and it underscores a very, very significant business reality: if your company doesn’t have an effective program for handling chargebacks, you’re going to lose a lot of money.

Ordinary chargeback monitoring programs look at why the chargeback occurred, what carrier was used, and the amount of time a customer spends unloading, among other things.

Great chargeback programs can identify the root cause for the chargeback. For example, if your customer is failing to unload the trucks in a timely manner, or arbitrarily delaying the transit times by failing to provide appointment times, why should your company be penalized for their inefficiencies and ineptitude?

Target Tells Suppliers to Move Faster or Pay-Up
Target Corp’s top executives are on a drive to improve the company’s supply chain operations. According to a letter obtained by Reuters, the retailer is pushing its vendors to shorten delivery times or face fines.

Why Pressure Suppliers?
The pressure placed on suppliers is part of CIO Mike McNamara and CFO John Mulligan’s plan to better equip their stores and streamline Target’s e-commerce division. Along with new top executives, Target has hired Amazon’s former logistics and supply chain executive, Arthur Valdez. Though Valdez will be an invaluable addition to any company trying to perfect its supply chain, he is now being sued by Amazon for breaching his non-compete agreement.

The reason for pressuring suppliers for faster deliveries is to avoid empty shelves in stores. (Like the disaster Target faced when its Lily Pulitzer flew off the shelf within days). And to better serve its online shoppers. (See also: Wal-Mart vs. Target: Which One Is A Bigger Threat To Amazon?)

Creating a better supply chain is also mandatory as Target expands into perishable products like fresh food: one of the key areas that the retailer is focusing on.

The upcoming delivery changes were discussed by the Target management with nearly 200 vendors and suppliers of the chain. The suppliers have between 60 and 90 days to comply with the new regulations and Target promises to be flexible initially. Once the new rules are fully implemented, Target hopes that its supply chain will rival that of Walmart and Amazon’s, and help it build its competitive advantage and increase market share.

Source: Investopedia

Related: 11 Ways To Reduce Chargebacks in Your Supply Chain
11 Ways To Reduce Chargebacks in Your Supply Chain