Part Three – Shipping the Order
Congratulations, you’ve received your first order from a new big-box retailer. In part one and two of this series, I described how to bring an order into your system, pick it, and label the product properly. With all of that completed correctly, we move onto the final steps of shipping an order to the big-box retailer.
Specifically, this article will touch on whether to ship via small package or on a pallet, common customer shipping requirements, advance ship notices (ASNs), and paperwork you’ll want to keep for future reference. As with the previous two parts, this article is no substitution for your customer’s routing guide, which is the ultimate authority to any questions you have. Nevertheless, the topics below will help guide you and your team through the process and avoid many costly mistakes.
To Palletize or Not to Palletize?
One of the first major decisions you need to make when shipping your order is whether to ship via a small package carrier (FedEx or UPS), or on a pallet. If the order is large, then palletizing it is the obvious choice. However, when the order is small, that decision becomes less clear.
If the customer is paying for freight, then they likely have firm guidelines about when orders should go small package or palletized. Consult the customer’s routing guide; the rules vary widely for each customer. For example, if the order is over fifteen cases, or weighs more than 150 lbs. total, then several retailers require the order to be shipped on a pallet. However, others put the threshold at 20 or 25 cases, and as much as 300 lbs.
If you are paying freight, then the customer’s case count or weight limit often does not apply, and you can ship whichever method is cheapest or most reliable. However, several big-box stores will refuse shipments over a certain weight, even if you are paying the freight bill.
Small Package Shipping Considerations
When using small package carriers to ship, usually FedEx or UPS, you’ll want to consider several important points. First is the actual shipping label. Because small package shipments do not require a formal bill of lading, many retailers require the shipping label and packing list to include specific information. For example, the customer’s PO#, department, or order type may need to be printed into the specified fields on the label. Even if not required, entering them can help avoid mistakes at the customer’s distribution center (DC), so I recommend it whenever possible.
Another consideration is whether to band the boxes together or not. Often, banding small boxes together can save money with small carriers because they round up the package weight. Thus, two packages that weigh 4.1 lbs. each would cost the same as two 5 lbs. packages. Bound together though, the bill would charge for one 9 lb. box. While this method can sometimes save money, there are many retailers that will fine vendors that send them boxes bound together. Check with your customer, and run price calculations, to see if this method will indeed save you money, and if your customer will accept banded boxes.
Pallet Shipping Considerations
“A” Good Base
If your order is big enough, then you then have to consider the requirements for shipping on a pallet. To begin with, you’ll need a high-quality pallet to stack the product on. Most large retailers require #1 or Grade A pallets. Essentially, these are pallets in very good condition that have not experienced any damage and have all their original parts in strong, sturdy condition. Any pallets that have visible damage or missing parts are not Grade A and should not be sent to customers that require them. Some retailers accept two-way pallets (pallets that can only be picked up on the short ends, as pictured), but many require four-way pallets.
Stacking the Product – Pallet Height Limits
Once you’ve found a good pallet that will meet the customer’s requirements, stack the product on the pallet to evenly distribute the weight and support the product. Most retailers do not allow any overhang, so be careful to stack everything within the 40 x 48 inch space. As the product stacks up, you’ll want to consider pallet height requirements. Most large retailers limit how high pallets can be in order to maximize their DC’s racking space. Some retailers will publish this limit in their vendor guide, but often you must call the DC and ask what their limit is. This varies widely by retailer. The lowest I’ve seen is 55 inches (60 inches including the 5-inch pallet). Some allow as high as 96 inches. The most difficult customers are the few who have different requirements for each DC. CVS is an example of this. My team calls each DC to get a pallet-height limit, which sometimes changes. We could ship shorter pallets to all the DCs, which is what we often do, but sometimes stacking the pallet a bit higher can save us a significant amount in freight costs.
Once the pallet is built, be sure to securely shrink wrap it to protect the product while in transit. If the product is light, secure the product very well to the pallet with several layers of shrink wrap. This will prevent it from coming off the pallet when it is moved.
Some retailers require black shrink wrap, especially if the product is a high-value item. Black shrink wrap hides the product from those moving it, which can reduce theft or other problems.
Advance Ship Notices (ASNs)
As discussed in part 1, most large retailers communicate with vendors via EDI (Electronic Data Interchange). An increasing number of big-box stores are requiring vendors to send advance ship notices (ASNs) when they ship orders. An ASN is an EDI document (EDI document number 856) that tells the customer how each order was shipped. More than just a tracking number, ASNs detail the carrier, tracking information, and ship date, as well as a detailed breakdown of how the order was packaged. Vendors usually require special ASN labels that show a serial shipping container code (SSCC-18) that is 18 digits long. These codes are unique to each package or pallet sent to a customer, and the customer’s receiving department can know exactly what is contained in the pallet or package by scanning the 18-digit barcode. One of the key benefits of ASNs is that they easily communicate such detailed information that they reduce the work load on the receiving end, as well as decrease opportunities for error. The label shown here is an example of an ASN label with the 18-digit barcode at the bottom. If your customer requires an ASN label, it will have very detailed requirements, which should further explain what you would need to put on the label. Additionally, many retailers recognize the limits on small suppliers, and many offer a free, web-based ASN system that allows you to print labels from the vendor’s website.
Scheduling the Shipment and Delivery
If you’ve submitted routing for the order (as discussed in part 1), then you will likely receive instruction on which carrier to use. However, if you must choose your own carrier, you may want to check if the customer has any preferred carriers. Many have a handful of favorite carriers, which reduces congestion at their receiving docks and helps avoid errors from unfamiliar shipping companies. Some retailers will not accept shipments from carriers not on their approved list. Others will grant special leniencies if you use their preferred carriers. For example, if a shipment leaves your warehouse on time with a customer’s preferred carrier but still arrives late at the destination DC, some vendors will not issue a fine. Be sure to note which freight carriers to use and to implement a process that ensures only those carriers are used. Even if preferred carriers are slightly more expensive, they are often cheaper overall when considering the potential fines or issues with a problem shipment.
Another requirement for many retailers is a delivery appointment. Usually, the trucking company handles the delivery appointment, often coordinating the delivery a day or two in advance or arrival. However, some retailers require you to call and schedule the delivery before you even ship the product. In this case, be sure to communicate clearly with the trucking company about the scheduled appointment.
Signed, Sealed, Delivered
Packing Lists and Bills of Lading
With the order correctly labeled and packaged, you’re ready to hand over the product to the freight company. Your job is almost done if you’re using a small package carrier, but you still have a few more important steps ahead if you are shipping a palletized load, most involving paperwork. The packing list should go in a marked pouch on the lead carton so that the receiver can quickly find it. In addition, many retailers will require you to put specific information on the packing list and bill of lading. Be sure to follow all these requirements to avoid chargebacks and fines.
A Foolproof Paper Trail
A common problem when shipping to large retailers is loss or damage of product when they receive it. Sometimes the product really is lost in transit, but other times the receiver may miscount your product when receiving it. When this happens, the customer will usually take a deduction from your invoice or fine you through a chargeback for the product that they did not receive. You can still obtain the money from these deductions or chargebacks if you have the proper paperwork, signatures, and information. Specifically, place a seal on the trailer and record the seal number, and instruct the driver to count your product and sign accordingly on each bill of lading. If you are having frequent problems, take detailed pictures of your loads when they leave for additional proof that you shipped the order complete. Recording all this information will help you easily dispute chargebacks or file freight claims with carriers. If you have all your paperwork in order, then in most situations you will likely receive compensation from either the customer or carrier.
Tracking the Order
The final step in the process is tracking your order and ensuring delivery. Tracking orders helps to find delays, which can often be resolved quickly by calling the carrier. Most retailers are much happier when you call and inform them that the carrier will be a day late, but that you have resolved the issue, than if they have to call you two weeks after the product should have arrived asking where it is. Once the product has delivered, print and file a copy of the proof of delivery (POD). Sometimes large retailers will fine you for shipments that arrived many months ago. To prove that you fulfilled the order, you will often need a POD. However, many carriers delete and purge their records after 9 to 12 months, so without a printed copy, you may never be able to prove delivery. Although most PODs will just sit in a file, the few that you do need will often justify the cost of tracking each shipment to your larger customers.
Shipping to big-box retailers can require a lot of effort and staff. This three-part series has given an overview of how to receive an order into your system, prepare and label the order, and ship it to the destination. Always keep in mind that the goal is to move your product efficiently through your customers’ supply chains and into consumers’ homes. Most of the customer requirements have this same goal in mind – even if they sometimes feel like hoops to jump through. You should consider adding to your standard fulfillment process anything that reduces opportunities for error, improves efficiency and accuracy, or helps your customer’s team correctly receive and process your product. By collaborating, sometimes even visiting, with your customer’s receiving team, you may come up with additional ideas on how to better move your product through the supply chain.
What experiences do you have with shipping to big-box retailers? What additional questions do you have? Although my team has shipped to several dozen large customers, we also are always looking for advice and opportunities to improve.
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