What is a Routing Guide?
Routing guides are documents published by retailers that establish a set of rules and requirements for shipping products from suppliers to retail locations and customers. They hold these shippers responsible for everything from specific modes and carriers that need to be used, to rates and service requirements. Routing guides were created when large retail chains began to broaden their reach to more locations and increase the volume of products offered by using more vendors and fulfillment centers. In order to keep the uniformity of the packaging, labeling and shipping freight from dozens of different vendors, these guides were created.
Pretty much every big box retailer from Costco to Walmart to Home Depot have their own routing guides with very unique requirements, and the way they keep shippers from ignoring their specifications is the threat of chargebacks. Each retailer lays out penalty charges when routing instructions are not followed exactly by number and severity of offenses. At ITS distribution services, our expertise is in understanding and adhering to complex routing guides and regulations from every major retailer and vendor, so we can handle it for you, and you can focus on your business.
The Benefits of Routing Guides
Retailers use regulated routing guides for several reasons. These guides allow retail companies to:
- Improve vendor compliance
- Control a supplier inbound shipment
- Reduce excessive transportation costs
- Connect suppliers and customers
- Keep their branding consistent from each vendor
Additionally, using these guides is a vast time saver for large companies. When they have preferred vendors to fulfill and distribute orders, their supply chains run more effectively, and they obviously have a financial cushion if their vendors mess up.
As a shipper, a detailed routing guide can be beneficial to you, as well. This is especially true if retailers offer you flexibility and allow you to take advantage of your resources to provide efficient and effective fulfillment processes. Working with retailers who have clearly established policies and knowing these requirements can help you streamline your production process and leverage it to get more customers.
The Importance of an Inbound Vendor Routing Guide
Inbound routing guides are useful to 3PLs or shippers, allowing them to properly route shipments to the customers or retailers. When used properly, they can streamline supply chain operations, reduce costs, ensure shipments are done correctly and overall enhance partnerships. These guides are essential and can help prevent things like mislabeling, late shipments, high transportation costs and more. An inbound routing guide is also beneficial for you as a shipper. A detailed guide will include relevant information about dimensions, weight, description of products being shipped, whether pallets can be stacked, PO numbers, delivery address, shipping label location, and more. Having all this information is helpful, as it allows you to be efficient, and execute shipments correctly the first time, which can save you money.
Complex Routing Guides and Avoiding Chargebacks and Penalties
If you don’t work with routing guides much, it can be hard to understand how important routing guide compliance is and how extreme chargeback fees and penalties can be. Each vendor you ship to has its own requirements and specific way of doing things. If you ship to smaller companies, they might not be as strict, but this is not the case for most large vendors. One example of a common requirement on routing guides is sending the advanced shipping notice through an EDI portal to the vendor when the package is shipped. There is a limited window of time in which that can be done, and it is the most common reason for chargebacks. Additional chargebacks can occur when:
- The shipping label is in the wrong place on the package
- The packing slip is in the wrong place
- The wrong terminology is used
- SKUs are mixed
- Price is not on each item
- And more
Most vendors assess chargebacks on a per penalty basis, based on the type of offenses and how many times they have happened. Some vendors even reserve the right to reject an entire purchase order if the routing guide is not followed exactly. Additionally, routing guides are constantly changing and being updated, so it’s extremely important to keep on top of these changes. Knowing how to manage various routing guides and make sure that you are avoiding steep chargebacks is vital to your business’ success.
ITS Logistics Expertise with Routing Guides
At ITS Logistics, we know how difficult it can be to keep up with routing guides, especially when you are fulfilling orders for several different retailers who all have their own unique terms and conditions, such as specific instructions for fulfilling orders and shipping product, package labeling, and a preferred freight carrier or transportation provider. More importantly, we also know that violating a routing guide can cost you-and that’s why we make it our priority to understand the requirements of each of the retailers’ routing guides you work with to avoid any chargebacks on your behalf.
Our experts have vast knowledge and experience with all kinds of routing guides, and we pride ourselves on understanding the requirements and chargebacks associated with each one. As part of our customer onboarding process, we go through each vendor you are using and make sure that we know their routing guides from the inside-out-so you can avoid chargebacks and focus on your business.
Whether you’ve been working with vendors for years, or you’re brand new to the whole operation, we can help! We even have an in-house team that can set you up with an EDI system to streamline the process of following routing guides successfully.
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