May 17, 2018

How to Stop Inaccurate ASNs from Stealing Sales and Eating Profits

Helpful Steps for Developing Programs That Minimize the Negative Impact of ASN Carton Content Errors

In a previous article titled The Impact of Inaccurate Carton Contents: How to Stop Inaccurate ASNs from Stealing Sales with Out-of-Stocks and Eating Profits with Excessive Safety Stock, I made a case for the value of Advanced Ship Notices (ASNs) to the extended retail supply chain and the hazards of not applying best practices for leveraging ASNs. The biggest take-aways from the article was that there is reliable data to support the notion that an average of 8% of cartons contain content errors and those errors are broken down according to the table below, and retailers must employ practices to minimize the negative impacts of these errors:

Harris Says... Regardless of the audit method, intelligent auditing offers the most efficient use of audit resources by targeting those vendors that are most likely to ship cartons whose actual contents does not match the ASN carton contents. What do you say? Click here to send us your comments

In the article I mentioned above, I referenced an Auburn University study on ASN carton content accuracy and a compelling video that explain the inventory and sales impact of blind receiving of inaccurate carton contents. We can put things into perspective by drawing from yet another Auburn University study on carton content errors:

1,000,000 cartons x 5.8% errors = 58,000 inaccurate cartons x $100 per cartons = $5.8 million impact.

Cross-docking is a common receiving activity that benefits from ASNs. Cross-docking is the practice of moving merchandise from the receiving dock directly to the shipping dock with minimal handling and minimal warehousing.

Retailers cross-dock to:

• Speed products to their final destination
• Reduce supply chain costs
• Lower the cost of inventory storage
• Reduce transportation costs.

Herein lies the rub: cross-docking creates a natural environment for blind-receiving of ASNs because the cross-docked cartons tend to bypass content auditing. In order to optimize efficiency and speed, retailers often blindly receive ASN carton contents. They scan the GS1-128 label on the outside of the carton, book the contents as inventory, based on the scan, and pay invoices based on the same ASN data.

Retailers can “trust, but verify” ASN carton contents via different methods:

• Integrated into the receiving process on the dock
• Using inbound sortation to divert cartons to an audit area
• Random auditing on dock or in value-added service area
• Manual process to identify and audit cartons

Regardless of the audit method, intelligent auditing offers the most efficient use of audit resources by targeting those vendors that are most likely to ship cartons whose actual contents does not match the ASN carton contents. Vendor classification, whereby vendors are grouped by performance levels, is an excellent method to inform targeted audit programs.

Implementing carton content audits, intelligent auditing, or vendor classification does not have to be as intimidating as they sound. Below are steps that are helpful for developing programs that minimize the negative impact of ASN carton content errors:

• Review your processes and chargebacks to identify areas of opportunity
• Utilize a simple root cause analysis (RCA) to ascertain causes of problem areas
• Engage your EDI provider or IT organization for EDI technical problems
• Work with trading partners to ensure that effective practices are in place to benefit all extended supply chain stakeholders
• Hire an engineer or consultant (or find a local college with a Supply Chain discipline for under-graduates looking for real-world projects) to review receiving, processing, and shipping procedures.  NOTE: Many problems can be solved by adopting basic, engineered processes and may not necessarily rely on technology purchases.
• Layer in technology to support a program only AFTER engineered processes have been implemented.

Blind receiving of inaccurate ASN carton contents creates a variety of inventory problems that lead to stock-outs, lost sales, and excess inventory. Omni-channel, or endless aisle, programs cannot be effective if inventories are not accurate. Buy online and pick up in-store (BOPIS) programs will not only suffer, but can damage the retailer’s brand if inaccurate inventories create bad customer experiences. Therefore, it is essential that retailer’s ensure accurate inventories in all fulfillment locations by implementing efficient and accurate ASN carton auditing programs.

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