In Heaven, the Police are British, the Chefs are French, the Mechanics are German, the Lovers Italian and it’s all organized by the Swiss.  And, there is no Vendor Correspondence!

Millions of Payments, Thousands of Discrepancies

For any retail A/P shop, vendor correspondence is a necessary evil.  Even in this age of continuous improvement and low tolerances for error, a small percentage of missed DSD receipts, case pack errors, pricing changes and other anomalies will result in large numbers of vendor disputes or questions that generate correspondence.  Over time, as procure to pay systems have progressed from paper and faxed POs, receiving documents and invoices to EDI and beyond, many retail A/P vendor correspondence departments are still mired in paper and manual research methods.

Those “old school” correspondence departments are characterized by:

• A backlog of thousands of unresolved, open vendor disputes that grows every week
• Average age over three months, with some individual items over a year old
• Average response time to vendors over a month, even on routine items
• A patchwork of stand-alone MS Office applications used for tracking

Other retailers have invested to improve their vendor correspondence operations and reaped significant rewards.  Their operations are characterized by:

• Vendor self service of routine issues through online portals
• Vendor self service online logging of issues & initial research
• Reasonable response times
• Detailed metrics drillable by correspondent, vendor, receiving location & category
• No vendor issue “fire drills”
• Significantly improved A/P relationships with merchants and vendors

Vendor Correspondence 2.0

The goal of the next phase in vendor correspondence is not to handle the inflow ever more efficiently – it is to significantly reduce the volume of vendor disputes and communication by addressing and fixing its root causes.  Case pack changes, pricing changes, store & warehouse receiving procedures, gaps in vendor systems and the like are major culprits.  However, the root causes of these issues lie outside the Accounts Payable department.

So forward thinking retailers will now open up vendor correspondence insights to the rest of the company.  As these metrics become available to merchants, logistics and IT, they will become inputs to company opportunity identification and performance measurement.  And when this happens, retailers will be able to address the root cause issues that cause correspondence in the first place.

Having trouble managing vendor correspondence?  Contact us at .(JavaScript must be enabled to view this email address).