In this article, learn about:
The most common deductions and compliance issues in grocery
How retailer and distributor deductions differ
Dispute windows, evidence, and where to file
How suppliers prevent and track deductions
Deductions and compliance issues in grocery come from two kinds of buyers -- retailers and distributors -- and the rules differ between them. Retailers such as Kroger usually apply a code to the remittance after the supplier submits an invoice. Distributors such as KeHE and UNFI can hold or charge earlier, at the receiving dock, and they also pass through deductions from the stores they serve. Each buyer sets its own codes, fees, and dispute windows. This guide covers the most common types, with Kroger, KeHE, and UNFI as examples.
What Are the Most Common Deductions and Compliance Issues in Grocery?
Most grocery deductions fall into five groups:
Shortages and overages: This deduction occurs when the buyer’s receiving count differs from the invoice or purchase order (PO).
Pricing and cost differences: This category of deduction happens when the invoiced cost differs from the PO or the buyer’s system.
Compliance and shipping violations: Deductions under this umbrella happen due to late shipments and/or documentation errors.
Damaged, unsaleable, or expired product: Sometimes called unsaleables, this category encompasses product that can no longer be sold due to damage, expiration, or other requirements.
Promotions and allowances: This category encompasses previously agreed upon terms and processing fees, usually related to sales or promotions.
Some deductions may be invalid and should be disputed. Some deductions are valid and planned, and some are valid but unplanned. Unplanned valid deductions should be traced back to a fixable process error.
How Do Grocery Deduction Codes Differ Between Retailers and Distributors?
The main difference is timing. A retailer pays against the submitted invoice and applies deductions to the remittance afterward, as Kroger does. A distributor can act at the receiving dock, before any payment is due. At KeHE, a case count that differs from the PO produces a UDR and a 48-hour response clock, and KeHE’s Supplier Policies and Procedures say suppliers must rely on its count over the BOL signed at origin.
Distributors also divide suppliers into groups. UNFI uses three-letter codes and ePASS for conventional suppliers, and adjustment numbers and the Dispute Center for Natural suppliers. Fee figures in the table come from the buyers’ published supplier documents and can change, so double-check them against your current agreement before filing a dispute.
Buyer | Where the deduction starts | Representative fee | Dispute window | Where to file | Typical resolution |
Kroger (retailer) | Remittance, after the invoice | EDI non-compliance: $250 or 1% of the invoice, whichever is greater | 180 days for any invalid charge | DemandTec, with registration through vendorportal@kroger.com | Not stated |
KeHE (distributor) | Dock (UDR), then remittance | MCB: 8%, $65 minimum per distribution center. EP: 8%, $35 minimum and $700 maximum per invoice | 48 hours for a UDR; K-Solve afterward, with the deadline in KeHE’s policies | UDR coordinator first, then K-Solve in KeHE CONNECT | About three weeks in K-Solve |
UNFI Conventional (distributor) | Remittance, under a three-letter code | SWL: period deduction for suppliers not using EDI | 60 days suggested, 12 months hard limit | ePASS through SV Harbor, with access from MerchandisingServices@unfi.com | 30 to 45 days |
UNFI Natural (distributor) | Remittance, as an adjustment number | Operational compliance fees | 12 months | Dispute Center in myUNFI; cash terms, short payments, and SAS and PRGX audit items still go by email | 35 to 45 days, with one appeal |
Related Reading: Disputing Distributor Deductions and Chargebacks
What Is the Typical Deduction Dispute Window in Grocery?
Dispute windows range from hours to an entire year, depending on the buyer:
Buyer | Dispute window | Notes |
Kroger (retailer) | 180 days | Applies to any invalid charge |
KeHE (distributor) | 48 hours | Time to respond to a UDR; later disputes move to K-Solve, where KeHE’s Supplier Policies and Procedures set the filing deadline |
UNFI Conventional (distributor) | 12 months | UNFI suggests filing within 60 days |
UNFI Natural (distributor) | 12 months | Adjustments older than 12 months are denied |
Supporting records such as carrier affidavits and warehouse photos become harder to gather as time passes, so it is important to have clean, clear, and up-to-date records that are readily accessible.
Related Readings:
Which Compliance Issues Trigger Grocery Deductions?
Five operational gaps account for most compliance-related deductions:
Quantity accuracy: This happens when the shipped count differs from the PO, resulting in a shortage or overage deduction.
Document accuracy: Missing, late, or wrong EDI documents, such as advance ship notices (ASNs), can trigger deductions.
Shipping timeliness: Late deliveries, such as those behind Kroger’s late shipment code can trigger deductions or chargebacks.
Pricing data: Cost changes that were not approved in writing also trigger deductions, for example, Kroger’s list cost deduction.
Product condition: Damaged, short-dated, or expired product, which KeHE flags on a UDR, are common deduction or chargeback triggers.
Suppliers typically send ASN errors to IT or EDI teams, labeling errors to warehouse operations, routing fines to transportation, and price differences to master data management. However, often these errors are signals of a larger operational issue that needs to be addressed.
How Do Suppliers Dispute a Grocery Deduction?
The process for disputing a deduction or chargeback is similar across buyers even though the portals differ:
Identify the deduction code or adjustment number and the buyer’s stated reason for the deduction.
Check the dispute window before gathering anything else, to ensure it isn’t too late.
Collect the supporting records, such as the PO, BOL, proof of delivery (POD), invoice, EDI documents, and photos.
File the claim in the buyer’s portal with an explanation and backup files.
Record the ticket or pass number for your records.
Follow up after the buyer’s typical resolution time if you have not received a resolution.
At KeHE, for example, a supplier responds to the UDR coordinator within 48 hours and then files in K-Solve, citing the relevant section of the Supplier Policies and Procedures.
How Can Suppliers Prevent and Track Grocery Deductions?
Prevention starts with quantity and document accuracy. Grillo’s Pickles handled orders through spreadsheets and PDFs before adopting EDI, and the manual work caused shipping errors and chargebacks. After automating with SPS Commerce, 95 to 96% of inbound orders flowed through EDI and the team saved 40 to 60 hours a week.
Tracking shows which codes recur and which windows are closing. Suppliers log each deduction by buyer, code, amount, distribution center, and carrier, then measure how often a code recurs after a fix.
Chosen Foods, an avocado-based food brand, used SPS Commerce to manage deductions across major retailers and distributors in one process. It identified $1.1 million in deductions and recovered $367,000.
Where Can Suppliers Get Help With Grocery Deductions?
Suppliers that want help with dispute volume at retailers and distributors can see how SPS Revenue Recovery handles deductions. Suppliers still building a process can start with the guides in The Supply Chain Source.