In this article, learn about:
How poor documentation can lead to compliance issues
Why accurate labeling and packing prevents damage and delays
The importance of timing and proactive communication
In retail supply chains, small shipping mistakes have a way of becoming expensive problems. When delays, damages, or shortages occur, it’s common for a supplier to face deductions and fines from the retailer. Repeated shipping mistakes can drain margins through chargebacks, fines, and operational disruptions. Prevention is almost always cheaper than fixing a problem after the shipment leaves the dock.
While some issues are certainly inevitable, understanding where they are most likely to pop up can help your business develop processes to prevent issues and avoid repeated mistakes.
Avoid Common Shipping Documentation Errors
Incorrect, incomplete, or missing documentation can lead to delays, deductions, and compliance violations. Suppliers should have standardized practices for completing, sending, and storing shipping documentation.
Three documents sit at the center of most retailer shipping programs:
Advance Shipment Notice (ASN): This document is sent from the supplier to the retailer, providing key details about a shipment before it arrives at its destination. ASNs include information on the order, shipment, item, and pack level.
BOL (Bill of Lading): A BOL is a document passed between the shipper and carrier. It outlines the details of the shipment, including information about the shipper, freight, carrier, and recipient/consignee. A complete and accurate BOL helps carriers, warehouses, and retailers stay aligned throughout the shipment journey. Errors, such as incorrect product count, weight, or destination, can all create major issues when attempting to deliver the shipment.
POD (Proof of Delivery): Proof of Delivery is a confirmation that the shipment recipient/consignee signs to verify receipt of the delivery. PODs indicate if the shipment was received on time, in full, and in the expected condition.
Just as important as creating documents is being able to find them when something goes wrong. ASNs, PODs, and BOLs are all essential documentation for disputing invalid deductions.
Related Reading: Reclassifications and Reweighs in Freight Shipping
Package and Palletize Correctly
A successful shipment starts with the right packaging and palletizing of the products. Retailers typically have set requirements, but it’s still wise for a supplier to develop and document internal best practices to help reduce risk and avoid damage.
Packaging
Match packaging to the product: Select packing materials that accommodate the product type and fragility. For example, fragile items may require bubble wrap, foam inserts, or extra packing paper, while perishables might need insulated or moisture-resistant packaging. It’s also important to check whether the retailer doesn’t have any restrictions on the type of packing materials used.
Right-size every carton: Overpacking can lead to crushed items, while underpacking can cause shifting in transit, both of which increase the likelihood of damaged products. Use right-sized boxes that minimize wasted space while protecting the contents.
Don't assume retailer requirements are universal: Many retailers require specific case pack quantities, inner/outer pack formats, and labeling on unit or case-level packaging. Failing to comply can lead to rejections or fines.
Related Reading: What Are the Different Types of Pack Sizes?
Pallets
The way in which a pallet is actually built will have a significant impact on shipping efficiency. Proper pallet configuration helps maximize space, reduces transportation costs, prevents product damage, and improves worker safety.
TI/HI refers to the pattern in which boxes are stacked on a pallet:
TI = The number of boxes per layer on a pallet
HI = The number of layers that can be safely placed on a pallet.
An accurate TI/HI calculation helps prevent damage to goods during the storage and transportation phases, as well as reduce risk of harm for the people handling the pallets. There are several best practices to follow when maximizing TI/HI:
Stack heavy goods first, making sure weight is distributed evenly.
Stack up to the edge of the pallet but never let boxes hang over it.
Avoid leaving empty spaces, as these can make items more likely to shift.
Use an overlapping pattern, when the first level lays in one direction, and each subsequent level rotates.
Securely strap everything down to prevent sliding during transit.
Related Reading: What is TI/HI?
Use Clear and Compliant Labeling
Each retailer typically has its own set of requirements regarding labeling, but there are best practices you can implement across the board to reduce compliance issues:
Make sure labels are readable and correctly placed: Labels should be easy to scan, free from ink smudges or wrinkle lines. They should also be placed in a location that allows for efficient receiving on the retailer’s side. Some retailers may have requirements for exact placement.
Use weather- and wear-resistant labels: Shipments may be subject to a variety of conditions on their route. It’s important that labels are resistant to wear and tear from handling and changes in humidity/temperature to prevent the information from becoming illegible or unscannable.
Test barcodes: If your shipment contains scannable labels, it’s important to test these in-house. A nonfunctioning barcode may prevent inventory from being properly recorded or received by the retailer, possibly resulting in deductions.
Schedule and Ship with Precise Timing
For shipments, timing is everything. Even if your shipment is documented, packaged, palletized, and labeled correctly, poor timing can still jeopardize your performance and potentially lead to penalties for non-compliance. Be careful of:
ASN timing: ASNs must be successfully transmitted to the retailer before the shipment arrives at the warehouse/distribution center/store to prevent receiving issues. Late or missing ASNs can trigger fines, cause confusion, and prevent products from being properly received.
Shipping windows: Many retailers have specified shipping windows for deliveries. If a shipment arrives early or late, even by a slim margin of time, this can hurt a supplier’s On Time In Full (OTIF) score and lead to non-compliance fines.
Factoring in lead time: It’s important for a supplier to have a strong understanding of their lead time, which refers to the amount of time it takes to prepare, pack, and transport goods upon receipt of the Purchase Order.
Retailer calendars: Some retailers have holidays, blackout dates, or other restrictions that may prevent deliveries on specific days. It’s important to stay on top of these to prevent failed deliveries and wasted time and resources.
OTIF performance has become more important than ever before as late, incomplete, and delayed shipments usually contribute to out of stock (OOS) inventory. Research from the Consumer Brands Association and Food Marketing Institute estimates that stockouts account for approximately 2%–3% of annual sales in the U.S. food retail industry. As retailers continue to prioritize inventory availability, suppliers face greater pressure to meet delivery expectations and maintain strong OTIF performance.
Related Reading: What is Lead Time and How Does it Affect Retail?
Frequently Asked Questions
What shipping mistakes lead to retailer chargebacks?
Many retailer chargebacks stem from preventable shipping errors, including incorrect labels, inaccurate carton counts, missing documentation, ASN discrepancies, and shipments that arrive outside the required delivery window. While the specific requirements vary by retailer, maintaining accurate data and following compliance guidelines can help suppliers reduce costly deductions.
How do shipping errors affect OTIF performance?
Shipping errors can negatively impact OTIF (On Time, In Full) performance by causing late deliveries, incomplete orders, or receiving delays. Even when products arrive on time, documentation errors or labeling issues can prevent retailers from processing inventory efficiently, resulting in lower scorecard performance and potential compliance penalties.
Why do retailers reject supplier shipments?
Retailers may reject shipments that fail to meet routing, labeling, packaging, or documentation requirements. Common issues include incorrect purchase order information, missing shipping labels, damaged packaging, and deliveries that arrive outside scheduled appointment windows. Rejected shipments often create additional costs and delays for both parties.
What is the best way to improve shipping accuracy?
Improving shipping accuracy starts with standardized processes, employee training, and routine verification of shipment data before products ever leave the warehouse.
Automating order validation, label checks, and shipping documents will reduce manual errors.
How Suppliers Can Reduce Shipping Errors and Compliance Issues
Shipping mistakes can be costly but many of the most common issues are preventable. Accurate documentation, proper packaging and palletization, compliant labeling, and reliable shipment timing all play a crucial role in helping suppliers avoid delays, deductions, and retailer compliance fines.
When problems do occur, proactive communication can often prevent a minor issue from becoming a larger disruption. Clear internal workflows, strong carrier relationships, and timely updates to retailers can help suppliers resolve issues more quickly and protect important business relationships.
As retailer compliance requirements continue to evolve, many suppliers are turning to automation to reduce manual errors. Solutions that connect inventory, shipping, and compliance data will help teams streamline processes, and improve overall supply chain performance.
Reducing shipping errors starts with stronger processes and better visibility. Learn how SPS Commerce helps suppliers automate order fulfillment, shipment documentation, and retail compliance processes across their customer network.