A New Look at an Old Problem: ASN Accuracy

11/1/2014
Advance ship notices (ASNs) provide better visibility, greater control and speed during receiving, and cost savings in labor and facilities, yet many suppliers continue to struggle with this business process.

For nearly fifteen years, the Retail Value Chain Federation (RVCF) has looked to identify ways retailers and their merchandise suppliers can improve ASN accuracy collaboratively. RVCF has strived to reduce supplier deductions and demonstrate ways to drive the Perfect Order, identified by the following four key elements: (1) On-Time, (2) Complete, (3) Damage Free, and (4) Accurate Invoicing. To achieve the Perfect Order, accurate ASNs are a must. In 2010, we explored ASN accuracy by conducting a retail survey, of which 42 major retailers participated. Now, in 2014, we’re once again pulling the covers off of ASN accuracy, analyzing ASN declarations versus what’s actually in the box. As we have done in the past, we reached out to Brian Gibson, Ph.D., professor of supply chain management at Auburn University, and Compliance Networks to help us survey our 50+ retail members.

ASNs have been employed for two decades, yet the same issues and problems persist. As our study in 2010 indicated, 3 percent of all units shipped are in error. Of a million units shipped, 30,000 were in error — wrong color, wrong size, wrong SKU, doesn’t matter. This year’s study should enable us to finally start a trend as we currently have data from 2010 and 2012 and we’ll soon have data from 2014. Have merchandise suppliers improved their order accuracy performance? We’ll know this month, when Dr. Gibson will present the updated results at the RVCF Fall Conference in Scottsdale, AZ.

Most of RVCF’s retail members employ ASNs. The ASN allows them better visibility, greater control and speed during receiving, and cost savings in labor and facilities. Yet, after all this time, many suppliers continue to struggle with this business process.

ASN errors are caused by a host of business process errors, committed by both the retailer and the merchandise supplier. Mis-picks, incorrect tags and labels, UPC errors, and PO errors and/or changes all lead to a faulty shipment. Can this quagmire ever be successfully resolved? We don’t believe it can in its entirety, but we can find ways to improve business processes and flow of goods, thereby improving error rates.

Take, for instance, the impact of retailers using consolidators. Suppliers receive ASN errors because the retailer’s consolidators change the structure and content of a shipment. During past RVCF Conferences, we took initial steps to document the natural business process flow of the ASN, from PO to remittance, with respect to both the retailers’ and suppliers’ perspectives. As each trading partner has unique requirements and understandings of process flow, we needed to identify and eliminate business process gaps in order to have a positive effect on reducing errors, leading to greater business partner synchronization. Keep in mind, retailers today want an uninterrupted, accurate flow of goods; errors in the supply chain impact speed to market, meaning longer duration times of invested capital and reduced return on that capital.

Root cause analysis: suppliers need to understand their retail customer’s receiving practices. Suppliers need to build the order the way the retailer takes it apart. What our past ASN studies have shown is that orders shipped to retailers with aggressive receiving auditing are more accurate than retailers with more lax procedures. As I’ve heard over the years, suppliers "smart pick" — but what does that mean? If the supplier is out of whites, they sub yellow — this is a cardinal sin! Not only will this practice create a “shipped not ordered” deduction, it will also generate a shortage deduction and other PO violations — a painful and costly error! Retailers are also expanding ASN requirements to their factories abroad that produce their
private-label products.

There are so many different and equally valuable warehousing systems, i.e., pick to light, RF guns, etc., yet the problem persists. Why? Because, human beings are involved in the process! However, there are best practices. You can improve your processes. Scan the order as it’s being packed. Match the order packed to the PO. In the near future, RFID will help. Read the tags on your shipment and create an EPC report. This report can then be compared to the retailer’s receiving EPC report and discrepancies can be identified immediately. There’s talk currently that in the future, EPC reports will be embedded in the ASN itself.

Other technologies have allowed the retailer greater visibility of an order leaving the supplier’s dock. In many cases, retailers can send “pre-deduction” notifications, advising the supplier of the particular error, with the expectations that the supplier with address the error immediately, instead of being advised days or weeks later of the discrepancy.

There is a lot of room for improvement. We’re currently conducting the 2014 ASN study and RVCF will dedicate a portion of its focus to help drive down error rates attributed to ASNs. We plan not only to identify the errors and where they occur, but to flush out solutions, whether they are technology tools, business processes, or employee skill enhancements. We will explore error-free shipments of pallets, mixed pallets, casepacks, mixed casepacks, and other pack methods over the next 12 months, so stay tuned.

I’ll conclude with a message to merchandise suppliers. Retail deductions can be painful, but they can be addressed, reduced and, in many cases, eliminated altogether. Technology has enabled retailers to better audit inbound shipments, allowing for greater visibility and control — this means suppliers need to step up their game. Another factor: Since 2009, supplier companies aren’t making those necessary investments in people and compliance departments. If owners and stakeholders continue to look at deductions, as they did years ago, as being a "cost of doing business," then, unfortunately, they missed the point — to adapt or perish. n

Kim Zablocky is the founder of RVCF.
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