Daily Archives: September 11, 2012

The Best Way to Insure Routing Guide Compliance …

… Is to be clear about who is routing what! I must admit that, after reading a recent article three times over on Inbound Logistics on ensuring routing guide compliance, I’m still not exactly sure who the article is for.

Generally speaking, a routing guide contains a set of rules intended to govern how all shipments being sent to a company’s facility are to be handled, and what costs the company is willing, and not willing, to incur. Based on this, it seems logical to assume that a routing guide is for the benefit of a company’s suppliers, and that it is the suppliers, or, in some vernacular, the vendors, whose compliance needs to be insured.

So, when the article starts off by saying that when vendors fail to comply with shippers’ routing guide instructions, all parties involved experience frustration. Huh? Isn’t the vendor doing the shipping by way of a carrier? I guess, in this context, “shipper” means “buyer”, but the buyer might be nothing more than a consignee, with the vendor doing all the shipping arrangements and a 3rd party doing all the transportation. Maybe it’s acceptable lingo in the old-fashioned logistics world, but if you want to reach supply management at large, let’s be clear who’s who.

Now, if we make this assumption and move on, replacing “shipper” by “buyer” in the first nine tips, everything sort of makes sense, but then tip 10 refers to the situation when a customer is late ordering a product. What customer? No where is customer mentioned up to this point! Does it refer to the “buyer”, known as the “shipper” (even though the buyer isn’t “shipping”)? Or the buyer’s customer? And why is the buyer’s customer allowed to order direct? If we assume that “customer” refers to a buyer “representative”, then this makes sense, but, at least for me, this is an even bigger stretch than assuming “shipper” and “buyer” are one in the same.

But the confusion doesn’t end there! If we then examine the tips, we are told to be upfront about chargebacks, which is a must, but the chargebacks referred to are actually fines levied by the “shipper”, who we are assuming is the “buyer”, to the vendor for non-compliance. This is a little confusing for two reasons. First of all, the standard definition of a charge-back is the return of funds to a buyer after a successful dispute. This is not the return of funds paid by the buyer (or “shipper”) to the vendor for an un-delivered or defective product, but a fine levied on the vendor for failure to comply with a buyer (or “shipper”) policy. This is not a chargeback. Secondly, in this situation, the money changing hands will be between the vendor and the 3rd party logistics carrier, and it is the vendor who will be seeking a chargeback if the logistics carrier screws up. Right?

And then, a little later on, we are told to divide carriers into categories by mode and weight breaks. While it’s useful to know what carriers offer a given mode, the volume brackets that define LTL (Less-than-TruckLoad) and TL (TruckLoad), and which carrier is the most cost effective within a mode and volume bracket, this is of no use to a vendor who does not know what mode a product should normally be shipped at, and the conditions under which an exception should be made.

And if a buyer really wants to ensure routing guide compliance, it’s not that hard to do so. All the buyer has to do is inform the supplier of the default shipping method it wants used and the alternate shipping methods that are acceptable if the default shipping method is not available. If the buyer takes the uncertainty out of the equation, the vendor will get it right. And this is not hard to do if the buyer has an on-line, searchable, routing guide integrated with its e-procurement system where a link to the appropriate mode and carriers, for the volume level, is included in the e-version of the purchase order. One click, and the vendor knows exactly what to do. If the PO, or on-line routing application, also includes the contact details for an appropriate contact person in case of questions, or unexpected issues, as well as a link to information about obtaining approval for expedited delivery and selecting the appropriate method for expedited delivery if need be, then there’s no reason that a vendor shouldn’t be able to get it right.

In summary, here’s the doctor‘s top 10 tips for ensuring routing guide compliance:

  • Keep
  • It
  • Simple
  • Stupid
  • And
  • Supply
  • Suppliers
  • With
  • Information
  • Needed