Beware of the End of Quarter Trap!

Boyd Evert & Al Frank discuss the potential traps that #RetailSuppliers face at the end of the quarter.  Also, they share lessons learned from the #COVID19 pandemic, emphasize the importance of #BestPractices training, and provide strategic advice for suppliers navigating uncertain times. The conversation highlights the need for clear communication, understanding the audience, and being proactive in addressing potential issues.  #RevenueRecovery #PostAudit 

Takeaways

* Suppliers must be aware of end of quarter traps.

* Clear communication with auditors is essential.

* Lessons from COVID-19 can help suppliers today.

* Best practices training can improve supplier performance.

* Understanding the audience includes recognizing auditors.

* Proactive measures can mitigate risks and penalties.

* Suppliers should document agreements clearly.

* Maintaining composure in communications is crucial.

* Awareness of market conditions aids strategic decisions.

* HRG offers support for suppliers facing challenges.

Titles

Avoiding End of Quarter Traps for Suppliers

Sound Bites

* "Don't be John McEnroe with auditors!"

* "Wiser decisions, fewer deductions."

Chapters

00:00

Navigating End of Quarter Traps

04:09

Lessons from COVID-19 for Retail Suppliers

09:01

Best Practices Training for Suppliers

12:11

Strategic Moves in Uncertain Times

Welcome to “The Savvy Supplier,” your go-to podcast for navigating the ever-changing landscape of retail supply! Join us as we dive into expert insights and actionable tips to help retail suppliers save time and money. From tackling inflation to optimizing operations, we’ve got you covered. Tune in every week for strategies that empower you to thrive in a competitive market. Don't miss out—subscribe now and become a savvy supplier! 💡

www.HRG-audit.com
www.SavvySupplierPodcast.com

Need help with managing Deductions and implementing Supplier Best Practices?  Help is here!
Email:  Boyd.Evert@HRG-audit.com

#RetailSupplierDeductions
#RetailSupplier
#Post-AuditClaims
#HRG

"Wiser Decisions, Fewer Deductions"

Transcript

Is there an end of quarter trap waiting for retail suppliers? How do you keep from getting ensnared on this episode of the Savvy Supplier.  Welcome into the Savvy Supplier where we save you time and money. I'm Al Frank alongside Boyd Evert, the CEO and co-founder of HRG. Boyd, we're going to touch on a number of topics today, but let's start with a potential end of quarter or even an end of month trap

that some suppliers fall into. What is that trap and how do you sidestep it?

Okay with with many issues I've always got a good what I like to call horror story. I mean where something just comes out of nowhere that you didn't expect so back in the early days when we started HRG I was cold calling it. I remember contacting somebody that was in the the entertainment category and he said to me I cannot believe you called me. He said I'm staring at this deduction and he said.

 I just lost $400,000 and I denied this six months ago and I can't believe they actually took the money after all this time. And so he was he was a little too hot to talk to at that point. So I said, why don't I stop by? We'll schedule times. I came by. We sat down and we looked through the deduction and there were several moving parts which I won't get into. just for the sake of our our conversation here is

He had denied it and he didn't understand how the auditor was communicating. Because he told the auditor that this is invalid, I don't approve it. And the auditor came back and said, well, I can see that we're at an impasse and that you don't agree with our findings and we'll just take it from here.

 (01:56.436)
And he thought the take it from here was we're to go ahead and cancel it. What they did is they escalated it. And so he was, he was like, you got to help me get this money back. And I said, okay, well, you have to understand that this particular retailer that at this threshold of 400 K, this has passed through the buyer up to the VP up to the SVP. And so now you, you basically are asking me to tell the retailer, I'm sorry, all three of you.

are mistaken. This is invalid. And I said without additional information, new information. And again, this it was a it was a layered issue. But needless to say, there was wasn't it wasn't clear the facts weren't entirely clear, neither was the agreement. And so they use the the auditor use the ambiguity to to to tell a pretty compelling story. It was a very compelling story. But it wasn't the full story. And so

This all happened at the end of a quarter. And so that's where the story really fits into our topic for today is that this was something that he had thought that he had dealt with, that he had shut them down, and that this was a done issue. the moral of the story is just because you deny something to an auditor, to somebody that's asking for additional funds, you need to make sure you follow up and say,

have you canceled that claim, right? Or is this a closed issue? Had he simply done that, he would have known that they were quietly escalating this issue. And the sad fact was, or is, that they didn't disclose to him that they were taking this over to merchandising and they were walking it up the chain of command. at the time, there were certain rules in place at this particular retailer.

where anything over I think it was 300k would have to be signed by an SVP. And so I knew that he didn't know that because these aren't published guidelines. I knew it because I was in the industry for many years on the other side. so there's a lot of things that people know for sure that ain't so.

(04:09.318)
You know, sometimes we live in times that are little more uncertain than others. Thinking about this time right now with the tariffs and the associated severe volatility that can be experienced through that. You think back just in the COVID, the pandemic era. It was like that as well. What are some of the lessons that were learned during COVID that might apply really well right now?

as people go through the uncertainty of our time.

Right, so great questions early on in during COVID. I huddled up with the team and said alright, so we need to think through this issue from the side from the standpoint of the retailer and the retailers auditors and we knew that anytime you had orders that that were partially filled, you would be subject to penalties, even though a lot of retailers were waiving some of these fines and penalties. They weren't waiving the in full portion.

of them. were waving the on time because just the uneven impact on the carriers, right, where some carriers, they had bandwidth in certain lanes but didn't have availability in other lanes. There was just a lot of uncertainty. as a team, we got together and we started to send out best practices to our clients, in particular to those that had items that were in extremely high demand.

right? So anything that dealt with disinfectants or hand sanitizers. And sure enough, our our fears bore themselves out in that, as we got into COVID, as we were progressing through it, there was a top to top meeting with one of our clients with one of the major retailers, and they were being fined at multiple by multiple retailers that for incomplete shipments.

(06:08.27)
And they were letting the retailers know we have this is our availability to ship this is but they were deliberately sending orders for for several truckloads of product and that product wasn't available. And so essentially what happened was is there was this escalation of fines and this particular client of ours hadn't communicated some of the best practices it for a number of reasons which I won't get into but

One of our other clients did and they sent a letter and it was by an SVP and they sent it out to all of the retailers saying any orders placed above the current forecast will not be honored and is not subject to fines and penalties. Now that doesn't mean that they didn't get them, they did, but using that letter that they sent out, we were able to get all of those penalties and fines repaid.

Right. So, so one of the lessons from COVID is if you get ahead of the curve, right, get ahead of the uncertainty and the potential liability and the risk for these fines and penalties, then you're in a position of leverage, right? Because now what you're doing is you're telling the retailer that, that in this extraordinary situation, these are the new terms and conditions in which we will ship this product. So,

taking the lessons from COVID and applying it to today, that the issue isn't going to be necessarily, although in some cases it will be on time and full, it's going to be, where's the cost? The cost is going to be all over the place because of some orders have been received, had tariffs, some orders were canceled, some orders weren't, and there was talk about who was going to absorb these costs.

So all of those conversations that have taken place over the past three or four months now will be reviewed by auditors. And one lesson we've learned years and years ago is that from the retailers perspective, whatever is the lowest cost is the correct cost. So as you're looking through your email correspondence, you may want to put together what we sometimes refer to as a capstone email.

(08:31.95)
saying we had a lot of conversations about this family of items. Here's where we landed, right? And communicating that these other agreements no longer apply. This is the correct cost and this is the correct suggested retail. So that's one of the, I'd say if you could do that, that is going to give you like 70 to 80 % more leverage than you would have otherwise if you just.

Hope for the best.

I know you're big on ongoing continual improvement and making adjustments as things happen. You're a big proponent of best practices training for that reason. Why do you think that any and all suppliers can benefit from good best practices training?

Well, I think the biggest lesson is understanding the audience. for so many, and it's natural, but for so many, they think, well, I'm talking to merchandising. I'm talking to my buyer, right? I'm talking to VP of merchandising at this retailer. When in fact, you're, you're also talking to the auditor, right? And so part of the best practice training that we do at HRG is helping them understand that silent part of the audience that

They're not directly addressing, these auditors gain access to these emails and these agreements and proposals, and they're going to read it a certain way. so understanding how those auditors are going to hear your offer and hear how you're communicating to the merchant at the retailer will arm you and prepare you so that when you are creating those proposals,

 (10:20.79)
you're going to avoid language that that is going to appear vague or unclear to the auditor in which the auditor is going to then look at some of the facts and if some of the costs and some of the retail is is changing, they're going to make some assumptions based on your conversations that you may have never intended nor the buyer really inferred. But it's there because that's how the auditor has been trained.

I would think right now during tariffs and trade talks and all the like, this is a time of learning for people, sometimes in a hard fashion. It's kind of actually like a tennis match where things are going back and forth constantly and a lot of unexpected twists and turns. What would be your advice for suppliers right now as they consider strategic moves in uncertain times? Are there some guiding principles that you would recommend?

I think that one of the most important things is maybe you continuing the tennis analogy is don't be John McEnroe. Don't be yelling at the auditors. So if you get asks that seem unreasonable or outrageous, really keep your cool and don't hit the caps lock and start typing a long email to the auditor. Right. So I think that's part of it. I think the other part of it is just to understand.

the broader context in which you're having these conversations and understanding just some of the implications of what you're communicating to a particular retailer and the larger context because you might have your other team that's speaking to a different retailer. There might be some other things going on and there might be some things that are inferred. So that's something that I think people can do is within their own companies is

is having some basic line of sight is, my, my particular customer isn't going to run this promotion. Whereas the other one will. So I think that's, that's, that's one, but two is to understand what's going on in your category. And it's difficult to do because you can't directly do that. That happens to that needs to happen inside a third party, whether it be an industry group.

(12:36.026)
or a firm such as HRG where we can help you understand what's going on in your category at a particular retailer so you can understand some of the shortcomings with your proposal or agreement.

That's a great point. You've got the ability to have a line of sight into lots of different suppliers and you can see what's really going well and what are the pitfalls might be. You're open to some discussions you along with the other experts at HRG about looking at the particular situation that a Supplier might face and to be able to suggest some things. In fact, you're open, I believe, to a free strategy call with them, correct?

That's right.

So you can get that by going to our website, HRG-audit.com, HRG-audit.com or calling HRG at 479-616-1600. You can email us at info@HRG-audit.com and we will schedule that free strategy call with you. HRG is ready and able to help you. Our wish for you is this, wiser decisions, fewer deductions. See you next time.

on the Savvy Supplier