Background
Walgreens established a Compliance or as they call it "Cost Recovery" Program back in 2018. This program is similar to other compliance programs across other retailers where individual fines are tracked on an infraction bases. The overall charge is passed on to the supplier in monthly buckets and is disputable as such.
On Time Fill Rate or OTFR is calculated as:
Vendor On Time Rate= Vendor On Time Units/ Revised Ordered Units
Vendor On Time Units: Is an adjusted on time units calculation that accounts for the following scenarios: Insufficient Lead Time, DC Appointment Pushout, Cancelled Line/PO, Revised WSTA’s.
Revised Ordered Units: Is an adjusted order quantity based on a Walgreens error or is mutually agreed upon. If there is no adjustment, the total ordered units will appear as the number.
Chargeback Amount is calculated as below.
($)= ((.95*Rev_Ordered_Units)- Vendor_On_Time_Units)*Unit_Cost*.05
To Summarize: You will be charged 5% of the unit cost multiplied by 95% of the difference between Revised Ordered Units & Vendor On Time Units. A chargeback will NOT be calculated if your Vendor On Time Fill Rate is >=95%.
Within the SupplyPike app, we currently pull in these monthly high level transactions and allow you to dispute these up to 12 weeks after they are issued. Walgreens outdated stance within documentation is that most of these charges are deemed closed within 4 weeks of email notification. We expanded that range to allow users to test this window further and give free range to dispute.
Disputes are submitted to SupplyChain.Compliance@Walgreens.com and reviewed within 2 weeks by a Cost Recovery Analyst or Walgreens DC Subject Matter Expert. Disputes can not be re-disputed and are final.
How to Dispute
Since SupplyPike is only pulling in the high level DC and EDI Cost Recovery charges, you'll want to additionally research and build your dispute file using information from SupplierNet.
Backup can be found within SupplierNet under Metrics/ Reports > OTFR. With this backup information, you'll want to fill out the vendor_dispute_form.xlsx. At the top of the document, you're asked to provide your Vendor Name, Vendor Number, Contact Name(s), and Email(s).
Within this file you are expected to provide the individual Case IDs, PO #s (if available), Reason for Dispute, and Supporting Evidence. The Supporting Evidence should be linked to new tabs within the excel file. This evidence can be a variety of different things including PODs, photos of the load, documents, emails, or anything relevant to why the charge is invalid.
SupplyPike provides the Vendor Dispute template from above within the details page of a Compliance/ Cost Recovery dispute page. Click the here icon or use the link from this article to fill out your details before disputing.
You will be reminded that this is a recommended document before disputing as well. Once you have all your details finalized, you are good to submit!
One benefit of disputing is that Walgreens will delay sending out chargebacks on anything that is currently under review for dispute.
Other Rules to Follow/ Scenarios for Disputing
If you feel you have been charged within any of the scenarios, you may have a good opportunity to dispute.
Collect Supplier Notes:
Suppliers must create the shipment in FOM 12 calendar days prior to the PO’s WSTA or 1 day after the PO issue date
Early available date must be 10 days prior to the WSTA date
Late available date must be 1 day prior to the WSTA date
Q: If a DC pushes out my appointment to a date after the WSTA, am I subject to OTFR Cost Recovery chargebacks?
A: You will NOT be subject to OTFR Cost Recovery chargebacks as long as the appointment was requested on or before the WSTA.
Q: If I am not given enough lead time for a purchase order and therefore cannot deliver by the WSTA, am I subject to OTFR Cost Recovery chargebacks?
A: You will NOT be subject to OTFR Cost Recovery chargebacks if insufficient lead time was provided for the purchase order
Q: What if orders come in ‘x’% higher than my forecast?
A: Suppliers are expected to ship ordered product by the designated WSTA. Suppliers are expected to regularly collaborate with Demand Planners on Sales & Order Forecasts. Please note, forecasts can change due to dramatic business change in sales, waste/shrink, and item transitions. Please monitor DC & Store inventory weekly to understand the impact of how orders will be generated.
Q: What if the Walgreens system timestamp does not match the POD timestamp?
A: Walgreens has a standardized timestamping process across all DC’s. Timestamps are systematically captured when the load arrives at the DC. The process has been validated and the timestamps are trusted. (Harder to win this dispute)
Q: If the carrier is not given enough transit time due to Walgreens late shipment tendering and therefore cannot deliver by the WSTA, am I subject to OTFR Cost Recovery chargebacks?
A: You will NOT be subject to OTFR Cost Recovery chargebacks if it’s determined that Walgreens tendered the shipment to the carrier with insufficient lead time. This only applies to Collect Shipments
Other Notes
PODs marked "said to contain" are subject to DC receiving further evaluation and can't be used to dispute fill rate when marked as such. When marked for this scenario, overages, shortages and damages are common.
LTL carriers need to be held accountable by the Supplier especially if they are holding goods for consolidation or consistently late. Shipping LTL does note exempt you from any rules.