List Cost Codes
SPS categorizes the following codes as shortages based on information provided by Kroger and how we see suppliers disputing these deductions with Kroger.
3 - Promo Cost difference (List Cost)
LC - LIST COST DEDUCTION
Description
Kroger imposes a list cost deduction when the unit price that was billed to Kroger does not match what Kroger expected to pay per unit.
How to Prevent
If Kroger sends a Purchase Order with the wrong unit cost of an item, the supplier should reject the PO. Otherwise, if the order is accepted and fulfilled, Kroger will expect to pay that amount on the PO, even if it’s incorrect.
Note that Kroger’s payment system will pay the lower amount between what was on the Purchase Order or the invoice.
This deduction can also happen around the time of a cost change of a particular item(s). Ensure that cost change proposals are shared via written notice and finalized via an accepted EDI transaction. Written notice of cost changes must be provided to Kroger in advance of the effective date of the change according to the following timelines:
General Merchandise | 90 days prior to effective date |
Health and Beauty Care Products | 60 days prior to effective date |
All Other Items* | 30 days prior to effective date |
How to Dispute
Default Dispute Type: LC - List Cost
Required Backup Documentation:
Invoice
Buyer Approval - Category Manager approval of the repayment of the deduction
Support - Director approval of the repayment of the deduction
Recommended Backup Documentation:
Supporting documentation the cost update was communicated per Kroger's guidelines
Any other documentation showing the deduction is invalid
To dispute invalid code 3’s, Kroger states that you must include approval emails from both the Category Manager and Director at Kroger. Your sales team should be able to reach out to their Kroger Category Management group to start this request.
You may have success if you can at least get approval from the Director in your Category Management Group.
In your request to the Director or Category Manager, ask for an approval of repayment for the specific PO number’s deduction. Kroger states that direction from the Kroger personnel must be clear, such as “Approval to pay” or “proceed with payment”.
It is best to attach the entire email approval to ensure that the Kroger personnel’s full names and roles are included.