***Walmart has used deduction code 58 for two different reasons over the past few years. Currently, code 58s are used for "Shortage Recovery Rate," but in the past code 58s were used for a reason of "Other Allowances." Both reasons are described below.***
Code 58 - Shortage Recovery Rate
Description
Code 58s for Shortage Recovery Rate (SRR) are fines from Walmart taken as a deduction to payments made on all DSDC POs for a given 9 digit vendor number. Walmart audits a sample of DSDC cases to compare ASN item quantities to actual item quantities. A shortage % is calculated based on this DSDC audit data from the previous Walmart quarter. Audits are performed on a regular basis at RDCs and the data is used to calculate the rate that will be used when charging SRR fines.
The calculation for a supplier's shortage recovery rate is:
SRR = Average audited dollars short / Average expected dollars
This rate is then applied as a deduction against the total cost for each invoice for each DSDC order. Think of it as an allowance taken off your invoices, but instead of a pre-negotiated percentage it is a variable rate that changes quarterly based on the previous quarter's performance. These can add up quickly!
How to Prevent Valid Code 58s
Because SRR deductions are levied based on Walmart's calculations for accuracy of historical DSDC shipments, the only way to prevent these deductions is to make sure your shipping processes are completely buttoned up for your DSDC shipments.
This means that your ASN data must always exactly match what you ship.
You can review your audit data in the Advanced Ship Notice Dashboard app in Retail Link. Use the dropdown in the upper right to switch to the "DSDC" view.
Can it be Disputed?
Walmart's Accounts Payable Dispute Portal (APDP) no longer allows disputes for code 58s. If you are not a DSDC supplier, or if you have SRR deductions taken against invoices that are not for DSDC orders (type 73), then you should dispute the deductions per the following instructions from Wal-Mart:
"To dispute Code 58 (Shortage Recovery Rate) deductions, reach out to Enterprise Business Services (EBS) or Supply Chain Management."
Enterprise Business Services Contact
EBS phone: 888-499-6377
EBS direct email: wmgbs@wal-mart.com (WM prefers that you use the request form below)
EBS info request form here
File a ticket here
Please note, if a SRR deduction is taken against a DSDC invoice, then it is extremely unlikely to be recoverable. There are a couple of factors working against you:
The SRR % is based on random audits from the previous quarter, and Walmart does not provide any data to show which audited orders were short. Therefore, you cannot try to prove that specific orders were indeed shipped in full.
Even if you knew which cases were audited, proof like shipping documents would not be sufficient, since shipping documents show quantities shipped/received at the case level, and the audits are performed at the item level.
How to Dispute Invalid Code 58s
If you received a SRR deduction that violates your supplier agreement (you are not a DSDC supplier or the invoice that was deducted was not for a DSDC order), then submit a dispute as described above to prove that the deduction is invalid. Documentation you will need:
Copy of your supplier agreement showing you are not a DSDC supplier
PO details showing that the order was not a DSDC order (type 73)
If you are in fact a DSDC supplier but you disagree with the % that was calculated/deducted, you could attempt to dispute this, but your odds of success are very low. Your better path would be to raise the issue at a high level (i.e. - all invoices deducted for a quarter) with your buyer and hope they are sympathetic.
Code 58 - Other Allowances
Description
Code 58s for Other Allowances/DSDC allowances are to cover a margin of error within ASN Packs on DSDC Shipments (Type 73 Purchase Orders). A code 58 occurs when this allowance is listed on the supplier agreement but not included on an invoice.
Common Root Causes for Code 58s
The common scenario for invalid Code 58s is that your Supplier Agreement states that an allowance is supposed to be given off-invoice, but your EDI provider is actually giving the allowance off-line-item. In this scenario, the correct dollar amount is being withheld from the invoice, just from the wrong place.
Potential root causes of valid code 58s are:
Purchase Order Inaccuracy: Purchase orders may contain incorrect information, resulting in discrepancies if shipped without correction.
Unlisted Allowances: Allowances on the purchase order might be missing from the invoice.
Implicit Shipping Confirmation: Shipping on an inaccurate PO can be seen as verifying the PO’s details, which may block later dispute attempts.
Incorrect EDI Allowance Codes: Using the wrong code for allowances in EDI may trigger further deductions.
Allowance Calculations on Net Instead of Gross Amount: If allowances are calculated on the net invoice rather than the gross amount, it may result in unexpected deductions.
How to Prevent Valid Code 58s
Verify all POs are accurate before shipping and ensure invoices reflect the purchase order exactly.
Confirm with your EDI team or provider that allowances on your supplier agreement and PO are included on the invoices (EDI 810).
Double-check allowances specified in your supplier agreement appear on both the PO and invoice.
For any special deals, ensure clear documentation is provided to and acknowledged by the buyer.
Can it be Disputed?
Yes, Code 58s for DSDC allowances can be disputed through the Accounts Payable Dispute Portal if you can prove that the allowance was actually given on the invoice. Otherwise, you will need to reach out to your buyer for assistance with a payback. While APDP technically allows disputes for code 58s, they can be difficult to win.
The common scenario for invalid code 58s for DSDC allowances is that your Supplier Agreement states that an allowance is supposed to be given off-invoice, but your EDI provider is actually giving the allowance off-line-item. In this scenario, the correct dollar amount is being withheld from the invoice, just from the wrong place. Disputing and showing that the correct amount was already withheld can often overturn the deduction.
How to Dispute Invalid Code 58s
You can attempt a dispute in the Accounts Payable Dispute Portal (APDP). If that fails then send documentation to your buyer to request payback.