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May 18, 2010

VendorNet

Five Dropship Management Essentials


Sharon Gardner, President of VendorNet shares her expertise.

While drop shipping has many benefits, it also means you are putting your reputation in the hands of a third party. Here are five drop ship essentials that will keep your reputation stellar!

Automation and data synchronization. You must address all levels of vendor sophistication. A portal that your low-tech vendors can use and mapping capabilities to interface with non-EDI system-to-system vendors are requirements. Cross reference your SKUs with your vendor's item numbers and/or GTINs to synchronize item-level order information.

Define roles and responsibilities. Assign an executive-level champion for the overall vendor relationship. Name someone else to own the day-to-day oversight of order transactions with your vendors.

Establish vendor compliance guidelines. Include your expectations for customers and service standards. Identify all systems (communications, accounting , routing guides and ship method requirements, returns instructions, reporting) and chargebacks for noncompliance.

Measure vendor performance. Develop vendor scorecards with specific timeframes and deadlines for correcting problems. Include shipping performance, customer service issues, backorders, aging metrics, and cancels and returns. Categorize your vendors by product line, sales, and number of SKUs, and gauge operational performance and profitability annually. Reward top performing vendors, and challenge them to expand business opportunities.

Enforce compliance. Make vendor compliance a priority; your reputation depends on it. Discontinue relationships with high-risk vendors, and reward top performers. Enforce chargebacks for late shipments, vendor cancels, shipping errors, missed order changes, or wrong shipping carrier. Administer carefully and judiciously, not as a weapon.


Bottom Line: Quality controls in technology and firm oversight in management are critical for drop shipping success.


Value-Added Bonus: Download a FREE VendorNet Drop Ship Manager Whitepaper



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