Deduction Library / Defectives
Defectives
A pricing deduction is a claim that the supplier invoiced a higher price than the retailer believes was agreed. The retailer short-pays to its own item file, deal file, or PO price. The gap may be pennies per unit. Across volume, it is not.
Why Retailers Assess It
Retailers don't want unsaleable goods occupying shelf space or DC capacity. Policy usually shifts that cost to the supplier under a returns, unsaleable, or quality program. The deduction is how the program is collected, whether or not the supplier ever sees the product.
How to Validate
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Identify the program: return-to-vendor, destroy-in-field, or an accrued unsaleable rate.
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Match the deduction to invoices, lots, or a time period — not only to a lump-sum code.
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Ask whether product was available for inspection or whether the claim is scan- or rate-based.
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Check expiration, lot, and damage codes against what you actually shipped.
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Watch for defectives that are actually shortages, freight damage, or markdowns wearing a quality code.
Documents You Typically Need
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Retailer unsaleable or returns policy for that banner
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Return authorization or destroy-in-field report
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Lot, code date, and item detail
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Original invoice and PO
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Quality or recall notices if a quality event is claimed
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Carrier damage reports when the issue started in transit
* Additional documents may be needed depending on the retailer and claim type.
Common Causes
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Store handling, rotation, or refrigeration — recorded as a supplier quality claim
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Code-date product that sat too long in the DC or on the shelf
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Consumer returns with no defect
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Accrued unsaleable rates that exceed the actual experience
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Freight or receiving damage coded as defective merchandise
Recovery Notes
You cannot inspect what has already been destroyed. That is why policy and reporting matter as much as photographs. If the banner deducts on a rate, audit the rate against actual activity. If the banner deducts on items, demand item-level detail before the claim ages out.
Related types: Shortages, Freight, Markdowns.
Related service: Retail Deduction Recovery.