Your Retail Deductions May Be Pointing Toward a Bigger Problem

The issue causing the most uncertainty might not be the one costing you the most right now.

A shortage deduction arrives, and the finance team begins researching the claim.

A pricing deduction appears, and the sales team checks the promotional agreement.

Markdown funding increases, and the account team attempts to determine what happened at the store level.

An OTIF charge is issued, and supply chain reviews the shipment.

Each department focuses on its own responsibilities and may solve the issue it faces. However, few suppliers see the full picture of how shortages, pricing deductions, markdown funding, and OTIF charges connect or where they might lead the business.

This creates a serious risk: treating related revenue problems as if they are separate issues.

One Supplier, Multiple Versions of the Problem

Retail complexity often produces several versions of the truth. Finance sees shortage deductions and an outstanding balance. Sales sees pricing deductions, a customer agreement, and expected promotional performance. Supply chain tracks shipment records, delivery appointments, and receiving activity tied to OTIF charges. The retailer's systems may show something else entirely.

None of these views are necessarily wrong. They just do not tell the whole story.

Consider phantom inventory. If a retailer's system shows units that are not physically available, the resulting problem may extend far beyond inventory accuracy. The item may not replenish properly. Sales may decline. Markdown decisions may be based on inaccurate on-hand information. Shortage claims may become more difficult to validate.

One faulty signal can send multiple parts of the business in different directions.

The same thing happens with pricing and rollback activity. Different teams may review a promotional agreement, an item-file change, a store execution issue, and the resulting deduction, each using their own data. Without a connected view, suppliers may spend a lot of time fixing the symptom but miss the real problem.

Deduction Recovery Is Important. Prevention Is More Valuable.

Recovering an invalid deduction protects revenue that has already been earned. That remains essential.

But deductions can also tell suppliers where future revenue is at risk.

Recurring shortages may identify problem locations, shipment patterns, or receiving inconsistencies. OTIF and MABD charges may expose process gaps that could affect future relationships with retailers. Freight claims may reveal carrier or documentation problems. Markdown and rollback activity may raise questions about whether funding requests align with agreed terms and actual execution.

The value goes beyond the money recovered from a single claim. It also includes what the organization learns from the overall pattern.

When suppliers can connect deduction activity with retailer data, inventory movement, funding agreements, and operational performance, they can begin asking better questions:

• Is this an isolated claim or part of a recurring pattern?

• Are certain items, stores, or distribution centers driving the issue?

• Do retailer records align with our records?

• Are we funding the activity according to the agreed terms?

• Which problem should we address first?

• What action could prevent the next deduction?

These questions help the organization shift from just reacting to deductions to managing the reasons they happen in the first place.

Where Is Your Greatest Uncertainty?

For some suppliers, shortages are still the hardest area to confirm. Others have trouble matching pricing deductions with promotions and rollbacks. Some worry about phantom inventory, while others are dealing with OTIF, MABD, or freight claims. These issues might be connected, even if they seem separate.

There is no single place to start. The best direction depends on where your organization has the least visibility and the most risk.

That is why we are asking retail suppliers one important question:

Which issue creates the most uncertainty for your business?

Take our "Which Direction Is Your Revenue Going?" poll and choose from:

• Shortages

• Pricing

• Markdown and rollback activity

• Phantom inventory

• OTIF and MABD

• Freight claims

• Rollbacks

• Promotions

• Phantom inventory
  

The issue you choose might be the one your team talks about most, or it could be the one no one has been able to fully explain.

Either way, your answer matters.

Take the poll now and tell us which issue creates the most uncertainty for retail suppliers.