Kroger: An In-Depth Guide to Deductions and Disputes for CPG Brands
Kroger is an American retailer that operates over 2,700 grocery stores in 35 states. Distributing in Kroger can accelerate a CPG brand’s growth if done profitably. This guide will walk through how to handle deductions and disputes with Kroger and in their Lavante portal, and enable Kroger to be a positive ROI distributor.
Types of Kroger Deductions
Kroger displays deduction codes on the invoice, which must be categorized in order to understand where your trade spend is going, and proactively resolve any operational issues. CPG brands have 180 days to dispute any invalid deductions. Once a dispute has been filed, no changes can be made. Double-check all documentation and support prior to submitting.
Promotional Allowance (A)
Promotional allowances are price reductions or discounts that manufacturers give to members of the marketing channel in exchange for special promotion of a product. Suppliers will see this code as:
- 092 - A
- ### - A
Cash Discount (CD)
Given in a percentage term, these are any cash allowances that the brand has agreed to.
CRV Repays (CV)
This deduction is only relevant for brands with a California Refund Value (CRV) or Bottle Deposits agreement.
EDI Non-Compliance (EV)
The EDI Non-Compliance (EV) deduction is applied when there is an issue with a required EDI document. Kroger prioritizes Electronic Data Interchange (EDI), as it ensures:
- Increased accuracy
- Better timelines
- Low operating costs/expenses
Suppliers are expected to have no issues receiving or sending any purchase orders through EDI, typically within 90 days. Failure to comply may result in an additional fee of $250 or 1% of the invoice amount.
List Cost (LC)
The term "List Cost (LC)" refers to the difference in cost on invoices. For price increases, suppliers must provide written notice to Kroger within the following deadlines:
- 90 days prior for general merchandise
- 60 days prior for health and beauty care products
- 30 days prior for all other items (excluding commodities like perishables or tobacco)
Kroger is not obligated to adjust prices without proper notification. For price decreases, suppliers must notify Kroger at least 30 days before the effective date. Failure to do so will result in a price support charge. List cost deductions occur when price changes are reflected in EDI documents without proper notification.
Off Invoice (OI)
Allowances due off-invoice are deducted using the Off Invoice (OI) code.
Deductions apply when manual corrections are necessary, typically because Kroger does not receive the contracted promotional allowance from the supplier.
Late Shipment (ORAD)
To interact with Kroger, suppliers must familiarize themselves with Supply Chain Vendor Documents on the Lavante platform, including codes for On Time Delivery Charges and Late Shipment (ORAD) fines. ORAD stands for “Original Requested Arrival Date,” which is the delivery date on the purchase order. Compliance includes adhering to on-time and case-fill rate requirements.
These deductions appear as
- ### - G###
- ORAD
Overage (OV)
Overage (OV) refers to an overpayment beyond what is indicated on supplier invoices. Although overages are discouraged, the Kroger system accommodates them, hence the existence of this deduction type.
Shipper Billing (PS)
Shipper Billing (PS) applies to specific invoices for Kroger or Peyton warehouse locations, and these deductions appear as ###PS.
Slotting (S)
Slotting fees, also known as shelving fees or slotting allowances, are one-time payments that suppliers make to Kroger to place their products on store shelves and in warehouses.
These will appear as 092 - S#####.
Pickup Allowance (PU)
The Pickup Allowance (PU) deduction reason code refers to freight charges suppliers pay on purchase orders picked up by Kroger carriers.
Return and Reclamations (V)
Return and reclamation deductions are related to the need to return items, based on Kroger’s returns and refunds policy. Suppliers will encounter this code in various formats such as:
- 701-4XXXXX (for Fred Meyer only, must contact Stephanie.Green@fredmeyer.com for disputes)
- ### - V
Shortage (SH)
Shortage (SH) deductions are common; Kroger deducts the value of a shortage from a supplier's invoice if the supplier doesn't deliver the full quantity of goods as stated in the purchase order.
How to dispute Kroger deductions through Lavante
If you believe that the deduction taken was invalid for any reason, log into Lavante to dispute. For some specialized deductions, there are contacts that must be emailed in order to dispute.
Disputing on Lavante
Once you locate the payment with a deduction that you’d like to dispute, click on the payment. On the new page, click on “create a claim” in order to start the dispute process.
Fill out details related to Claim Type, amount, description, and attach any supporting documents. Below are the details on the support documents that are required for each claim type.
Continue to track the status of the claim, and add comments if additional details are required. Below are the statuses for tracking:
- Open: You have not fully saved and submitted your claim, and will not be reviewed
- Pending: The Claim has been sent to the next workflow for review.
- Closed: Claim was closed by Kroger with feedback provided on the resolution decision.
- Pending Updated: Claim is assigned to the supplier user/submitter and needs attention to be considered valid for review. If that user/submitted does not go into the and click Edit -> Save & Submit, the claim is not in queue to review
Conclusion
Managing Kroger deduction codes manually can make it difficult to understand which deductions can be properly disputed. Confido transforms this process and automates the deduction coding and dispute process, leveraging AI to help your accounting department with speed and efficiency.
With Confido, teams can submit and manage disputes from a single interface, and automatically categorize each deduction by reason, retailer, and more, to bring transparency into the gross to net revenue bridge.
Want to learn more or speak with an expert? Schedule a time with us today.