The Ultimate Guide to Routing Guides

What is a Routing Guide?

Routing guides are documents published by retailers that establish a set of rules and requirements for shipping products from suppliers to retail locations and customers. They include details like: regional point of contacts, delivery time expectations, approved or preferred carriers and vendors, preferred transportation methods, and packaging/shipping requirements. They allow retailers to establish set standards for shippers and hold shippers responsible for following those standards, from specific modes and carriers that need to be used to rates and service requirements.

Large retail chains began using routing guides as they began to broaden their reach to more locations, increase the volume of products and vendors, and use more fulfillment centers. Having routing guides in place preserved the uniformity of packaging, labeling, and shipping freight by creating standards across dozens of different vendors.

Most big box retailers—from Costco to Walmart to Home Depot—have their own routing guides, each with very unique requirements. Retailers enforce the use of routing guides using chargebacks, which is a penalty charge shippers have to pay when routing instructions are not followed exactly. The actual penalty is usually not set and varies by the number and severity of routing guide deviations.

The Benefits of Routing Guides

Retailers use regulated routing guides for several reasons. These guides allow retail companies to:

• Improve vendor compliance
• Control supplier inbound shipments
• Reduce excessive transportation costs
• Connect suppliers and customers
• Keep branding consistent across all vendors

The organization and standards routing guides create save a vast amount of time for large companies. Establishing preferred vendors to fulfill and distribute orders improves supply chain efficiency and effectiveness.

Detailed routing guides also benefit shippers, especially if retailers offer shippers the flexibility to utilize their own resources. Working with retailers who have clearly established policies and routing guides can help shippers streamline their processes to be more efficient and effective. Routing guides can also help shippers streamline their production process and leverage the improvements to appeal to more customers.

The Importance of an Inbound Vendor Routing Guide

An inbound routing guide is similar to a regular routing guide but focuses specifically on the transportation and routing of goods inbound to a company's distribution centers or warehouses. Typically, receivers (buyers) provide inbound routing guides to suppliers or vendors to dictate how shipments should be sent to the receiver’s facilities. These guides provide details on carrier preferences, delivery schedules, shipment consolidation requirements, packaging guidelines, and any other instructions related to inbound logistics.

Inbound routing guides are useful to 3PLs or shippers and ensure incoming shipments are handled efficiently, cost-effectively, and in accordance with the buyer's requirements and operational constraints. When used properly, they can streamline supply chain operations, reduce costs, ensure shipments are done correctly and overall enhance partnerships. Inbound routing guides also help prevent mistakes, such as mislabeling, late shipments, high transportation costs, and more.

Complex Routing Guides and Avoiding Chargebacks and Penalties

Each vendor has its own policies and procedures regarding chargebacks and penalties ranging in severity. Smaller companies may have looser guidelines, but large vendors will almost always follow strict policies. One example of a common requirement on routing guides is sending the advanced shipping notice through an EDI portal to the vendor when the package is shipped. There is a limited window of time in which that can be done, and it is the most common reason for chargebacks. Other common chargebacks include:

1. The shipping label being placed in the wrong place on the package
2. The packing slip being put in the wrong place
3. The wrong terminology being used
4. SKUs being mixed
5. Price not being placed on each item

Most vendors assess chargebacks on a per penalty basis, based on the type of offenses and how many times they have happened. Some vendors even reserve the right to reject an entire purchase order if the routing guide is not followed exactly. Additionally, routing guides are constantly changing and being updated, so it’s extremely important to keep on top of these changes. Staying up to date with routing guides and ensuring compliance is best way to avoid steep chargebacks.

Leverage ITS Logistics’ Expertise with Routing Guides

The ITS Logistics distribution and fulfillment team has decades of experience in understanding and adhering to complex routing guides and is familiar with regulations from every major retailer and vendor. ITS handles compliance for customers that would much rather be dedicating time and resources to improving their business.

As part of the customer onboarding process, ITS evaluates every customer to determine vendors and ensure routing guide compliance. With the highest level of service, unmatched industry experience and work ethic, and a laser focus on innovation and technology– the team at

ITS Logistics’ high standard for distribution and fulfillment:

1. 99.6% ASN Timeliness
2. 99.8% Load Quality
3. 99.8% ASN Accuracy
4. 99.9% On-Time Shipping
5. 99.4% Fill Rate
6. 99.3% Pallet & Carton Labeling

Reach out to learn more about ITS Logistics and find a creative logistics solution that will work for your business.

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