Guide · Deduction prevention
For CPG operations teams shipping through KeHE, UNFI, and other distributors.
Recovery gets the dollar back. Prevention keeps it from leaving. This guide covers the operational checkpoints, compliance rules, and system connections that prevent the most common CPG deductions before they hit your remittance.
The economics
Every deduction your team recovers costs labor (research and filing), time (days to weeks per dispute), and potentially 20-35% of the recovered dollar if you use a recovery service. A deduction prevented costs a compliance check before shipment — and keeps the full dollar.
Recovery path
$250 fill-rate fee
Total cost: $50-87 in service fees + hours of labor + 3-week delay
Prevention path
$250 fill-rate fee
Total cost: one pre-shipment check. You keep $250.
This example uses a fill-rate fee. The same economics apply to every preventable deduction type: appointment no-shows ($250), pallet violations ($75-$400), labeling non-compliance (3% of affected product), and routing violations. The cheapest deduction is the one you never have to recover.
Deduction types
Not every deduction is preventable. Contractual passthrough — promotional allowances, MCB processing fees, weekly CN charges — follows agreed terms. These seven are compliance-based deductions that can be prevented with upstream checks, evidence collection, and system monitoring.
What causes it
Cases received at the DC fall below 95% of cases ordered. The gap may be a real shortage, a DC miscount, or an ASN mismatch.
How to prevent it
Confirm physical case counts match the PO before pickup. Reconcile pick ticket, BOL, and ASN quantities. If shipping partial, file a planned short-ship (EDI 860) in advance so the DC expects the reduced quantity.
Evidence to collect
Pick confirmation, BOL with carrier signature, ASN (EDI 856) with lot-level detail, pre-shipment pallet photos.
Fee: 3% fee on the shortage amount when fill rate drops below 95%.
What causes it
On-time delivery falls below 85% for the quarter. Causes include missed appointments, carrier delays, reschedules, and traffic — but the penalty applies to the brand regardless of the cause.
How to prevent it
Schedule appointments 7+ days in advance through C3 Reservations. Confirm carrier pickup on the scheduled date. Monitor in-transit events. If a delay is unavoidable, reschedule the appointment before the delivery window closes.
Evidence to collect
C3 Reservations appointment history showing scheduled vs. actual delivery, carrier tracking events proving on-time departure, communication trail showing DC-initiated changes.
Fee: $250 per late PO when quarterly OTD falls below 85%.
What causes it
EDI 855 (PO acknowledgment) not sent within 24 hours of the 850. EDI 753 (ready to ship) not sent 3 business days before pickup. EDI 856 (ASN) missing or inaccurate.
How to prevent it
Automate EDI acknowledgment to fire within hours, not days. Set a calendar trigger for the 753 deadline. Validate ASN data against the BOL before transmission.
Evidence to collect
EDI transmission timestamps from SPS Commerce, Crstl, or TrueCommerce. System-generated acknowledgment records.
Fee: No direct fee for late 855, but it blocks the EDI 810 invoice. Late 753 can delay carrier dispatch and cascade into an OTD penalty.
What causes it
Carrier does not arrive at the DC during the scheduled appointment window. Causes include carrier dispatch failures, traffic, wrong DC, and scheduling errors.
How to prevent it
Confirm the appointment in C3 Reservations 7 days out. Verify the carrier has the correct DC address, date, and time. Monitor carrier dispatch the day before. Cancel appointments at least 24 hours in advance if the shipment will not be ready.
Evidence to collect
C3 Reservations booking confirmation, carrier dispatch records, cancellation receipts if applicable.
Fee: $250 per no-show. Same-day cancellation: $250.
What causes it
Case barcode scan rate falls below 95% at the DC. Unreadable, incorrect, or missing GTIN barcodes trigger the non-compliance threshold.
How to prevent it
Test barcode scan rates before shipping. Verify GTIN compliance through IX-ONE imaging. A single unreadable barcode format can pull the entire SKU below the 95% threshold — fix the master, not just the batch.
Evidence to collect
IX-ONE imaging reports, internal barcode scan test results, corrective action records.
Fee: 3% non-compliance fee on affected product when scan rate drops below 95%.
What causes it
Non-standard pallets (not GMA 48x40), pinwheeled loads, floor-loaded trailers, overweight or overheight pallets, or missing PO placards.
How to prevent it
Use GMA-standard 48x40 pallets with 4-way entry. Verify weight (max 2,500 lb) and height (max 72 inches including pallet). Placard every pallet with the KeHE PO number and destination DC. Never pinwheel or floor-load unless explicitly agreed.
Evidence to collect
Pre-shipment pallet photos with timestamps, weight tickets, placard verification records.
Fee: Pinwheeled pallets: $75. Floor-loaded trailers: $400. Sort & segregate: $85 / $110 / $160+ depending on severity.
What causes it
Temperature out of spec at delivery, incorrect wrapping or stacking, non-compliant packaging, or failure to follow DC-specific requirements.
How to prevent it
Check temperature bands before loading: refrigerated 34-40 degrees F, proteins 28-40 degrees F, frozen -20 to 0 degrees F. Follow DC-specific stacking and wrapping rules. Document pre-load temperatures with timestamped photos or data logger readings.
Evidence to collect
Temperature logs (continuous from pickup through delivery), pre-load temperature photos, packaging compliance photos, data logger readings.
Fee: Temperature non-compliance risks full load rejection, not just a fee. Stacking and wrapping violations trigger extra handling charges.
Fee amounts are from the current KeHE IBR Fee Schedule and P&P Fee Schedule. Always verify against the current distributor documentation. For the complete fee reference, see the KeHE compliance guide.
Pre-shipment checklist
Run these eight checks before every outbound shipment. Each one prevents a specific category of deduction and collects evidence that serves double duty: if a deduction still posts despite compliance, the evidence is already assembled for the dispute.
EDI 855 sent within 24 hours
PO acknowledged, invoice pathway open.
Item master verified (UPC, case pack, description)
No receiving discrepancies from data mismatches.
Inventory allocated and confirmed
No surprise short-ships. Planned partials filed via EDI 860.
EDI 753 sent 3 business days before pickup
Carrier dispatch on schedule.
Appointment booked in C3 Reservations (7+ days)
DC expecting the load. No no-show risk.
Pallet specs verified (GMA, weight, height, placards)
No handling fees at the dock.
Barcode scan rate tested (95%+ threshold)
No non-compliance fee on the SKU.
Temperature and packaging documented pre-load
Evidence collected before the carrier takes possession.
For the full upstream prevention guide with KeHE-specific thresholds, deadlines, and fee amounts, see How to prevent KeHE compliance deductions before they happen. For the evidence required per deduction type, see the deduction evidence checklist.
Prevention meets recovery
Prevention and recovery are not separate workflows. They share the same evidence trail. The BOL you photograph before carrier handoff prevents a shortage dispute — and if a UDR still arrives, that same BOL is the decisive evidence for the dispute. The difference is timing: collect it proactively, not reactively.
BOL, pallet photos, temperature readings, barcode test results, ASN data. These take minutes to gather at the warehouse. The same evidence costs hours to reconstruct from scattered systems after a deduction posts.
If the shipment is compliant, the evidence proves it. If a deduction posts anyway, the evidence is already assembled for the dispute. Either way, the work was done once.
Recurring deductions at the same DC, same carrier, or same SKU reveal systemic issues. The pattern is visible only when evidence is collected consistently across every shipment.
How EasyOps automates prevention
Manual compliance checking fails when teams are busy, when seasonal volume spikes, or when someone is out. EasyOps runs the checks against every PO automatically — before the truck moves.
The prevention advantage
Most deduction tools start after the deduction posts.
Recovery services, point tools, and even internal teams typically begin when the remittance arrives with money missing. By then, the evidence trail is cold, the dispute window is ticking, and recovery is the only option.
EasyOps starts at the purchase order and works forward. Compliance is checked before shipment. Evidence is collected during fulfillment. When a deduction does post, the dispute is ready before someone even notices the charge. That is the structural difference between recovery-first and prevention-first deduction management.
$0
Cost of a prevented deduction
20-35%
Cost of a recovered deduction (service fee)
Frequently asked
No. Some deductions are contractual passthrough — promotional allowances, MCB processing fees, weekly CN charges — and cannot be prevented because they follow agreed terms. Prevention applies to compliance-based deductions: shortages, late deliveries, EDI violations, labeling issues, and routing failures. In one audit, 88% of deduction dollars were contractual. The remaining 12% is where prevention matters most.
Fill rate penalties. When cases received at the DC fall below 95% of cases ordered, a 3% fee applies. The most common causes are DC miscounts (preventable with pre-shipment evidence), ASN mismatches (preventable with data validation), and unplanned short-ships (preventable with inventory confirmation before acknowledgment).
A prevented deduction costs nothing. A recovered deduction costs labor (your team researching and filing), time (days to weeks per dispute), and potentially 20-35% of the recovered dollar to a recovery service. If you prevent a $500 fill-rate fee, you keep $500. If you recover it through a service, you keep $325-$400. The economics are straightforward: prevention is always cheaper than recovery.
Yes. EasyOps checks compliance for KeHE, UNFI, Walmart, Target, Walgreens, and Costco. The checking framework is distributor-agnostic and the rules are distributor-specific, so each PO is checked against the requirements of the distributor it ships to. See the KeHE compliance guide for the KeHE fee categories covered.
Prevention is the first step, not a separate workflow. The same systems that collect evidence for disputes — BOLs, ASN timestamps, appointment records, carrier tracking — also power the pre-shipment compliance checks. The difference is timing: check before the truck moves, not after the deduction posts. See the complete deduction management guide for how prevention connects to classification, evidence, and recovery.
Evidence boundary: This guide is an operational reference based on current KeHE documentation and EasyOps compliance rules. Fee amounts and thresholds change when distributors update their terms. Always verify against the current distributor documentation. For the full KeHE fee reference, see the KeHE compliance guide.
Related resources
The full fee schedule, routing rules, EDI deadlines, and compliance thresholds.
Read →
OTIF targets, EDI deadlines, packing requirements, and the checks to run before shipment.
Read →
What deductions actually cost at every revenue tier — dollars, labor, and missed disputes.
Read →
Classify, dispute, recover, prevent — the full workflow.
Read →
Start with what you have
