Industry guide · Food & Beverage
Grocery and beverage brands selling through KeHE and UNFI face a specific deduction profile: fill-rate fees that compound with velocity, OTD penalties that accumulate quarterly, and promotional passthroughs that blur into noise. This guide maps every type, the evidence each requires, and the dispute strategy that works.
For CPG operations and finance teams managing grocery and beverage deductions at KeHE and UNFI.
Direct answer
CPG brands selling grocery and beverage products through KeHE and UNFI typically lose 5-15% of gross sales to deductions. These fall into three categories: service-level deductions (fill rate, OTD, cut cases), compliance and logistics deductions (appointment fees, barcode non-compliance, EDI violations), and promotional and program deductions (MCB, CN passthroughs, slotting). The first category is where most recoverable dollars hide.
In one verified audit, 88% of deduction dollars were contractual passthrough — charges that follow agreed terms. The remaining 12% contained the disputable items. The audit’s job is to separate the two so your team files the recoverable ones instead of disputing everything.
The six most common
These six deduction types appear on virtually every grocery and beverage brand’s KeHE remittance. Each has a different code, trigger, and dispute path.
Trigger: Service level falls below 95% for the quarter. KeHE charges 3% of the shortage amount.
Disputable? Often — when DC miscount caused the shortfall, not supplier short-ship
Evidence: Signed BOL, POD, pick confirmation, warehouse count records
Trigger: On-time delivery drops below 85% for the rolling quarter. Late POs accumulate toward the threshold.
Disputable? Often — when the appointment was rescheduled by the DC or the carrier delivered within the window
Evidence: C3 Reservations appointment history, carrier tracking events, BOL timestamps
Trigger: $1.10 per case when shipped quantity falls short of ordered quantity. Accumulates across POs.
Disputable? Rarely — usually a valid upstream fix. Disputable only when DC count is wrong.
Evidence: BOL, pick confirmation, packing list against PO quantity
Trigger: 8% of invoice for the Expedited Program. AAP-enrolled suppliers are exempt.
Disputable? Yes — if AAP enrollment status is current. Verify before disputing.
Evidence: AAP enrollment confirmation, Fee Schedule, invoice
Trigger: Weekly retailer-initiated charges routed through KeHE. KeHE is the billing intermediary.
Disputable? Not through K-Solve — dispute route is the retailer directly
Evidence: Promotional agreement, retailer deal sheet, PO terms
Trigger: Introductory allowance (IAA at 15% minimum), slotting, placement, and free-fill charges for new items.
Disputable? Sometimes — when charged outside the agreement or double-applied
Evidence: New-item agreement, slotting contract, prior deductions under the same term
For the full code reference, see all 111 KeHE prefix codes. For evidence requirements by type, see the evidence playbook.
Why grocery is different
Grocery SKUs turn quickly. When service level dips, KeHE measures it in days, not months. A single missed appointment or partial shipment can pull your quarterly fill rate below 95% and trigger the 3% SLF across every affected PO.
A $1.10 cut-case charge is invisible on one PO. Across 200 cases short over a quarter, it is $220 — a full margin point for a low-ASP grocery SKU. EasyOps rolls these up by cause so you see the pattern, not just the line.
Holiday, back-to-school, and promotional peaks stress fulfillment capacity. When volume jumps 30-50%, appointment scheduling, EDI timing, and packing compliance are the first things to slip — and each slip becomes a deduction.
Prevention checklist
Every item on this list addresses a specific deduction trigger. Run them before the truck moves.
Compare allocated inventory against PO quantity before the pick ticket prints. A planned partial with an EDI 860 change request is a controlled decision. A surprise short-ship at the dock is a 3% fee.
Schedule through C3 Reservations at least 7 days before delivery. No-show fee: $250. Same-day cancellation: $250. These are avoidable with a calendar check.
The EDI 856 must match the BOL case counts. A mismatch is the most common source of receiving discrepancies. The DC trusts the ASN for system counts and the BOL for physical verification.
KeHE scans case barcodes at receiving. Below 95% scan rate triggers a 3% non-compliance fee. Test your barcodes before shipping — one unreadable format can pull an entire SKU below threshold.
Timestamped photos of every pallet before the carrier takes possession. These are your primary evidence if a shortage or damage dispute arises. Cheapest insurance in the supply chain.
KeHE issues UDRs within 48 hours of receiving. You have 48 hours to respond, but aim for 24. A missed window means the DC count stands — no dispute possible.
For the full upstream prevention guide, see how to prevent KeHE compliance deductions.
How EasyOps helps
Upload your K-Solve export. EasyOps classifies each deduction — fill-rate fee, OTD penalty, promotional passthrough — separating contractual from disputable in minutes, not weeks.
Every disputable deduction arrives with the BOL, POD, ASN, and appointment record already attached. Your team files through K-Solve with a complete packet instead of hunting across systems.
Recurring deductions are rolled up by cause, DC, and time period. A pattern of fill-rate fees at a specific DC may indicate a labeling or packing issue that can be fixed upstream.
Frequently asked
Fill-rate fees (SLF) are the most common recurring deduction for shelf-stable grocery and beverage brands. KeHE charges 3% of the shortage amount when quarterly service level drops below 95%. High-velocity SKUs are penalized fastest because they ship frequently and each missed case counts against the quarterly calculation.
Yes, when the shortfall was caused by a DC miscount rather than a supplier short-ship. The evidence is the signed BOL and proof of delivery showing the correct quantity was shipped. In verified audits, fill-rate disputes with complete evidence packets have strong win rates.
KeHE calculates on-time delivery on a rolling quarter. When your rate drops below 85%, a penalty applies to each late PO. They are disputable when the appointment was rescheduled by the DC or the carrier delivered within the agreed window. The evidence is the C3 Reservations appointment history and carrier tracking events.
No. CN codes are retailer-initiated weekly charges that KeHE processes as a billing intermediary. The dispute route is through the retailer directly, not through K-Solve. Verify the charge against your promotional agreement with the retailer.
EasyOps classifies every deduction line — separating contractual passthroughs from disputable items — and assembles the evidence packet (BOL, POD, ASN, appointment records) automatically. For grocery brands, this means fill-rate disputes get filed with the right evidence instead of expiring in a spreadsheet. In one audit, EasyOps identified $10,757 in disputable deductions from $151,671 total.
Evidence boundary: This guide is an operational reference for grocery and beverage brands, not a substitute for current distributor documentation. Always verify terms and deadlines directly with each distributor.
Go deeper
How EasyOps traces every grocery deduction to its rule.
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The complete operating guide from remittance to root cause.
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What evidence KeHE expects for each deduction type.
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Upstream checks to prevent compliance deductions before they happen.
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