HRG, Woodridge venture wants to help Walmart suppliers manage costly deductions 

by Kim Souza ([email protected]) 830 views 

Revenue deduction help has been available for large Walmart suppliers through companies like Harvest Revenue Group (HRG). But for smaller suppliers, auditing defense against the world’s largest retailer was too expensive. That’s changing.

Bentonville-based HRG has helped some of Walmart’s largest suppliers recover unauthorized deductions for nearly two decades. HRG CEO Boyd Evert and the more than 30 auditors he employs handle deduction management with fund recovery for companies with more than $30 billion in annual sales at Walmart. Until now, the service was out of reach for smaller to medium-sized suppliers to Walmart with revenue under $100 million.

Jon Allen, CEO of Rogers-based Woodridge Retail Group, and his auditors work with smaller to medium-sized suppliers to Walmart and other competitors to better manage and grow their omnichannel businesses. Allen and Evert recently formed a joint venture partnership to extend customized deduction management services at levels more affordable for smaller companies.

“Profitability for small to medium-size suppliers is under intense pressure, and a large claim over a price dispute can have a critical impact on smaller suppliers who also often don’t have the staff to regularly monitor claims and deductions,” Allen said.

He said Woodridge has seen suppliers get small deductions over time they could live with, then a large deduction hits their account, and there is a major cash crunch. The expertise to fight and recover the funds is specialized. He said there is no turnkey service for smaller companies that can fail or no longer do business with Walmart if a large deduction occurs.

The new venture will offer post-audit service with HRG that is affordable for smaller companies managed by Woodridge Group. The Woodridge deductions service through HRG is customizable based on the size and scale of the deductions. The service provides contact with the retailer on their behalf to resolve claims and put safeguards against future deductions.

Evert said HRG identified gaps in service for turnkey post-audit service, and partnering with Woodridge is one way to fill the gaps. Allen said retailers are more closely monitoring price metrics than in the past decades because of inflationary pressures. Changes in prices open the door to mistakes that can result in deductions generated from Walmart’s internal post-audit teams.

Supply chain disruptions and more focus on on-time and in-full deliveries can also generate fees and deductions in supplier accounts. The newer Supplier Quality Excellence Program at Walmart is another area where fees and handling costs can dig into profits for smaller suppliers.

Jeff Young recently joined HRG as chief operating officer and brings two decades of supply chain expertise to the business. He spent 14 years at Walmart as senior director of replenishment for consumables. He also logged time handling the logistics business for Bonduelle, and he served as director of supply chain for Uber Freight, formerly Transplace.

Evert said Young brings more expertise to his firm in an area where fees and deductions are growing as Walmart handles more freight on behalf of its suppliers while also providing fulfillment for its marketplace sellers. As Walmart continues to grow the number of marketplace sellers and provide fulfillment for many, the risk of claims in that area is likely to rise, and the new venture is hoping to provide help where needed.

“The best deduction is no deduction,” Evert said. “This venture also works closely with suppliers to ensure they guard against deductions from the get-go, making sure their seller agreement is worded to avoid verbiage that can trigger a retailer post-audit that usually results in a deduction against sales income.”

Allen said he was already bringing some of his clients to HRG for this type of work after seeing the results from clients who just opted to take the default plan provided by Walmart.

“The more business a supplier does with Walmart, the more likely they will incur deductions and fees that offset their sales income. The cost of not opening an email can be detrimental for a small company because some deductions have a very short window for potential recovery,” Allen said.

Young said Walmart and HRG have worked through post-audit claims for suppliers for years. With more fees, scorecards and propensity by Walmart to fine, it’s smaller suppliers who most need a customized service that is now available through the venture between HRG and Woodridge.

“I spent about six months looking for a true competitor for this new venture and didn’t find one,” Young said.

Evert said the venture is not a service-as-a software-solution (SASS) application but is a customizable service based on the demand of smaller suppliers who need representation on deductions. Evert said HRG  talks directly to Walmart at different levels to resolve the claim, recover the deduction and ensure it’s not deducted under another code.

“I brought a client to HRG that would have gone under without the help and recovery and education they provided. This is a real issue for suppliers of all sizes. We are here for the most vulnerable with this new venture,” Allen said.