Supply chains report that 3% to 20% is lost to chargebacks each year (Source: Gartner Top 5 Practices to Reduce Retailer Chargebacks and Lower Costs). And in today’s fast-paced, data-driven supply chains, chargebacks are a costly and often avoidable problem.
These penalties, typically issued when a trading partner fails to meet specific requirements, can erode profit margins, damage relationships, and disrupt operations.
Fortunately, digital supply chain collaboration offers ways to reduce and even prevent retailer chargebacks. By improving visibility, communication, and data accuracy, businesses can align more closely and avoid the pitfalls that lead to chargebacks.
What is supply chain chargeback management?
A supply chain chargeback is a financial penalty that a retailer or distributor imposes on a supplier for failing to meet agreed-upon requirements, such as late shipments, incorrect labeling, or incomplete orders. Supply chain chargeback management aims to reduce these penalties by identifying root causes, improving compliance, and streamlining operations across the supply chain.
5 tactics to prevent supply chain chargebacks
Supply chain management software streamlines fulfillment by improving order accuracy, automating workflows, and providing real-time visibility, helping businesses avoid chargebacks due to delays or errors.
Here are five tangible ways to tackle chargebacks using digital tools and smarter collaboration:
1. Identify and group chargeback root causes
The first step in solving any problem is understanding it. Supply chain chargebacks often stem from recurring issues like late shipments, incorrect labeling, or mismatched purchase orders. However, without a clear view of the data, these issues can seem random or isolated.
What to do:
- Use digital dashboards to track chargeback trends over time.
- Group chargebacks by root cause categories—such as shipping errors, documentation issues, or compliance failures.
- Visualize this data to spot patterns and prioritize the most frequent or costly issues.
By categorizing chargebacks, you can move from reactive firefighting to proactive problem-solving.
2. Assign owner for compliance improvements
Once you know what’s going wrong, the next step is to make sure someone is responsible for fixing it. Too often, chargeback management falls through the cracks because no one owns the process.
What to do:
- Assign clear ownership of chargeback categories to specific teams or individuals—such as logistics, warehouse operations, or customer service.
- Set KPIs and accountability metrics for reducing chargebacks in each area.
- Use workflow tools to track progress and ensure follow-through.
When everyone knows their role in compliance, it becomes easier to make consistent improvements.
3. Boost collaboration with suppliers, retailers
Chargebacks are often a symptom of poor communication between trading partners. Misaligned expectations, unclear requirements, or last-minute changes can all lead to costly mistakes.
What to do:
- Use cloud-based platforms to share real-time data with suppliers and retailers.
- Set up automated alerts for order changes, shipment delays, or compliance risks.
- Hold regular collaboration meetings to review performance and align with expectations.
Digital collaboration tools help ensure that everyone is working from the same playbook—reducing misunderstandings and improving execution.
4. Use data tools to improve performance
Modern supply chains generate massive amounts of data. The key is turning that data into actionable insights that help prevent supply chain chargebacks before they happen.
What to do:
- Implement predictive analytics to flag potential issues—like shipments at risk of delay or orders with missing documentation.
- Use machine learning models to identify which suppliers or SKUs are most likely to trigger chargebacks.
- Integrate data from multiple systems (ERP, WMS, TMS) to get a 360-degree view of supply chain performance.
With the right tools, you can shift from reacting to chargebacks to preventing them altogether.
5. Strengthen quality checks and dispute handling
Even with the best systems in place, mistakes can still happen. That’s why it’s important to have strong quality control and a clear process for disputing chargebacks when they’re issued in error.
What to do:
- Introduce automated quality checks at key points in the supply chain—such as before shipping or receiving.
- Use digital documentation (photos, timestamps, scan logs) to verify compliance and support dispute claims.
- Create a centralized chargeback portal where teams can track, investigate, and respond to chargebacks efficiently.
A strong dispute process not only helps recover lost revenue but also builds trust with trading partners.
Prevent chargebacks: Collaboration is the cure for chargebacks
Supply chain chargebacks are often a symptom of deeper issues, such as miscommunication, poor data quality, or lack of visibility within a supply chain. OpenText Business Network Cloud helps businesses reduce chargebacks by providing end-to-end visibility and automation across trading partner interactions. Our Trading Grid and Command Center solutions enable businesses to identify and group chargeback root causes through advanced analytics and real-time monitoring of transaction data.
It supports assigning ownership for compliance improvements, such as e-invoicing, by integrating workflows and role-based dashboards that track and trace accountability throughout your entire supply chain.
OpenText enhances collaboration with suppliers and retailers via a centralized, cloud-based environment that facilitates seamless data exchange and communication. No matter your industry or geographic location, the path to fewer chargebacks and better performance starts with a smarter, more collaborative connected community.
