Code 21: Concealed Shortages

Overview

Code 21 deductions are issued for concealed shortages. These shortages are not visible when a shipment is initially received and are typically discovered only after vendor packs are opened or after merchandise reaches the retail store.

Concealed shortages are often discovered only after the original vendor packaging has been opened.

Concealed shortages include inner carton shortages, inner pallet shortages, and partial supplier packs. Because proof of delivery is often signed based on vendor pack quantities, Code 21 deductions can be difficult to dispute.

Common Root Causes

• Pack size discrepancies between shipped quantities and the purchase order or invoice.
• Incorrect or inadequate product labeling that causes receiving errors.
• Failure to properly package shipments.
• Short shipments or unauthorized product substitutions.

How to Prevent Valid Code 21 Deductions

Item Setup and Invoicing

• Submit only one invoice per purchase order whenever possible.
• Verify item setup information.
• Confirm vendor pack quantities.
• Confirm warehouse pack quantities.
• Transmit invoices using Walmart item numbers.
• Ensure invoices match the purchase order without unauthorized adjustments.
• Match invoice units of measure with those on the purchase order.
• If you disagree with the ordered quantity, do not short ship. Instead, work with the Replenishment Manager or buyer to obtain an updated purchase order.
• Verify that fulfillment information is correctly transmitted through your EDI system.

Packaging and Labeling

• Do not masterpack shipments.
• Clearly display the purchase order number and facility number on labels.
• Ensure labels are visible, undamaged, and easy to read.
• Use color coding or product imagery to distinguish products.
• Use slip sheets between purchase orders when palletizing freight.
• Use color coding or visual identifiers to separate different orders.
• Avoid co-mingling inventory from multiple purchase orders whenever possible.
• If multiple purchase orders must be included in one shipment, clearly separate them according to Walmart requirements.

Can It Be Disputed?

Yes. Code 21 deductions can be disputed through the Accounts Payable Disputes Portal (APDP) in Retail Link. However, they are generally more difficult to win than standard Code 22 or Code 24 shortage claims. If you can demonstrate that the shipment was complete when shipped, filing a dispute may be worthwhile.

Supporting Documentation

• EDI 850 purchase order showing the requested quantities.
• Proof of Delivery showing the items received with the purchase order number clearly listed.
• For store disputes, include the matching delivery address.
• For warehouse disputes, include a Proof of Delivery signed in eaches.

Conclusion

Code 21 deductions typically result from concealed shortages that are discovered only after vendor packaging is opened. Accurate item setup, proper packaging, clear labeling, and complete purchase order fulfillment can help reduce these deductions. When a deduction is invalid, suppliers should gather detailed shipping documentation and submit a well-supported APDP dispute.