Walmart’s new OTIF requirements were implemented for suppliers starting September 15th, calling for agility and adaptation for suppliers. Is your brand ready for the new updates?
What’s Happening with the new OTIF Requirements?
The changes vary between Prepaid, where the supplier handles the transportation to Walmart, and Collect, where Walmart picks up the freight from the supplier.
Collect Suppliers won’t feel a huge impact from the new requirements. They went from a Collect Ready (orders routed on-time and ready for pick-up) requirement of 95% to 98%. The increased focus is on prepaid LTL shipments. Their minimum requirement of 70% on–time has increased to 98% on–time.
New OTIF Goals Effective immediately: These changes will be effective on all purchase orders with must arrive by dates after Sept. 15, 2020.
- On Time = 98% Prepaid and Collect Ready
- In Full = 98% General Merchandise, Health & Wellness, Food and Consumables
OTIF Changes to Goals and Fines –The 3% fine has not changed. This is the amount it has always been.
Walmart’s New Supplier Quality Excellence Program (SQEP)
Walmart will be implementing the SQEP program in four phases, with a full program launch February 1, 2021 to essentially hold suppliers accountable for their item file accuracy.
The SQEP program is holding suppliers accountable to their Item File metrics, correct use of case labels and carton markings, and overall load quality. Occasionally, suppliers will make small changes to their products but forget to update the Item File, causing errors in what is ordered vs received. SQEP comes with a dashboard rollout for accuracy tracking. Like OTIF, this program uses chargebacks to prevent falling below Walmart’s required threshold of accuracy.
This is a big undertaking for suppliers with several action items, but there are ways suppliers can achieve success with Walmart’s new OTIF requirements, especially when working with a supportive team like Harvest Group.
What Can Suppliers do to Prepare?
As the world of supply chain and retail is adapting to these changes, here are a few ways that suppliers can brace themselves and push their business forward.
SQEP Supplier Action Items for 2020:
PO Accuracy – Beginning Nov. 2, 2020
Supplier Action Required:
- Review the SQEP Standards in Retail Link Academy > Ordering & Replenishment > KPIs and Metrics > Supplier Quality Excellence Program (SQEP).
- Develop and implement an internal accuracy action plan for all outgoing Walmart U.S. Stores and eCommerce deliveries.
- Quality Assurance– Mitigate errors throughout your supply chain. Avoid item substitutions that contribute to SKU inaccuracies.
- Accountability– Ensure practices are in place to prevent inaccuracies while picking orders. Ship to the purchase order; no more, no less.
Item File Accuracy
- Conduct a thorough review of your entire Item File and submit any updates through the Item 360 portal
- Check all levels of the Item hierarchy including Item, Warehouse Pack & Supplier Pack specs
This update brings a newfound emphasis on suppliers really getting into the details of their supply chain. They need to understand how their carriers are performing by DC Lane and make adjustments as needed.
Ask yourself these important questions: What is the root cause of my low On-Time score? Which carriers are delivering poorly? Are we making lead time updates and holding one another accountable? Should I consider 3rd Party Consolidation?
The big picture is important to keep in mind, but the day–to–day operations are where suppliers need to be zeroing in. High OTIF leads to further collaboration with your Walmart Team, reduced Out of Stocks, and higher sales.
Working with a broker during this time is a great way to make informed decisions while receiving the support you need from an extended team. Harvest Group is here to help! We are working with our clients to efficiently manage these changes. Interested in learning more? Reach out to hello@harvestgroup.com or fill out our contact form.
