The Bigger Walmart Story: 98% OTIF or 2021 SQEP?

Walmart Supplier Quality Excellence Program

 

Since Walmart first implemented its On Time In Full (OTIF) initiative years ago, Colby Beland has monitored the program closely and helped Walmart suppliers. Colby is Vice President of Corporate Sales Solutions for Hub Group.  Hub Group, through its CaseStack Retail Supplier Solutions, is supporting suppliers through the recent OTIF transition to the 98% expectation.

We spoke with Colby on the Conference Call Podcast about the September OTIF announcement (click the play button above to hear our entire conversation). His advice for suppliers was insightful as he’s been working with suppliers from day one of OTIF. While he was surprised at the new OTIF goals, he saw an even bigger concern for Walmart suppliers. In our conversation, Colby assured us 98% is possible, but the real story in the announcement is hitting next year: Walmart’s Supplier Quality Excellence Program (SQEP).

Is 98% OTIF Even Possible?

Since Colby works directly with Walmart suppliers, it’s always insightful to get his take on what’s happening on the front lines of supply chain. We started by asking him what those first conversations were like when Walmart announced the OTIF update in September.

“We immediately started getting phone calls from suppliers wondering if 98% OTIF is even possible,” he began. “Is 98% even possible? Should we be looking to Walmart collect as a solution? Can you help us solve the problem? There were a lot of conversations around suppliers going collect.”

Why do some suppliers think a 98% OTIF can’t be attained? The first reason, as Colby explains, comes down to the hard numbers. “If you do the math,” he illustrates, “1 divided by 42 puts you at 97%. That means, if you just have one late distribution center, you’re below 98%. It’s a lofty expectation week after week, but it IS attainable. Hub Group’s CaseStack Retail Supplier Solutions has been exceeding 98% for a while. The 98% goal is not unheard of, but to the supplier that’s been shipping LTL (less than truckload) and had an expectation of 70%, to now jump to 98% prompted many conversations from suppliers.”

The second reason was simply the timing of the announcement. We asked Colby what he thought about Walmart’s OTIF update coming so late in the year as opposed to previous ones that normally come at the beginning of Walmart’s fiscal year.

“That was a shock for most suppliers,” Colby says. “The announcement came out on September 1 with an implementation of September 15.  The typical lead time for an LTL supplier in Retail Link is 13 or 14 days on a nationwide basis for Walmart. Purchase orders that were written the day following the announcement had an MABD (must arrive by date) of September 15 and were being impacted. Historically, Walmart has given suppliers a six-month announcement on any major change.”

Suppliers Should Look at SQEP Closely

With such a huge announcement and so little time to adjust, Walmart suppliers have been focused on 98% OTIF. As we continued our conversation with Colby, he stressed that OTIF was not the real story in Walmart’s September announcement. Major changes are hitting suppliers in 2021 in the form of the Supplier Quality Excellence Program. As he advises, this should be a priority for all Walmart suppliers in the next few months.

“OTIF is clearly a big deal, because the new expectations are happening right now,” Colby begins. “But the bigger announcement was SQEP. This is a much bigger deal if I’m a supplier and what it’s going to mean to Walmart. If you read the announcement, SQEP is basically another avenue for Walmart to hold the supplier accountable for lots of different things in addition to OTIF. If I was a supplier, I would be spending a lot of time understanding the different components of SQEP and what it will cost. Most organizations are entering their budgeting and planning seasons right now. They need to be understanding as much about SQEP as they can as they prepare budgets going into 2021.

“SQEP is as big a deal as OTIF. We’ve been dealing with OTIF for a long time. There are solutions. Hub Group can help suppliers be at 98%. If I’m a supplier, OTIF would be the least of my concerns. It would be more about SQEP and what it means to me and my organization as we move forward.”