Just weeks ago, Walmart announced it was adjusting standards for the On Time In Full (OTIF) initiative. Supply chain expectations for suppliers increased to 98% for both On Time and In Full. The new standards went into effect on all purchase orders with a Must Arrive By Date after September 15.
As questions arose around the new goals, one huge topic has received little attention: how will the new OTIF goals impact suppliers’ e-commerce business?
Tiffany Henderson is 8th & Walton’s Director of E-commerce. She has been working with suppliers since the announcement and brought her expertise to a recent Conference Call Podcast (click the play button above to hear our entire interview with Tiffany). In our conversation, Tiffany detailed what Walmart.com suppliers can expect immediately and how to prepare for the holiday season.
What’s the Big Change for E-commerce Suppliers?
We began our conversation with the big question: under the new OTIF guidelines, how will Walmart e-commerce be different? As Tiffany explained, OTIF penalties will be a big change for Walmart.com suppliers:
“Previously, many Walmart.com suppliers were not challenged with the 95% OTIF goal that the stores had to meet,” she begins. “Different categories would have 70% or 85% they would have to meet. Also, their case count (quantity they shipped) was not as impactful on their sales. If they received a fine for 100 cases shipped, it was very different compared to what the store’s fine would be at 95% with a million cases shipped.
“The new guidelines are quite a drastic change for many Walmart.com suppliers. Some of them went from having almost no fines with a 70% to 85% goal they had to meet (based on their category) to now being 98% across the board. It doesn’t matter what department or whether or not you work with stores, the goal is 98%. A lot of suppliers may be experiencing fines for the first time.”
Where can Suppliers Start Making OTIF Improvements?
Tiffany works with Walmart suppliers each week and understands the danger of OTIF penalties getting out of control. With the alignment of store and online expectations, suppliers checking their internal processes has never been more critical. Tiffany gives practical guidance for suppliers wanting to get ahead of future penalties:
“Suppliers should be continuously improving their shipping standards to try and meet that goal,” she advises. “My recommendation would be to look at your last year’s OTIF charges, your average ranking you came back with, and try to budget to it. Come up with an average so you know what potential fines may be going forward, especially if you were never able to hit the previous 95% goal.
“Focus needs to be on meeting the On Time In Full criteria for the stores and online,” Tiffany concludes. “That is first and foremost on Walmart’s mind. The fines are only going to keep getting stiffer. If suppliers can’t meet the goals, there will be continued penalties. It’s very important to Walmart to meet the goals so customers have items on the shelf and items in the distribution centers for purchasing.”
(Need help getting your OTIF fines eliminated? Looking for help with your e-commerce pages? Click here to contact us at 8th & Walton! Or click here for more information on the How to Sell on Walmart Marketplace class.)