ST. GEORGE, UT – MAY 19: Trailer moves at Walmart distribution center on May 19, 2022 … [+]
Walmart is relaxing its requirement that all packages from suppliers arrive on time. Since September 2020, 98% has been Walmart’s OTIF requirement.From today February 1stcent, the new OTIF goals are 90% on-time compliance and 95% complete fulfillment. This was announced on January 30th on the Retail Link portal for suppliers.th.
But Kevin Williamson, CEO of RJW Logistics, said: “For suppliers who consistently failed to meet previous standards and paid hefty fines, this news may seem like a reason to celebrate. “Maybe, but that’s short-sighted.” While Walmart’s lower OTIF requirements will allow more suppliers to remain compliant, suppliers that admit to poor OTIF performance are sacrificing in-store performance, sales and business growth. ”
RJW Logistics is an asset-based third-party logistics company focused on helping consumer goods customers achieve higher delivery compliance with large retail chains.
Walmart’s On-Time-In-Full Initiative is a compliance measure designed to ensure your shipments arrive at your Walmart store or distribution center on time. For Walmart, this goal is to ensure that when customers go to the store, the products they want to buy are on the shelves. Walmart is fining suppliers who arrive late or don’t ship all of their shipments. Although Walmart is not the only major retailer with his OTIF requirements, Walmart’s his OTIF requirements are a top priority for consumer goods companies because it is the world’s largest retailer and a company with strict requirements.
Sam Hallock, director of Uber Freight, reports that among Walmart’s customer base, Walmart’s suppliers currently pay Walmart penalties of 0.16% of the cost of goods sold. Uber Freight is a leading provider of managed transportation services.
Uber Freight reports that the fines depend on the cost of the products sold to Walmart. For example, if a company under-ships televisions, it will be fined more than if it under-ships soup. But for many retailers, the fines are well over $1 million a year. Cumulatively, it is estimated that the consumer goods industry loses more than $1 billion annually due to lack of shipping compliance costs.
Proving OTIF remains difficult
Many consumer goods suppliers have implemented real-time transportation visibility solutions. These solutions allow businesses to prove that their products arrived on time. But Stephen Dyke, a senior executive at FourKites, says it’s not difficult to gain visibility into whether a package will arrive on time. This is proof that the full amount has arrived. FourKites is one of the largest providers of real-time traffic visualization solutions.
Tracking your truck using GPS is not enough. Your visibility solution should be built in a way that allows you to download order quantity and inventory data from your customers’ systems. Uber Freight can also track both on-time and complete trips. Steve Barber, senior vice president of platforms at Uber Freight, explains how this works.
When Uber Freight receives a purchase order, delivery order, or sales order (the type of order used depends on the customer’s ERP), it is measured by OTIF. And many warehouse management systems are configured to scan barcodes on items as they are loaded onto trucks. That data is then incorporated into pre-shipment notifications to retailers. That ASN data is also entered into the Uber Freight system, allowing you to compare what was shipped with what was ordered.
“So you can compare what was actually on that truck versus what was going to be on that truck at the order level,” Barber explained. “We can track that information down to the actual delivery level, so once it’s delivered, we can see if it was delivered on time.” In addition to data normalization and data cleansing, this is also a big data issue. . It is clearly not an easy problem to solve.
With the right OTIF data, you can prove that your company truly shipped on time. But what happens when your shipments don’t meet OTIF? At FourKites’ user conference, consumer goods executives discuss how they use visualization data to identify where shipments are holding up across the supply chain. and how they dug into the root causes of delays and undershipments and implemented a continuous improvement program.
However, even resolving the complete data issue will not completely exempt consumer goods companies from OTIF fines. Retailers may report that the product arrived damaged, some cartons arrived empty, or the product may have been stolen during shipping. Nevertheless, achieving improved OTIF compliance is the main reason consumer goods companies cooperate with both his FourKites and Uber Freight.
