Are you a Walmart supplier looking to meet the expectations of today's evolving retail landscape? Look no further than Walmart's On-Time In-Full (OTIF) initiative, launched in 2017.
In this guide, we'll break down what OTIF is, how it's calculated, and why it matters to your business. We'll also provide practical tips to improve OTIF performance and avoid penalties.
What is On-Time In-Full (OTIF)?
OTIF is Walmart's compliance measure for supplier freight arriving at their stores or distribution centers. It revolves around two critical questions for each delivery:
Did the shipment arrive on time? Early or late deliveries may result in monetary penalties. Walmart assigns specific drop-off windows, and meeting them is crucial.
Did the shipment arrive in full? Walmart expects the delivered items to match the purchase order (PO) in quantity and product. Any discrepancies can lead to penalties.
How is OTIF Calculated?
OTIF is calculated based on two metrics: on-time delivery and in-full delivery. Monetary penalties are also calculated as a percentage of the order.
For example, let's say you're selling cases to Walmart at $5.00 per case, and your PO shows you need to deliver 100 cases. If you deliver 90 cases on time but are 10 cases short, your on-time score would be 100%, and your in-full score would be 90%. The resulting OTIF penalty would be $0.30.
On the other hand, if you deliver all 100 cases but they arrive a day late, your on-time score would be 0%, and your in-full score would be 100%. The penalty, in this case, would be $3.00.
What is a Good OTIF Score
You should strive for 100% on both the on-time and in-full metrics. As of September 2020, Walmart's goal is 98%. While this is the target, the acceptable range for on-time and in-full metrics can vary. Consult with your Walmart merchant team to determine what is acceptable.
Does OTIF Matter?
OTIF's ultimate goal is to ensure that items are consistently in stock. A smooth supply chain is vital for sales, profitability, positive customer experiences, and overall retail success. OTIF highlights areas needing improvement, leading to better sales and higher scores. Penalties serve as a reminder for suppliers to enhance their supply chains and keep Walmart shelves stocked. Walmart's priority is to have items available when customers are ready to purchase.
Walmart OTIF Guidelines
Walmart's OTIF expectations have evolved over the years, and as of September 15, 2020, the goal for all freight characteristics is 98%. Suppliers must achieve a 98% on-time delivery rate and deliver at least 98% of ordered cases across all Walmart categories and transportation methods.
Improving OTIF Performance
If your OTIF performance needs improvement, taking action is crucial. Here are some practical steps to consider:
Understand Your Walmart OTIF Scorecard: Use Retail Link® to track your OTIF performance and identify potential issues that could result in penalties.
Fix Purchase Order (PO) Issues First: Ensure the accuracy of the products and quantities listed on the PO. Avoid substitutions and stay updated on any PO changes or cancellations.
Communicate with Your Walmart Merchant: Stay in touch with your merchant to align your production capacity with their expectations. This allows for accurate forecasting and better shipment planning.
Consider Using a Third-Party Consolidator: Small and mid-sized suppliers can benefit from outsourcing supply chain tasks to third-party logistics and consolidating firms. They can help optimize transportation and appointment schedules and reduce charges by consolidating shipments.
Stay Up-to-Date on OTIF Changes: Regularly check for communications from Walmart in Retail Link® and keep a close relationship with your Walmart merchant team to stay informed about any updates or changes to OTIF expectations.
Following these steps, you can improve your OTIF performance, avoid penalties, and ensure your products are consistently available to Walmart customers.
Remember, OTIF is a valuable tool for enhancing your supply chain and contributing to a positive customer experience. Embrace the challenge and strive for excellence in delivering On-Time In-Full to Walmart.
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