Walmart is putting the pressure on its suppliers to deliver exactly on time and packaged right. That means if a supplier delivers late, there will be a fine. There will also be a fine for early deliveries.
The program, labeled “On-Time, In-Full,’’ intends to add $1 billion to revenue by improving product availability at stores. The pressure is on to stay on par with rival Amazon.com, which is expected to grow quickly once it completes the purchase of Whole Foods.
“Wal-Mart has to find efficiencies wherever it can,’’ says Laura Kennedy, an analyst at Kantar Retail. “They’re trying to squeeze and squeeze and squeeze.’’
The program begins in August, and the company said they will require full-truckload suppliers of fast-turning items to “deliver what we ordered 100 percent in full, on the must-arrive-by date 75 percent of the time.” Items that are late or missing during a one-month period will incur a fine of 3 percent of their value. Early shipments get dinged, too, because they create overstocks.
The stakes increase by February when Walmart will expect deliveries to be on-time and in-full 95 percent of the time. Its previous target was 90 percent in a four-day window.
Walmart acknowledged the goals are aggressive and will require new ways of working, saying it’s “working closely with our vendors to help reach these targets. We know that when products we’ve ordered arrive on time, it results in happier customers.’’
“Everybody has come to the stark realization that On Time In Full is here and it’s real and they better get ready for August,’’ says Colby Beland, vice president of sales at CaseStack, a logistics provider that bundles supplier shipments for delivery to retailers’ warehouses
