fbpx

New 2020 Walmart OTIF Changes

Explained in Plain English

Learn about:

  • The changes to Walmart’s On-Time In-Full (OTIF) program
  • Prepaid-specific expectations
  • What the changes mean for suppliers

On September 1, 2020, Walmart announced changes to its  On-Time In-Full (OTIF) program.

The new OTIF goals will apply for all orders with a Must Arrive By Date (MABD) of September 15, 2020, and thereafter. The new requirements affect purchase orders due in the middle of Walmart Week 33 – the next to last week in the September OTIF month.

Note: This change does not affect Order Defect Rate (ODR) for Marketplace sellers. However, Walmart is starting to integrate the OTIF and OMNI programs so that e-commerce suppliers must meet OTIF goals.

The new OTIF goals do not affect suppliers for Sam’s Club, Walmart.com, direct-to-store deliveries (DSD), Import, and Walmart International, which have separate compliance programs. However, Walmart does have plans to incorporate other types of orders into scope in the future.

New 2020 Walmart OTIF goals

Walmart’s monthly OTIF goals for US suppliers are as follows:

  • On-Time: 98%
    • Prepaid On-Time (i.e., when the supplier manages the transportation): 98% of all cases delivered arrive on time at the distribution center.
      • This goal includes Less than Truckload (LTL), Full Truckload Shipping, and Mix of Full Truckload and Less Than Truckload.
      • In other words, Walmart expects all Prepaid orders to fall within this goal.
    • Collect Ready (i.e., when Walmart manages the transportation): 98% of all cases are ready for pick up by the appointment time.
      • Walmart does not expect Collect Ready Suppliers to deliver the order on time to the DC or store. This responsibility falls into Walmart’s accountability bucket.
      • The supplier must make sure that Walmart can pick up the entire order by the appointment time.
  • In-Full: 98%
    • General Merchandise: 98% of all cases ordered are delivered
    • Health and Wellness: 98% of all cases ordered are delivered
    • Food and Consumables: 98% of all cases ordered are delivered
New 2020 OTIF Goals
New 2020 OTIF Goals

To sum up, Walmart has changed the goals so that every order, regardless of merchandising alignment or shipment type, must meet the 98% goal. This means that suppliers must fill 98% of all orders entirely. Additionally, suppliers must ship 98% of all cases within the delivery window (for Prepaid suppliers). They must route and ready 98% of all cases by the PO’s appointment time (for Collect suppliers).

The changes affect Prepaid LTL suppliers the most with a 40% increase to the On-Time goal from 70%. Prepaid FTL suppliers will see a 12% jump for their On-Time goal, up from 87.5%. In-Full goals increased by 3% for General Merchandise and 0.5% for Food and Consumables. Collect Ready goals have also increased by 3%.

For Prepaid Mixed FTL and LTL, there is no longer a “blended goal.” Regardless of how suppliers ship their products, the On-Time goal is 98% across the board.

If orders fail to comply, Walmart will charge the supplier 3% of the cost of goods sold (COGS) of non-compliant cases that go to stores and shipped e-commerce units. Walmart has not specified a minimum fine threshold for OTIF non-compliance to receive an actual fee.

Related Reading: How to Explain OTIF to Your 5-Year-Old

OTIF calculations

The way Walmart calculates OTIF has not changed. Walmart measures OTIF based on the original PO order quantity and original MABD for system-generated orders. For manual orders, the calculations use the adjusted PO order quantity and adjusted MABD. Cases received in excess still go into the “Overfilled Cases” metric on the scorecard.

OTIF in a snap

Prepaid expectations

Prepaid shipping has different compliance “delivery windows” that suppliers must consider to meet their On-Time goals. These windows depend on the merchandising alignment and distribution center.

For all Prepaid orders that suppliers route to the Regional Distribution Center network (RDC), the delivery window is on the MABD or one day prior. This means that the order must arrive at a regional DC no later than MABD and no earlier than the day before the MABD. (Walmart does not consider early deliveries to be on time.)

For all Prepaid orders that suppliers route outside the RDC network, Walmart determines the delivery window by the order’s merchandising alignment:

  • General Merchandise: Orders must arrive by the MABD or one day prior.
  • Consumables/Health & Wellness: Orders must arrive no later than or earlier than the MABD.
  • Food (Fresh POs): Walmart bases the delivery window between 11:00 AM the day before the MABD to 11:00 AM on the MABD. So, there is a 24-hour delivery window (local time) for Fresh Food orders.
  • Food (Fresh and Non-Fresh mixed POs): If the shipment contains food that is Fresh and Non-Fresh, then there are two delivery windows for the On-Time goal:
    • Between 11:00 AM the day before the MABD to 11:00 AM on the MABD, or
    • On the MABD exactly.
    • In other words, the On-Time delivery window is from 11:00 AM the day before the MABD to 11:59 PM on the day of the MABD.
  • Food (Non-Fresh POs): Orders must arrive no later than or earlier than the MABD.
  • Food POs for DC 6090 (Corrine, Utah): There is an exception for DC# 6090 in Corrine, UT, for all Food POs (Fresh, Non-Fresh, and mixed). Orders destined for this DC must arrive no later than or earlier than the MABD.

Prepaid POs which fall under Walmart’s private fleet program are different in that they must be On Time and Collect Ready. The PO must be ready for pick up on the dock by the appointment time to fall under the On-Time goal. POs that are late due to a Supplier Ship Point failure will fall into the Supplier Accountability bucket, and therefore, will have fines associated with them.

Additionally, prepaid backhaul POs must comply with Prepaid On-Time goals in addition to Collect Ready goals. In other words, these POs must be ready for pick up on the dock by the appointment time. Otherwise, the order will fall into the failed Supplier Ship Point bucket.

Related Reading: Walmart OTIF Fundamentals

What these changes mean for suppliers

Walmart is holding its suppliers to a much higher standard for compliance than ever before. It expects suppliers to fulfill orders entirely within tight delivery windows nearly every time. The changes are also occurring mid-week in the middle of the month, whereas Walmart typically levies OTIF fines monthly. 

Walmart’s OTIF Scorecard does not display detailed PO data older than four weeks. Suppliers may only view up to four weeks before the current week, a four-week snapshot of their scores, the current month to date, and the previous month. The only data available in the PO Summary on the OTIF Scorecard is within a four-week timeframe.

Many suppliers may consider switching from Prepaid to Collect, especially those who ship LTL. Third-party logistics companies and carriers will need to up the ante on shipping on time, and warehouses will need to ensure they are fulfilling orders completely. OTIF fines can be severe, and they add up. Suppliers should look into holding their third-parties accountable for low OTIF scores.

How this changes SupplyPike’s OTIF Radar

SupplyPike is updating OTIF Radar to account for these changes to OTIF goals. We are working diligently to ensure that OTIF goals are well-defined, up-to-date, and available readily. We store our data indefinitely so that you can see your historical scores and never miss an insight.

With these new changes potentially bringing significant fines to your bottom line, it’s now more important than ever to have a detailed across your supply chain perspective on OTIF performance to isolate, identify, and resolve any lackluster performance areas.

OTIF Radar by SupplyPike provides just that by automatically combining multiple data sources to give you new and powerful insights into OTIF performance. Hold your third parties in the supply chain accountable for their specific performance and impact on your fines with clean and easy-to-access data on each party. 

OTIF Radar Dashboard
OTIF Radar Dashboard
OTIF Radar Fines Over Time
OTIF Radar Fines Over Time

SupplyPike monitors and will notify you of any OTIF rule changes so that you can rest easy. OTIF rule changes are also applied appropriately in the OTIF Radar app, so you are always up to date on the latest compliance goals.

Start your free 14-day no-risk trial!

OTIF always up-to-date
Updated on October 28, 2020

Was this article helpful?

Related Articles