What is SQEP?
Walmart rolled out its Supplier Quality Excellence Program (SQEP) on February 1st of 2021. Its goal was to create a “zero-based mindset” regarding quality defects for suppliers. From the beginning, there were four Phases planned for release:
Phase 1: PO Accuracy
Phase 2: Barcode and Labeling Compliance
Phase 3: Packaging, Pallet, and Load Compliance
Phase 4: Scheduling and Transportation
Phases 1-3 have been released, but Phase 4 has not. Phase 1 was released in stages in Q1 and Q2 of Walmart FYE 22. Phase 2 was released in Q3 of Walmart FYE 22. And Phase 3 was released in Q1 of Walmart FYE 23.
We have also heard that Walmart will be automating most of the processes for Phase 2 in the months to come, which are likely to increase
Phase 1
Right Item, Right Invoice
Phase 1 of SQEP was meant to measure PO Accuracy: fulfilling the PO complete as requested by Walmart. PO revisions are permitted, but final PO must match the items shipped.
Some of the most common defects in this Phase are:
“ASN Not Downloaded”
“Overage”
Phase 2
Right Item, Right Condition
Phase 2 of SQEP measures Barcode and Labeling Compliance. Barcode Compliance is defined as the “ability [for Walmart] to receive cases based off the scanned barcode.” Labeling Compliance is defined as “adhering to Walmart’s guidelines around carton label, identification, and carton markings.”
Some of the most common defects of Phase 2 are:
- Barcode Compliance
- Label Compliance
Phase 3
Right Condition
Phase 3 measures Packaging, Pallet, and Load Quality Compliance. Packaging Compliance is defined as the “carton’s ability to endure the handling and processing throughout the supply chain.” Pallet Compliance is defined as “adherence to pallet labeling, securement, and required quality standards.” And Load Quality Compliance is defined as “adherence to load stability and segregation standards.
Phase 4
Phase 4 is largely unknown, both in terms of when it will go into effect as well as what it will entail. The most recent version of Walmart’s Secondary Packaging Supply Chain Standards (SPSCS ‘23) did not contain any new information on Phase 4.
Stay tuned and subscribe to our newsletter to make sure that you get ahead of Phase 4 and can adapt your business to it as quickly as possible when it does come. We will be covering it as soon as the information is made available.
SQEP Defects at a High Level
SQEP’s charges are labeled with a defect description. These descriptions have more elaborate definitions in the SPSCS ‘23, but the most important information has been aggregated here.
These defect descriptions are designed to help suppliers make corrective action, but they can also be useful for doing validity checks on fines and knowing how to dispute them.
The defect descriptions and fines can be found in the SQEP dashboard.
The Structure of this Resource
As can be seen in the Table of Contents, the defects are listed by Phase number of the SQEP program. Within each of the Phases, the defects are organized, approximately, by which ones are most common.
This resource is designed more as a reference guide than something to be read attentive cover to cover. For that reason, there is quite a bit of overlapping information from defect description to defect description. The main goal is for this resource to be a helpful reference when more information on a particular defect is required.
For example, in Phase 1, both the “ASN Not Downloaded” and the “Overage” defects are very common, with our research finding that “ASN Not Downloaded” is just slightly more common. For this reason we started with “ASN Not Downloaded” and followed it up by “Overage” and, etc.
In the last section of this resource, Benchmarking Your SQEP Defects, we look at the cadence of the SQEP defects across the Phases, with an outright list of the defects sorted by most common in descending order. We also show this information graphically, so as to give you a better sense of where your business stands in relation to other Walmart suppliers.