Target’s SPM Team Announces Collect Compliance Fines Through ShipIQ

Learn More:

• Context around ShipIQ

• A Breakdown of OTR and SPA

• Key Dates 

• Required and Recommended Supplier Action

• SPM's Intention for This Compliance Update

The Target Supplier Performance Management (SPM) team announced that collect suppliers will begin to see compliance fines in ShipIQ as of August 4, 2024.

Target began replacing its Vendor Ready to Ship (VRS) system with ShipIQ (SIQ) in the fall of 2022 to transition from supplier-led pickup date requests to pickup dates assigned based on the product lead time.

Related Reading: Target's New Process for Collect Suppliers: ShipIQ

The new SPM On Time Ship metric didn't fully capture all aspects of compliance ShipIQ was meant to track. New metrics designed to measure collect supplier compliance through ShipIQ have been developed and will be rolled out in a few months.

Although the majority of suppliers have been moved on to ShipIQ, some FDC suppliers are still going through VRS. Some of the below updates will not apply to those suppliers. 

Compliance Fines Breakdown: OTR and SPA

Collect compliance is broken down into two main categories: 

1. On Time Release (OTR)

2. Supplier Pickup Adherence (SPA)

As of August 4, 2024, Target suppliers shipping collect through ShipIQ will be given fines for violating these policies. These fines are broken down by two main categories. 

1. OTR Fine Calculation: If on time release is less than 100% the supplier will be fined at 1.5% cost of goods on "units released late and missing."

2. SPA Fine Calculation: If pick up adherence is less than 100%, the supplier will be fined at 1.5% cost of goods on PO-locations with one of the following reason codes:

   • Inventory Not Ready: this is defined as when "the vendor is not or will not be ready with the inventory on the pickup date that ShipIQ has assigned to hit In Yard Goal Date delivery.​"

   • No Pickup Appointments Available/Business Closed: this is defined as when "the vendor does not have any appointments available at the shipping location on the pickup date that ShipIQ has assigned to hit In Yard Goal Date delivery​."

   • Target Adjusted Quantity: this is defined as when the "Inventory Analyst has added quantities late to the PO and the vendor is no longer able to have the product ready on the pickup date that ShipIQ has assigned to hit In Yard Goal Date delivery."

For both OTR and SPA, only fines over a $50 threshold will be issued.  

Key Dates for the Update

Before the fines begin on August 4th, Target has informed suppliers that they should make sure that their ShipIQ processes are up to date using the performance data available in SPMD Greenfield. They should also check ShipIQ to see the potential OTR and SPA violations already visible. Charges for the violations won't be sent before August 4, so exemption requests for fines before then should not be sent. 

August Week 1 2024 (8.4-8.10)

On these dates, the OTR and SPA compliance program data will begin to be measured and generate compliance charges. All POs received and measured at DCs during this week will be liable to receive a compliance (VC) chargeback. 

August Week 2 2024 (8.11-8.17)

In week 2, all week 1 OTR and SPA performance and compliance information will be visible in the SPMD in Greenfield. Any violations above $50 that are not accepted or exempted from the week prior will also be visible. Similar to other SPM Compliance, suppliers will have 90 days to dispute once deductions are created. 

Required Vendor Action

The Target SPM team has recommended that suppliers: 

• Continue the ShipIQ process and expectations and/or become more familiar with it via ShipIQ Academy.

• Visit Partners Online > Apps & Reports > SPMD > Info & Training for the Supplier Performance Management Metric Training for On Time Release & Pickup Adherence to read up on compliance.

• In the Supplier Performance Management Dashboard under Apps & Reports > Supplier Performance Management Dashboard, review cards and reports for OTR & SPA performance and violation reporting. 

• Read and follow Target's Compliance Policy and monitor supplier performance using Greenfield Reporting. Ideally, the SPMD should be monitored weekly.

NOTE: Owned Brand Vendors should stay tuned for additional details and context in the upcoming July Owned Brand Western Hemisphere Summit.

The SPM team generally encourages keeping up with POL news, updates, training, and Greenfield for future updates.

Although this update may result in additional deductions for Target suppliers, a fully integrated and coherent ShipIQ process should help most suppliers improve their supply chain, ultimately creating improved efficiencies and effectiveness and thus lower costs for Target and shoppers.

There will also be a training for suppliers, specifically covering the metric changes, on Thursday, June 20th. This can be signed up for by following this link. Another training is likely to be scheduled before the update is released in August and will be announced on POL. 

Recommended Supplier Action

Best supplier practice might have a few extra steps:

• Check your SPMD data at least once a week

• Make sure at least one person in your organization is assigned to monitor ShipIQ for necessary updates (i.e. releasing shipments, checking/updating pickup dates, etc.).  

• Change pickup dates (with appropriate reason codes)

• Cancel shipments

• Create manual shipments

• Review and confirm POs

• Modify shipments that have already been routed

• Cartons, Weight, Cube, Pallet spaces, BOL, Appointment #, Pickup Date (only to a later date)

• If they aren't already managing it, try to keep your warehouse(s) informed about pickup changes made in ShipIQ.

• Small Parcel vendors: make sure to start reviewing and releasing in ShipIQ, otherwise you will start receiving OTR fines in August. This should generally be just confirming that a small parcel shipment will continue to be a small parcel shipment.

Some general reasons for when you would want to make a change in ShipIQ:

• Last-minute inventory availability changes, adding or removing items

• Incorrect details initially submitted, found upon reviewing PO before release

• Pickup date missed due to vendor/warehouse error - must choose a new pickup date

Even though Target is not taking fines for these yet, suppliers can already see performance for these metrics in the SPMD. Between now and August, suppliers should also start looking at the data to see how they're doing on these metrics. 

SPM Intention Behind This Compliance Update

In our engagement with Target's SPM team, we learned that this update is meant to increase insight into supply chain performance and provide more data for suppliers, merchants, planners, and inventory teams to improve across the board. Many of Target's compliance updates in 2024 will help with these larger initiatives.

The expectation is that these are behaviors that have already been happening, and now there is an added layer of accountability to keep all parties on the same page and in communication when needed.

For more questions on the update or general inquiries into all things related to supplier performance management, reach out to the SPM team through the request support link in POL and use the drop-down to select  "Supplier Performance Management" as your reason for support.

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