Walmart OTIF Fundamentals
- How your OTIF score is calculated
- The main categories of OTIF
- Key terms to understanding your business’ On Time and In Full score
Walmart’s On Time In Full (OTIF) program is a rigorous scoring system that tracks inbound performance by various levels of business. So let’s take a look at the fundamentals of OTIF.
How Is OTIF Calculated? What Is Included in My OTIF Score?
Walmart generally calculates OTIF by dividing the total number of Vendor Packs, or cases, that the Distribution Center (DC) receives within the delivery window by the total number of cases ordered. Walmart no longer grades suppliers on a single OTIF metric, though it is still tracked and available. Rather, suppliers must meet each OTIF-related metric to avoid fines.
Walmart does not consider overages in this calculation, so it only calculates shipments that are missing cases or haven’t been filled at all. Additionally, Walmart does not include purchase orders (POs) for import merchandise, Sam’s Club, e-commerce, and direct-to-store deliveries (DSD) in its OTIF metrics or suppliers’ scores.
What Is the Difference Between Prepaid and Collect?
Walmart orders fall into two categories: Prepaid and Collect.
Prepaid orders are shipped by you. This means you are in charge of scheduling a carrier of your choice to pick up and deliver your order to the Walmart DC. You also are responsible for creating the delivery appointment at the Walmart DC so they know when your shipment will arrive.
Collect orders are picked up by Walmart. This means a Walmart truck or third party carrier dispatched by Walmart picks up the product at your warehouse and Walmart takes the responsibility of getting your product to the Walmart DC. You are still responsible for scheduling a pick up appointment, also known as a request for routing, with Walmart. Your product must be packaged and ready at your facility for the pickup, otherwise this will impact your OTIF score. Scheduling the pickup appointment and having your product ready is referred to as being Collect Ready.
What Does It Mean to Be On Time?
A PO is considered On Time if the Arrival Compliance Date is within the delivery window. An Arrival Compliance Date falls under one of two scenarios:
- You schedule a delivery appointment ahead of time, and whenever the product arrives at the DC, the PO will receive an Arrival Gate Timestamp, which will be considered your Arrival Compliance Date. This will determine whether the PO is “On Time”.
- You fail to schedule a delivery appointment ahead of time and Walmart will not document an Arrival Gate Timestamp. Walmart instead will consider your product delivered when they process your shipping documentation, which may be days after the product actually arrived. The day they process the documentation is referred to as the Pro Date, which will be considered the Arrival Compliance Date and will determine whether the PO is “On Time”.
What Does It Mean to Be In Full?
A PO is considered In Full if Walmart receives 100% of all ordered cases. If the amount of cases received is less than the number of cases ordered on the PO, then the PO is considered Not-In-Full.
Walmart no longer differentiates In Full metrics for different business units.
What Is MABD? What Is Order Quantity?
The MABD is the Must Arrive By Date of a PO. You’ll see this term a lot in relation to OTIF and will always be on your POs.
- The Original MABD is the Must Arrive By Date that is assigned to the PO when the order is created.
- The Adjusted MABD is the Must Arrive By Date that is assigned to the PO when the order arrives at the DC.
The Order Quantity is the amount of product Walmart is requesting from you. This is the total ordered quantity listed in the CTT segment on the EDI 850 Purchase Order.
- The Original Order Quantity is the quantity of cases ordered on the PO when it is originally created.
- The Adjusted Order Quantity is the quantity of cases ordered on the PO when the order arrives at the DC.
Essentially, the adjusted fields take into account changes made to the PO before it gets delivered, specifically changes to MABD and ordered cases on the PO, whereas original MABD and order quantity are based only on those values at the time the PO was created.
What Are Delivery Windows?
Delivery windows are the date during which DCs must receive a shipment. Walmart bases its delivery windows on the Must Arrive By Date (MABD), transportation type, and distribution center type.
New 2021 delivery windows*
* Starting the week of 3/27/2021
- The delivery window for live appointment POs is exactly the MABD, not a day before or after.
- For drop trailer POs, the delivery windows are as follows:
- Perishable for all modes of transport: exactly the MABD
- High-Velocity DC (HVDC) and Automated Consolidation Center (ACC) POs for all modes of transport: the MABD or the day before
- Regional DC (RDC), Fulfillment Center (FC), and Fashion DC (FDC) POs for Full Truckload shipping: the MABD or up to two days before
- RDC, FC, and FDC POs for Less-Than-Truckload shipping: the MABD or up to three days before
2021 OTIF Delivery Windows
What Is the Difference Between a System-Generated Order and a Manual Order?
A PO’s event code is used to determine if the PO is system-generated or manually-created. For grocery POs created with DCS2000, the Create User ID and Create System ID fields are used to classify the PO as manual or system-generated.
System-generated POs are measured against the original MABD and the original order quantity to determine whether the PO was on time and in full. POs with the event code of POS REPLEN, PICKNPACK, 2-TIER, and “ “ are considered system-generated orders. Canceled system-generated POs will count against your OTIF score, with accountability assigned to you or Walmart depending on the cancel reason code used for the cancellation.
Manually-created POs are measured against the adjusted MABD and adjusted order quantity. POs with event codes that are not considered system-generated event codes (i.e., the ones listed above) are considered manually-created POs. Canceled manually-created POs do not count against your OTIF score.
What Is Lead Time?
Lead time is the measurement of time it takes for an order to be received, processed, and fulfilled by you and delivered to the DC. Lead time settings help determine the MABD on each PO. Lead time is calculated by adding four components: Supplier Process Time, Ship Interval, Transit Time, and Process Time at the Walmart DC.
The Supplier Process Time involves two steps, and the “clock” starts when Walmart sends you the PO via an EDI 850 Purchase Order. If this is a Collect PO where Walmart picks up the product from you, then the first step is for you to complete a Request for Routing by 4:00 PM CST the day after the order is transmitted. Next, you will need to get the shipment ready by producing the order, packaging it, stacking it, and wrapping it.
The Ship Interval, also called the “Pickup Window”, begins once the shipment is ready to be collected and ends when the shipment is picked up from your facility.
The Transit Time begins when the shipment is picked up by the carrier, either your own or Walmart’s. It is different for each supplier depending on the geographic location of their ship points, department, PO type, and other aspects.
The Process Time at Walmart DC begins when the shipment arrives at the DC and ends when the PO is marked as “received” by the DC.
Accurately calculated lead times are crucial to delivering on your MABD. Work with your replenishment team to ensure that lead times are accurate. If your internal systems are consistent, reliable, and efficient, this will also help your OTIF scores improve. Looking for a way to improve these systems?
Check out SupplyPike’s OTIF Dashboard to get a head start on not worrying about Walmart compliance anymore!
Written by The SupplyPike Team
About The SupplyPike Team
SupplyPike builds software to help retail suppliers fight deductions, meet compliance standards, and dig down to root cause issues in their supply chain.Read More