Not complying with your purchasers’ OTIF requirements can be very costly, and result in hefty fines. For example, Walmart fines its vendors 3% of the cost of goods sold if the order fails OTIF requirements. In 2016, Target stores increased their OTIF penalties to 5% of the order cost, five times what it previously was. That kind of money adds up!
Having your product in stores according to your sales forecasts and correctly stocking your product helps maintain or even increase your sales and overall profit margins. According to recent Walmart data, poor In-Full performance accounted for $1.7 billion in lost sales during the 2019 fiscal year.
The formula for your OTIF score:
OTIF ( % ) = number of cases on time in full ÷ total number of cases ordered * 100
Note: Orders can be split and still comply. If an order has two separate delivery dates, consider each delivery separately. Check with your purchaser before breaking up orders to make sure they accept split shipments.
The Walmart OTIF Program
Walmart breaks down OTIF into separate metrics, On Time and In Full. Each metric has its own percentage goal that must be met in order to avoid fines. The metrics that apply to you differ based on whether you manage your own transportation (ie: “Prepaid”) or Walmart picks up the product from your warehouses (ie: “Collect”). For Prepaid shipping, the percentages are also broken down into the mode of transportation. If you are shipping full truckload (FTL), then you must be on time 98% of the time. If you are shipping less than truckload (LTL), then you have to be on time 98% of the time. For collect orders, your cases must be routed on time and ready for pickup by Walmart 98% of the time.
Finally, the In Full percentage goals are across all merchandising alignments so that you must ship in full for 98% of all ordered cases regardless of what department you are in.