Beginning this Tuesday, the financial stakes of shipping to Walmart Inc. (NYSE:WMT) will get appreciably higher.
Effective Sept. 15, the Bentonville, Arkansas-based retail behemoth will require its suppliers and their carriers to deliver all orders as Walmart required and by their “must-arrive-by” dates 98% of the time or be fined 3% of the cost of the goods. The adjustment was disclosed in a Sept. 1 Walmart memo, giving its massive supplier and carrier network just two weeks to adjust.
The change to the program, known in the retailing trade as “on-time, in-full” (OTIF), brings the two components into uniformity for the first time since Walmart launched it in mid-2017. Currently, 95% of all general merchandise orders must be filled exactly as Walmart wants it. For food and consumables, that figure is 97.5%. Talk Business & Politics, an Arkansas online publication that first reported the story, said OTIF compliance on the food and consumables segment has been well below Walmart’s requirements.
The same uniform standards will apply to the time-in-transit portion. For truckload carriers, Walmart currently sets an 87% on-time threshold for a “prepaid” transaction where the supplier sets the delivery terms and pays the freight charges. It imposes a 95% requirement for a “collect transaction,” where the retailer handles the shipping and absolves the shipper of any responsibility should an in-transit issue like a truck breakdown affect delivery schedules.
Less-than-truckload (LTL) carriers may face the most difficult adjustment. Their on-time requirements are currently set at 70%.
Walmart initiated the program to push suppliers to improve their fulfillment execution. The retailer complained it was losing millions of dollars in sales because store shelves were not being restocked fast enough. Last year, Walmart raised the OTIF requirements on general merchandise and food and consumables orders.
According to the Arkansas publication’s report, Walmart executives said in the memo that “we must improve product availability to help ensure that our customers can purchase the products they want, when they want, in-store and on-line. To deliver on this goal, orders need to be fulfilled accurately, on-time and in-full.”
The move comes as Walmart’s suppliers and carriers begin gearing up for what is expected to be an unprecedented peak season for e-commerce as the normal holiday frenzy converges with online activity as the COVID-19 pandemic restrains store buying. During the pandemic, all retailers have experienced more frequent and severe inventory shortages. Walmart granted suppliers a COVID-19 exemption from OTIF requirements at the peak of the outbreak, but that exemption expired Aug. 17, according to the Arkansas publication.
The new policy may also be a response to cost and execution pressure from the recent rollout of the Walmart+ program, which offers free same-day deliveries of more than 160,000 items, much of it grocery and general merchandise, for a $98 annual subscription fee, or a $12.95 monthly subscription. The new program is costly to implement, but Walmart views it as necessary to defend its online grocery market share from rivals like Amazon.com, Inc. (NASDAQ: AMZN) and Target Corp. (NYSE:TGT), analysts said. Based on the Talk Business & Politics Report, Walmart has much work to do if it wants to improve its OTIF metrics in the grocery segment.
Amazon and Target’s OTIF compliance standards are similar to those in Walmart’s new policy.
Stan
I worked in this rat race my whole life, thankfully I retired about a year ago. I was a driver the first part of my career, then I thought if I was in the office I could change this crap and I did make a difference for my drivers but there’s just too much crap to overcome
Mike
As of Monday 9/14 our company no longer hauls for Walmart and/or Sam’s Club. We had already stopped with Amazon, US Foods and a select few others. (Especially Grocery chain warehouses) All remarks made herein are pretty accurate and true. Including the “new school” versus “old school” drivers. If you want to be a truck driver, company or owner operator, you better know what you are signing up for, because all these companies who you need to make a living off of, do not care about what you want or do not want, they want their freight covered and delivered period. So get to it…….
Shawn Kitchen
Having been on the truck driver side of this equation at Wal-Mart facilities before, I wonder if Wal-Mart will be equally as demanding with their own employees to process the trucks in less than the 4-6 hours that has typically been my experience?
CM Evans
Actually the unload times have improved right about the same time they stopped charging unload fees to generate that revenue for themselves
John
All owner operators should boycott Walmart trust me they want us more than anything no parking and waste of time they can pay me all the money they want and I wouldn’t deliver for them
Glenn Eugene Green
Let’s talk about Walmart hypocrisy, cant arrive earlier than an hour for your appointment, if one does, one is turned away… when one shows up within that hour window, we wait in line to check in at the guard shack….but then one must find their door, break seal, open doors, dock, drop and chock wheels… then walk to receiving door, and if its crowded, wait until a clerk calls the next in line to the window… and if after all of this waiting, one should be past their appointment time, the load is marked LATE… And lets NOT MENTION HOW LONG IT TAKES TO GET UNLOADED AND GET YOUR BILLS BACK FROM RECEIVING
Dane
Yes this is exactly right! So now we need to across the board impose a $100 an hour detention fee, after the first hour. Two can play at that game.
Scott
And that my friend is the truth every time
Steven Meyer
Don’t like Walmart’s rules, don’t haul their freight.. Problem solved..And, if your a company driver, do your job, and quit crying about it..
in today’s age of real-time gps, the road construction excuse, is only for the “less-intelligent”. And since statistically, accident delays are less than 1% of PU/Del delays, that excuse, is pretty played out also… These new school truckers, may want government telling them what to do, and how to act, but us old school truckers, sure the hell don’t..
Stephen Webster
Many truck drivers refused to haul for certain customers. These are the same companies and some A T A and C T A and O T A members who complained about the same truck driver shortage. We have over 10,000 truck drivers available for the right job doing security work and other jobs instead of cross border truck freight.
Anju Abraham
Well said
Stephen Webster
This is very bad with E logs out should have been lowered to 90 percent and exceptions for bad weather accident, or break down. This why we need minimum wage and freight rates. There must be a surplus of trucks for Walmart to be able to do this. . We need Federal government to introduce new legislation to introduce large fines to any shippers or receiver that fines the trucking company for encouraging the truck drivers to extend the hours of service. We also need time and half above 10 hours per day and double time after 13: hours per day.
Pedie
What about construction, wrecks, logs of course and shipper delays. I hope we for the most part just stop delivering to walmart. No one has ever said anything about, what walmart wants. I sat in a DC Thursday for 7 hrs. There are others out here besides what they want. Tge mighty walmart flexing their financial muscles again.
Bob
Exactly
CM Evans
What this requires is better planning, not the Feds intervention. Carriers should know what time requirements are needed to move a load, and communicate that to the shipper.
Stephen Webster
I have seen loads get held up 7 hours at the border. With E logs we can not afford to cheat. It is not uncommon to loose 2 hours in a snow storm or road closures because of accidents. When dispatch phones Walmart nobody answered. Some times the receiver window is not possible because things beyond the truck drivers control. We need Federal government regulations to set minimum wage and freight rates as well as fines for receivers that push transportation companies to run over tired truck drivers in bad weather. If the government did this there would be a surplus of truck drivers in 6 months and no need for E logs for safety.