Skip to content
Search AI Powered
Please enter at least 3 characters.

Latest Stories

newsworthy

Wal-Mart delivery mandate will push supply chain to up its game

"On-time, in-full" program isn't new, but it sure feels that way with the elephant in the ring.

The Beast of Bentonville has let it be known that, for all the talk of the "Amazon effect" on the nation's retail supply chains, it still has the power to influence the terms and conditions of the trade.

Starting Aug. 1, Wal-Mart Stores Inc.'s U.S. operation will require that suppliers of full-truckload shipments and their carriers deliver all orders in full on the "must-arrive-by date" 75 percent of the time or else face penalties. As of Feb. 1, 2018, the Bentonville, Ark.-based behemoth will ratchet up the requirement to 95 percent in full and on time. Early deliveries will also be penalized, as those lead to overstocks that disrupt Wal-Mart's supply chain as much as shipments that arrive late.


Wal-Mart set a one-day delivery window for perishables, consumables, and grocery items, and a two-day window for "soft goods" like apparel and for general merchandise. The previous target had been set at 90 percent for food, consumables, and general merchandise hitting a four-day delivery window. The updated directive applies to "collect" shipments that are routed through and paid by Wal-Mart, and "pre-paid" shipments, in which the supplier sets the delivery terms and pays the freight charges.

According to a published report last week, Wal-Mart will impose penalties for mis-timed or incomplete shipments equal to 3 percent of the affected shipment's value. Kory Lundberg, a Wal-Mart spokesman, confirmed in an e-mail that "fees" would be imposed on problem deliveries, though he wouldn't respond to a query about specifics. MacroPoint LLC, a load-visibility software provider, said in a blog post today that retailers can charge fines of up to $500 per load for deliveries that don't comply with their standards.

The new guidelines replace a scorecard approach that provided suppliers with the percentage of shipments that arrived late and the percentage that arrived early and notes which shipments were considered not full. However, it didn't provide suppliers with insight as to where the delivery problems occurred. According to one industry source, Wal-Mart will supply a visibility tool, which will identify delivery pain points to help suppliers fix them. This will be important, because suppliers could easily be dinged for missed deliveries that were caused by problems on Wal-Mart's end, not theirs.

Wal-Mart, which notified its suppliers of the changes a year in advance, has been working to remove its own barriers to suppliers' compliance efforts.

Suppliers using less-than-truckload (LTL) carriers are also subject to "on-time, in-full" (OTIF) requirements. However, they are less stringent—somewhere in the low to mid-thirty-percent range—to account for the more complex nature of LTL ecosystems, which would make the high scores required of truckload suppliers virtually impossible to attain. Averitt Express Inc., an LTL carrier based in Cookeville, Tenn., and a long-time Wal-Mart vendor, provides one-day deliveries across the board, according to Beth Donham, Averitt's director of sales, supply chain solutions. By providing uniform deliveries, Averitt ensures that it is keeping commitments to its shipper customers and to Wal-Mart, Donham said. Averitt has been in compliance with the Wal-Mart guidelines since February.

Wal-Mart's objectives are familiar to all retailers: Reduce stock variability, minimize inventory bloat, and boost sales. Other retailers have put in place OTIF mandates accompanied by non-performance penalties. However, none are as big as Wal-Mart, which is the world's largest retailer. It is likely that other retailers will follow suit as the entire sector copes with heightened consumer expectations largely brought about by Seattle-based Amazon.com Inc., the nation's largest e-tailer.

"We—customers included—knew this was coming, and we expect that OTIF will effectively be a baseline requirement for shippers and carriers," said Craig Fiander, senior vice president, global business development, for visibility software provider FourKites Inc. Fiander said the impact of the mandate "goes beyond visibility" and requires shippers, carriers, and third-party logistics providers (3PLs) to "better automate and synchronize the entire shipping experience from product to distribution."

In its blog post, MacroPoint said it will be imperative to inform retailers in advance of any potential issues likely to affect on-time performance, and to reschedule the appointment if possible. Many retailers assess rescheduled-appointment charges that are as much as 75 percent lower than the fines for failing to meet OTIF standards, the company wrote.

Donham of Averitt said it is paramount to have adequate communications systems in place not only in interaction with Wal-Mart, but between shipper and carrier and within the carrier's own network. The responsibility for making the OTIF initiative work rests equally with shipper and carrier, Donham said.

"The ultimate objective is for both of us to look good in the eyes of Wal-Mart," she said.

The Latest

More Stories

Yale robotic stacker application
Photo courtesy of Yale Lift Truck Technologies

Group chat

Picture a busy DC, with manually operated forklifts, people, and pallets in constant motion. At the same time, the stationary equipment they interact with, such as conveyors and palletizers, is industriously whirring away. Together, they are performing something akin to a carefully choreographed ballet.

Now add driverless forklifts to the mix. Shuttling along without a human operator on board, they may look like they’re operating independently, but they’re not. They’re actually in constant contact with other equipment and software, making sure they perform their part in the dance at the right moment. Without that ability to communicate, the forklifts—and other warehouse operations—could come to a standstill.

Keep ReadingShow less

Featured

chart of HR practices

Workplace report finds 5 trends sweeping the global labor pool

Waves of change are expected to wash over workplaces in the new year, highlighted by companies’ needs to balance the influx of artificial intelligence (AI) with the skills, capabilities, and perspectives that are uniquely human, according to a study from Top Employers Institute.

According to the Amsterdam-based human resources (HR) consulting firm, 2025 will be the year that the balance between individual and group well-being will evolve, blending personal empowerment with collective goals. The focus will be on creating environments where individual contributions enhance the overall strength of teams and organizations, and where traditional boundaries are softened to allow for greater collaboration and inclusion.

Keep ReadingShow less
2024 International Foodservice Distributor Association’s (IFDA) National Championship

2024 International Foodservice Distributor Association’s (IFDA) National Championship

Truckers, warehouse workers get some love

It’s probably safe to say that no one chooses a career in logistics for the glory. But even those accustomed to toiling in obscurity appreciate a little recognition now and then—particularly when it comes from the people they love best: their kids.

That familial love was on full display at the 2024 International Foodservice Distributor Association’s (IFDA) National Championship, which brings together foodservice distribution professionals to demonstrate their expertise in driving, warehouse operations, safety, and operational efficiency. For the eighth year, the event included a Kids Essay Contest, where children of participants were encouraged to share why they are proud of their parents or guardians and the work they do.

Keep ReadingShow less
zebox office photo

Tech incubator Zebox lists top 10 logistics startups

The logistics tech firm incubator Zebox, a unit of supply chain giant CMA CGM Group, plans to show off 10 of its top startup businesses at the annual technology trade show CES in January, the French company said today.

Founded in 2018, Zebox calls itself an international innovation accelerator expert in the fields of maritime industry, logistics & media. The Marseille, France-based unit is supported by major companies in the sector, such as BNSF Railway, Blume Global, Trac Intermodal, Vinci, CEVA Logistics, Transdev and Port of Virginia.

Keep ReadingShow less
humanoid robot carrying box in warehouse

Humanoid robot maker Apptronik teams with Google

The humanoid robot manufacturer Apptronik on Thursday said it has partnered with Google to accelerate the advancement of its AI-powered robots and make them more helpful to people in dynamic environments.

The deal will add the Google DeepMind robotics team’s AI expertise to Austin, Texas-based Apptronik’s robotics platform, allowing the units to handle a wider range of tasks in real-world settings like factories and warehouses.

Keep ReadingShow less