Effective 15th September, Walmart introduced new OTIF goals of 98% for all POs measured with metrics Prepaid On-time, Collect Ready, and In-full. So, what does this mean for you and your business? How do you continue to drive sales and profitability?
Ensuring you are set up for success by knowing your company’s score, retailer expectations, and best practices for improvement is critical at this time. Performing root cause analysis and putting corrective actions in place for any identified issues will help curb those hefty charges that erode your margin and profitability. Here are a few tips for improving OTIF.
1. Monitor how you perform by MABD Day of Week.
Analyze on-time performance by day of the week to identify trends by carrier. Are MABDs that fall on a Saturday and Sunday frequently late? How does this compare when you split your OTIF scores out by distribution center? Determining if you need to change order days or alter your MABD will help you re-evaluate lead times and define corrective action to avoid imminent fines.
2. Monitor how your carriers are performing by DC and lane.
- Are orders consistently arriving early or late to specific DCs?
- Is the product being shipped directly to the FC or via the consolidation network?
Consider re-evaluating lead times to account for extra process days or transit time based on DC performance, and communicate any adjustments to your replenishment manager. Inform your carriers of new OTIF expectations, and work together to ensure lead times are being calculated accurately. You should also consider conducting quarterly carrier review meetings to determine if your provider is correctly equipped to conform to the new OTIF standards. Hold shipping partners accountable and nail down the best partner for each lane.
3. Schedule or reschedule your DC appointments to fall within the MABD delivery window.
When prepaid suppliers arrange for transportation, they have a short window to request an appointment at a DC. The date that your product should arrive at Walmart Distribution centers is a key part of meeting the OTIF requirements, so it’s up to you to meet the delivery timeline! Keep track of these delivery windows when scheduling or rescheduling appointments to ensure that your appointment time falls within the MABD delivery window, otherwise, your OTIF score and fines will be affected. A PO will not receive an arrival gate timestamp if it’s missing a scheduled appointment.
4. Cancel POs and PO lines for system-generated orders to avoid fines.
It’s vital for suppliers to follow the weekly PO and PO line cancel process to avoid fines; any PO shipped in short but not canceled will be deemed Not in Full. POs not meeting their minimum objective will incur a monthly 3% off-COGS charge for all cases recorded as Not in Full. Remember, if you fall below 98% for the month, you will receive an OTIF Fine as well as a deduction claim for the shortage.
If you wish to submit PO cancelations, be sure to meet your submission deadlines, as there are no purchase order exclusions or disputes for the Supplier Performance Management program. Looking at cancel reason codes and accountability will also help determine process gaps with internal sales and supplier chain teams.
5. Review your Forecast Variance to avoid future PO cancellations.
System-generated POs that are canceled will remain in the OTIF calculation. However, if system-generated orders are being canceled often, you should review your forecast variance to see if orders are being projected accurately. High forecast variance can cause orders to be unpredictable, making it difficult for you to plan and fulfill orders from Walmart. Telling the right story and working directly with your buyer will help prevent unrealistic system-generated POs from being generated in the future.
Need more help? Look no further than Nuqleous’ Spotlight Retail Analytics solution to provide the following benefits and capabilities:
- Use a single version of the truth data across your organization to set up reporting, conduct research, and identify corrective actions.
- Monitor your company’s OTIF scorecard and schedule weekly email delivery to OTIF stakeholders.
- Review your supplier performance and charges to understand where fines are coming from and perform root cause analysis.
- Look at cancel reason codes and accountability metrics to determine process gaps with internal sales and supplier chain teams.
- Use PO research to review On-time Delivery Window Expectations and understand when orders need to be delivered to be considered on-time.
- Use On-time by Day of Week metrics to help you schedule DC appointments and order days that suit your business.
- Review carrier and facility performance to identify trends and opportunities.
- Use forecast performance data to proactively collaborate with Walmart buyers and replenishment managers on anticipated issues.
Once armed with OTIF visibility provided by Spotlight, reducing deduction claims should be the primary objective. For any residual claims, there’s Streamline™ — a software solution that delivers fact-based findings to support your deduction claims and reduces the potential for misunderstanding or disputes. Streamline™ gathers and triangulates data from multiple sources to automatically validate your company’s deductions, freeing your team to focus time on other value-added activities.
Ready to see how we can help you become a best-in-class supplier? Let’s talk.