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. According to recent Walmart data, poor In-Full performance accounted for $1.7 billion in lost sales during the 2019 fiscal year.
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 (i.e.: “Prepaid”) or Walmart picks up the product from your facilities (i.e.: “Collect”).
Walmart’s monthly OTIF goals that suppliers are responsible for are as follows:
- General Merchandise and Health and Wellness: 95% of all cases ordered are delivered
- Food and Consumables: 97.5% of all cases ordered are delivered
Prepaid On Time (i.e. when you manage the transportation):
- Less than Truckload (LTL) Shipping: 70% of all cases delivered are delivered on time
- Full Truckload Shipping: 87.5% of all cases delivered are delivered on time
- Mix of Full Truckload and Less Than Truckload: If you use a combination of Full Truckload and Less Than Truckload, then Walmart will give you a “blended goal” somewhere between 70% and 87.5% for required On Time percentage, generally correlated to how much Full Truckload versus LTL you move product on. For example, mostly Full Truckload and a little LTL Walmart may assign you an 85% On Time goal.
Collect Ready (i.e. when Walmart manages the transportation):
- 95% of all cases are routed on time and ready for pick up.