Suppliers will pay fine to Wal-Mart if they are late. Or early. Or not packed properly. Or...
Two days late? That’ll earn you a fine. One day early? That’s a fine, too. Right on-time but goods aren’t packed properly? You guessed it—fined.
The program "On-Time, In-Full" aims to add $1 billion to revenue by improving product availability at stores, according to slides from a presentation obtained by Bloomberg.
It underscores the urgency Wal-Mart feels as it raises wages, cuts prices and confronts a powerhouse rival in Amazon.com Inc. that’s poised to grow with its planned purchase of Whole Foods Markets Inc.
The new rules begin in August, and the company said they will require full-truckload suppliers of fast-turning items—groceries, paper towels—to “deliver what we ordered 100 percent in full, on the must-arrive-by date 75 percent of the time.”
Items that are late or missing during a one-month period will incur a fine of 3 percent of their value. Early shipments get dinged, too, because they create overstocks.
By February, Wal-Mart wants these deliveries to be on-time and in-full (known as OTIF) 95 percent of the time. Its previous target was 90 percent hitting a more lenient four-day window. ■