What is Walmart OTIF?
STRUGGLING TO MEET WALMART’S OTIF REQUIREMENTS?
You’re not the only one facing this challenge! The standards of Walmart’s OTIF (On Time and In Full) program have evolved, but currently, they necessitate a 90% on time rate (98% if collect) and 95% in full. While the aim is always 100%, no process in business—or life—is flawless. Achieving even these benchmarks can seem like an uphill battle for many.
UNDERSTANDING OTIF
The program’s title itself is indicative of its dual focus. ‘On time’ pertains to the timely delivery of the Purchase Order by your carrier within the stipulated timeframe. ‘In full’ emphasizes the need to complete the PO with the entirety of the ordered items. For Walmart, OTIF serves as a reliable “single source of truth,” offering transparent insights into supply chain performance metrics from both Walmart and the supplier’s perspectives.
WHY DOES OTIF MATTER TO WALMART?
OTIF ensures efficient product delivery to distribution centers (DCs) and subsequently, to store shelves, boosting overall sales. By narrowing the delivery timeframes, Walmart can prevent product accumulation in their storage areas, mitigating confusion and potential product loss at the store level. Ideally, as soon as one unit of a product is sold out, the next is ready for shelf restocking. OTIF is pivotal in making this vision a reality.
WHAT IF I DON’T ACHEIVE THE OTIF TARGETS?
Falling short of either goal triggers potential penalties. Walmart evaluates performance monthly, based on their fiscal calendar. OTIF penalties are binary in nature – if you meet the 90% or 95% threshold, you’re in the clear. If not, every non-compliant PO incurs a 3% cost of goods (COGs) fine. For instance, a 94.9% score for in full could mean a 3% COGs penalty on the 5.1% non-compliant POs.
However, there’s a silver lining. With meticulous record-keeping of your POs and understanding the reasons for any shortcomings or delays, you can potentially avoid fines. You can attribute specific reason codes to POs in Retail Link to possibly exclude them from OTIF calculations. For instance, if a snowstorm delays your delivery, that PO shouldn’t penalize you – but it’s your responsibility to classify it appropriately. Walmart anticipates proactive management from suppliers, with timely communication of such anomalies.
HOW OFTEN IS OTIF BILLED?
In 2024, Walmart moved to a quarterly billing process. Supplier’s will still be evaluated monthly and must strive to maintain Walmart’s expectations, but the fines will be released at the end of the quarter.
HOW CAN OCM SUPPORT YOU?
At Ozark Consulting & Marketing (OCM), we’ve been guiding clients through OTIF challenges since its inception. Whether you’re an OTIF novice or a veteran, we’re confident in our capacity to enhance your operations. With over 30 years of experience assisting Walmart and Sam’s Club suppliers, our consultancy in Bentonville, Arkansas stands as one of the most enduring. Our longevity stems from our commitment to understanding and aligning with our client’s objectives. To further assist you, we’ve curated a comprehensive dashboard in our reporting suite, detailing crucial supply chain facets. This dashboard can highlight problematic DC locations or specific POs with shortages. Such insights are instrumental in rectifying on-ground supply chain issues and sidestepping fines that dent your profitability. Please reach out below if you have any questions.