Changes to Walmart's Supplier Standards and Their Impact on the Supply Chain

Walmart has announced that it is easing requirements for its suppliers. The retailer has lowered the bar for on-time and complete delivery that was set in 2020 at 98 percent to 90 percent on-time and 95 percent complete delivery, effective February 1.

While the reason for the change was not explained, Zipline Logistics CEO Andrew Lynch suggested that it may stem from late delivery penalties at Walmart becoming a revenue source as carriers struggle to comply with the strict rules. Lynch emphasized that Walmart's real objective is not penalty revenue, but rather to encourage suppliers to provide products at competitive prices and on time.

This development is good news for brands struggling to meet Walmart's high standards. While the change is modest, it provides room for error in the event of unexpected supply chain disruptions. It is even better news for suppliers already meeting the original standards.

Lynch noted that if brands meet Walmart's strict requirements, the 8 percent reduction in standards can be viewed as an opportunity to gain shelf space from lower-performing competitors.

However, Lynch pointed out that not all suppliers will be able to meet these requirements, and many carriers will still struggle to meet Walmart standards. He emphasized that if suppliers want not only to meet but also exceed retailer shipment requirements, they should choose a carrier provider that specializes in retail, is familiar with compliance issues, and can adapt strategies that will reduce total transportation costs.

Key Takeaways:

• Walmart has lowered supplier requirements from 98 percent to 90 percent on-time and 95 percent complete delivery.

• The change may have been made because carriers struggle to comply with the strict rules.

• This situation provides an advantage for brands struggling to meet high standards.

• If brands meet Walmart's strict requirements, they can turn the reduction in standards into a competitive advantage.

• When selecting an appropriate carrier provider, suppliers should prefer those that specialize in retail and are familiar with compliance issues.

News Source: https://www.supplychain247.com/article/walmart-slashes-otif-supplier-shipment-requirements