Walmart eases rules to allow its suppliers to deliver day early

The sign for Wal-Mart Stores Inc. headquarters in Bentonville is shown in this file photo.
The sign for Wal-Mart Stores Inc. headquarters in Bentonville is shown in this file photo.

Walmart Inc. has adjusted its delivery guidelines for suppliers, allowing some to have the option of getting shipments to regional distribution centers one day earlier than the scheduled arrival date.

The change relaxes previous standards requiring suppliers to deliver products on a specific date -- neither early nor late -- to avoid potential fines. Walmart's program, which is called "on-time, in-full," went into effect last year, and the new option to deliver one day early has been reserved for suppliers of food, consumables, and health and wellness products.

Steve Bratspies, Walmart's U.S. chief merchandise officer, informed suppliers of the change in a memo. He wrote Walmart is "committed to reviewing" its on-time, in-full delivery standards and would make adjustments "to benefit our customers when needed."

"We are simply allowing the carrier to deliver a day earlier," Bratspies wrote in the memo, adding that the changes are retroactive to March 31.

Wal-Mart's on-time, in-full policy was introduced to suppliers in 2016 and officially implemented earlier this year as a way for the retailer to improve the flow of products through a distribution center to ensure inventory isn't piling up and items are in stock for customers.

The retailer's goal is to have products delivered on time and in full 95 percent of the time, but Bratspies previously acknowledged the path would be a "journey" for both the retailer and suppliers.

Under the previous guidelines, full truckload suppliers had to have shipments delivered on the scheduled arrival date a minimum of 85 percent of the time or they would be fined 3 percent of the value of the products that missed the target. Those guidelines went into effect April 1 and were an increase from previous requirements of 75 percent, which had been in place since last August when Walmart began holding its suppliers to those delivery standards without levying fines.

Meanwhile, less-than-truckload suppliers were required to have products delivered in the one-day window 50 percent of the time, which was an increase from previous requirements of 33 percent.

Colby Beland, vice president of sales and marketing at Fayetteville-based CaseStack, said the amendment to a "one-day early option" for food, consumable, and health and wellness suppliers was likely because of capacity issues in transportation. The challenges -- caused by factors like a driver shortage and new federal regulations -- have made it harder to hit the one-day window.

"I think Walmart is being fair to the supplier based on current market conditions," said Beland, whose company works with Walmart suppliers. "Capacity has never been tighter in the transportation industry. When you don't have capacity, it makes it very difficult to deliver to a single day."

But a Walmart spokesman said the retailer made the change to simplify the delivery process for suppliers who handle both food and general merchandise, giving them more flexibility. General merchandise suppliers already had a two-day window for product delivery under the guidelines.

Bratspies said in an interview earlier this year that the retailer would be "practical and reasonable" in its partnership with suppliers as it tries to work its way to an eventual 95 percent target date. He said Walmart didn't develop the program because it is motivated to collect fines from suppliers.

"I don't want that money," Bratspies said at the time. "I want the product."

A similar program is being introduced at Sam's Club, according to Beland. He said the warehouse chain informed suppliers they'll be asked to deliver 75 percent of their products on-time, in-full over a two-day window beginning May 1. The thresholds will increase over time to 95 percent.

Beland said the latest adjustment with Walmart's program won't alter its goal of hitting 95 percent. In fact, he believes the relaxed window could help expedite the process.

"This allows Walmart to keep their goal," Beland said. "And I think it allows Walmart to get to their goal, but with maybe a two-day window instead of a one-day window."

Business on 04/13/2018

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