Walmart will no longer tolerate tardy suppliers. The retailer will now require suppliers to deliver goods exactly on time or face fines, another step in the retailer’s efforts to keep inventory low and shelves stocked as it battles with Amazon.com
According to Reuters, Walmart executives plan to announce at an annual conference this week that their large suppliers fulfill orders within a specified one- or two-day window 85 percent of the time or face a fine of 3 percent of the cost of delayed goods.
Previously, suppliers had to hit a 75 percent threshold to avoid fines. For smaller suppliers, the on-time threshold will move to 50 percent, up from 33 percent. These changes will take effect this April.
At their suppliers meeting in Bentonville, Ark.,Walmart will share for the first time with it’s On Shelf Customer Availability (OSCA) data, which had only been accessible internally. This data displays which precise products are on shelves at any given time and why products are out of stock, as well as what products Walmart plans to stock in each store. The data, which will become available throughout the year, will help with on-time delivery.
In February, Walmart executives told suppliers more accurate delivery times would be a focus going forward, and the retailer first introduced fines for inaccurate deliveries last year. Wal-Mart hopes to add $1 billion of revenue by improving product availability at stores.
More precise delivery schedules will help keep Walmart’s shelves stocked and a better eye on inventory flow.