All major retailers have strict supplier performance goals, and Walmart is no exception. Walmart uses On Time In Full (OTIF) as a key performance indicator (KPI) for its suppliers. Non-compliance can result in costly accounts receivable (AR) fines. Let’s go over these metrics and how you can avoid chargebacks.

What Is On Time In Full (OTIF)?

OTIF is a common acronym in the retail supply chain world. It stands for “On Time In Full,” a standard term used by most major retailers. While Walmart enforces OTIF with penalties for non-compliance, other retailers measure similar metrics:

• Target uses a metric called On Time Fill Rate (OTFR) which is tracked in Partners Online (POL). Failure to meet expectations can lead to chargebacks and supplier scorecard impacts.
• Kroger uses ORAD (Original Requested Arrival Date) as a benchmark. Missed ORAD windows can result in delayed payment or supplier scorecard downgrades.
• Costco focuses on Advance Ship Notice (ASN or EDI 856) accuracy and delivery appointments, and repeat non-compliance can lead to supplier suspension.
• Walgreens deducts for late deliveries or fill rate misses, tracked via EDI and supplier scorecards.

OTIF compliance is essential for a resilient supply chain and avoiding stockouts in stores, which can lose you customers. Additionally, non-compliance can harm your relationship with Walmart and potentially cost you your business with that retailer. Finally, there is an immediate financial impact, as Walmart will issue an AR fine equal to 3% of the cost of goods sold (COGS) for non-compliant cases.

OTIF Metrics and Calculations

Walmart uses the following calculation for its OTIF KPI:

OTIF% = number of cases on time or in full ÷ total number of cases ordered

There are three components of Walmart’s OTIF metrics. Each metric is as follows:

• On Time (Prepaid): 90% of all cases arrive within the delivery window at the distribution center (DC)

• On Time (Collect Ready): 98% of all cases are ready for Walmart pickup

• In Full: 95% of all ordered cases arrive, as divided by merchandise alignment

You will see these metrics as a percentage on your OTIF dashboard in Retail Link. For example, if Walmart did not receive 100 of your last 2,000 shipped goods, your In Full score would be 95%:

95% = (2,000 – 100) ÷ 2,000

Let’s break these down further.

On Time (Prepaid)

In the past, Walmart has been more lenient with less-than-truckload (LTL) shipments compared to full truckload (FTL). However, in 2020, it simplified this metric and combined the two. Now, the On Time (Prepaid) metric is 90% across all shipping options.

On Time (Prepaid) metrics are based on the Must Arrive By Date (MABD) and the corresponding delivery window. Delivery windows vary based on the merchandise alignment. For example, the window for food is the MABD only (not a day before or after), while the window for general merchandise is the MABD plus one day before.

The KPI further breaks down into three metrics:

• Prepaid Early Delivery: The shipment arrived at the DC before the delivery window, according to the MABD.

• Prepaid Late Delivery: The shipment arrived at the DC after the delivery window had closed.

• Prepaid Unscheduled Appointment: The shipment arrived at the DC without an appointment. Typically, your third-party logistics (3PL) team handles appointments; otherwise, they are your responsibility.

Delivery windows break down into two categories: one for live appointments and one for drop trailers. The delivery window also varies depending on whether you sell in-store or online, where you ship goods, and what your merchandise alignment is.

Walmart’s distribution and fulfillment center classifications are:

• ACC: Automated Consolidation Center
• DC: Distribution Center
• FC: Fulfillment Center
• FDC: Fashion Distribution Center
• FSC: Fresh Solutions Center
• GDC: Grocery Distribution Center
• HVDC: High-Velocity Distribution Center
• RDC: Regional Distribution Center

Live Appointment POs

Drop Trailer Delivery POs

Applies to both in-store and e-commerce suppliers for all merchandise alignments

On Time (Collect)

If you have a contract with Walmart to pick up your shipments, you are a Collect supplier. The On Time (Collect) metric is 98%. On your OTIF scorecard, you will see many reasons for not being Collect Ready, but some of these are not your responsibility—they are Walmart’s. The following metrics are your responsibility. 

• Supplier Ship Point: The shipment wasn’t available for pickup. While Walmart may own some accountability on this metric, you must ensure that the truck can access your facilities and load your goods by the appointed time on the appointed day.

• Late Transport Notification: The Request for Routing (RFR) occurred late. Ensure that you or your 3PL submits RFRs before 4:00 p.m. CDT the day after receiving the order.

If you worry about your On Time performance, consider your shipping options.

In Full

The In Full metric is 95% and is a simple formula: the number of cases received divided by the number of cases ordered. This metric applies to each merchandise alignment, so if you sell goods in different departments, your metrics will reflect this.

• Food
• Consumables
• Health & Wellness
• Apparel
• Home
• Hardlines
• Entertainment/Toys 
• Seasonal

Walmart further calculates the In Full metric by system-generated orders versus manual orders. System-generated order quantities must match the original order quantity on the PO. Manual order quantities must match the adjusted order quantity. 

Sometimes, In Full non-compliance can come from shipping items instead of canceling them. You can cancel an entire PO or specific line items if you cannot fulfill an order as requested to avoid the In Full fine.

Common Errors and Tips

If 3% of COGS sounds like a steep fine, here are some common mistakes you’ll see and how to avoid them.

Common OTIF Pitfalls

• Misinterpreting MABD for perishables versus general merchandise (Prepaid): Always check your item setup and Retail Link to ensure you can ship within the delivery window of your merchandise alignment. Remember: Perishables have a one-day delivery window that is equal to the MABD on the PO. General Merchandise (GM) items have wider windows depending on the DC.

• Late RFR submission (Collect): Make sure you or your 3PLs confirm the Collect pickup day and time before 4:00 p.m. CDT the day after receiving the order. These days can fall on weekends and holidays, so communicate your facility closures to Walmart to avoid this error.

• Shipping partials instead of properly canceling unfillable POs: If you cannot ship an entire order for any reason, cancel the PO or PO line items. Do not partial-ship.

Tips to Stay Compliant:

• Partner with 3PLs that have strong Walmart experience.
• Check your OTIF scorecard in Retail Link weekly.
• Use ASN accuracy reports to validate “In Full” compliance.

Staying on Top of OTIF

Walmart has changed its OTIF compliance goals significantly since COVID-19 shook the supply chain, and it’s vital to a smooth operation to stay on top of these goals. Make sure you check your OTIF Scorecard frequently in Retail Link and make adjustments when you start to fall behind. 

Cheat sheets, standard operating procedures (SOPs), accountable 3PL partners, and regular audits can help you avoid OTIF fines. Of course, prevention is the best medicine, so be proactive in your supply chain.

Need help staying compliant with Walmart? Let us know.