Effective Sept. 15, suppliers not meeting those guidelines will be fined 3 percent of the cost of the goods.
Most suppliers right now are meeting around a 70 percent rate of OTIF shipments, and Walmart's announcement gives them little time to adjust, with the Talk Business & Politics report saying the announcement sent "shockwaves" through the supplier community. Smaller companies using less-than-truckload shipments could be especially disadvantaged.
A memo from Walmart said the point is to "keep the customer at the center of everything we do," according to the report.
"[W]e must improve product availability to help ensure that our customer can purchase the products they want, when they want, in-store or online," the memo said, according to Talk Business & Politics. "To deliver on this goal, orders need to be fulfilled accurately, on time and in full. Over the last couple of years, improvements to the On Time and In Full (OTIF) program have driven increased visibility and accountability for Walmart and our Supplier partners."
The OTIF program is part of Walmart's push to get items to customers as fast as possible. In the current landscape, where Amazon Prime offers one-day deliveries, speed is essential.
But online commenters were outraged at Walmart's actions, with one commenter calling the new mandate "punitive and unnecessary," saying their carriers were pushed out weeks at a time due to slowdowns, the report stated.
The move could be linked to Walmart's recently announced Walmart+ subscription service, which will compete with Amazon Prime by offering special deals. Walmart+ will focus heavily on grocery delivery, which has seen large jumps in use during the pandemic.
Over half of Walmart's spending families use Amazon Prime, too, and Amazon has been edging in on the grocery market itself. So, Walmart wants to carve out its own place in the market in an increasingly digital world.