Walmart Raises the Stakes for Supply Chain Reliability

February 19, 2018
Walmart Raises the Stakes for Supply Chain Reliability

Walmart has raised the stakes for supply chain reliability. Its new on-time, in-full delivery guidelines (OTIF) were rolled out in 2017, with escalating requirements for 2018.

Both early and late deliveries get the thumbs down; failure to meet the metrics results in the supplier being fined 3% of the value of their order.

Requirements vary, depending on whether the shipment is a full-truckload or less-than-truckload (LTL) shipment. But either way, suppliers and 3PL’s cannot use weather or other uncontrollable events as acceptable reasons for failure to deliver in full and on time.

This post is based on the Supply Chain 24/7 article, Keeping Pace with Walmart’s On-Time Delivery Requirements, by Scott Bolduc, February 5, 2018. 

Discussion Questions
1. Assume that you are responsible for designing a lean supply chain for a supplier to Walmart. Find a company that supplies packaged water to Walmart from an internet search.  (Or find another company that supplies Walmart if you choose.)  How would you improve the supply chain to become lean to meet the demands Walmart has now imposed for suppliers such as your chosen company?

Guidance: Students should review lean supply chains, facility location considerations, and the importance of forecasting to enable lean supply chains.  Students should diagram (suggested: use a value stream mapping technique) the current supply chain by labeling locations, transportation methods, lead times, inventory levels (if known).  Now, students should start to make suggested changes to the diagram to create a lean supply chain.

2. How can the risks be mitigated for a lean supply chain that is heavily dependent on advanced technology?

Guidance: Students should review the importance of technology in logistics and inventory management.  Students should identify the top five risks for a technology failure in a lean supply chain for their chosen Walmart supplier (referring to responses on discussion question 1), and discuss ways to mitigate those risks.

3. What are the key factors to consider in selecting a reliable 3PL for your selected company that supplies Walmart?

Guidance: Review material on 3PLs and distribution centers. Students should develop a checklist of 10 items to be used to select a reliable 3PL for their chosen Walmart supplier (referring to responses on discussion question 1).

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