Wal-Mart Stores Inc. is adjusting its product delivery guidelines and will lay out its revamped plan during a two-day supplier growth forum that begins today.
Steve Bratspies, the company's U.S. chief merchandising officer, said full-truckload suppliers will be told they must have shipments that are destined for the retailer's shelves delivered on the scheduled arrival date -- not early or late -- at a minimum of 85 percent of the time by April 1. It's an increase from current requirements of 75 percent that have been in effect since August, but lower than the retailer's original Feb. 1 target of 95 percent that was discussed when the program was unveiled.
Meanwhile, less-than-truckload suppliers will be required to have their products delivered on-time and in full at a 50 percent threshold by April 1. The current threshold is 33 percent.
"We're on the road to 95 [percent], but we also are trying to be practical and reasonable and, in a good partnership, trying to step our way there," Bratspies said. "We'll continue to raise the bar as we do it."
The next step is part of a process Wal-Mart began more than two years ago after studying the way items flowed from suppliers and distribution centers to store shelves. The retailer identified inefficiencies in its previous four-day method, which one Wal-Mart executive said looked more like a 10-day window. So the retailer has tightened the delivery schedule, first mentioning the plan two years ago and formally unveiling it to suppliers during last year's growth summit.
Since August, suppliers who haven't met the monthly threshold have been fined 3 percent of the value of the products that didn't hit the target. But Bratspies said collecting fines isn't the motivation.
"For me, in a perfect world there's no fines," Bratspies said. "I don't want that money. I want the product. That's really what I want. So it's just building accountability."
Colby Beland, vice president of sales and marketing at logistics firm CaseStack, said the adjustment to 85 percent is in line with what he expected after monitoring Wal-Mart's progress over the past several months.
While Wal-Mart has seen significant improvement from its full-truckload suppliers the past few months, boosting the level to its ultimate goal of 95 percent by Feb. 1 would've created issues.
But Beland also said the less-than-truckload increase to 50 percent is an indication Wal-Mart wasn't getting as much progress from smaller suppliers, so the company is planning to drive accountability.
"Stepping up the threshold for those smaller suppliers, or those less-than-truckload suppliers, makes sense," Beland said. "That's where they were not seeing the ground being made up that they wanted to see as far as moving toward 95 percent."
The on-time, in-full update is one of several topics the retailer is scheduled to discuss during a forum that will be attended by about 4,000 Wal-Mart suppliers, according to Bratspies.
He described the two-day business meeting as a chance to make sure suppliers are "clear on our strategy" and aligned with the retailer as it enters the new fiscal year.
Some of the topics will be familiar to Wal-Mart suppliers -- providing great items at the lowest prices, moving with speed, and aiding the retailer in its competition with Amazon.com.
Bratspies acknowledged that suppliers have their own expectations and have asked Wal-Mart to share data to help them work together, adding that the retailer intends to follow through. Bratspies said Wal-Mart plans to provide more of its forward-looking forecast than in previous years and also offer increased access to data detailing the root causes of out-of-stock items.
Bill Sussman, chief executive officer of consulting firm Supplier Community and former CEO of shopper marketing agency Collective Bias, believes Wal-Mart's willingness to share more data is "great news" for suppliers.
"Wal-Mart's relationships with suppliers are at its best when suppliers know what to expect," said Sussman, who used to work for the retailer and also held roles in the supplier community. "When they provide that consistency and the trust relationship extends beyond negotiating over price or negotiating over an item, to things like sharing data, that goes a long way."
Bratspies said Wal-Mart understands that building trust with suppliers is critical to its success and that the retailer this week wants to reinforce plans to work together to drive sales growth.
"There's always a little bit of conflict between a supplier and a retailer," Bratspies said. "Hey, we're negotiating. So there's always a little conflict. ... We're not always going to agree, but we should trust each other and trust that we always have each other's best interests at heart as we do these things."
Business on 01/30/2018