It’s not easy being a supplier for Walmart. Sure, doing business with the largest retail chain in the world has its perks, but in order to maintain a relationship with Walmart, suppliers must adhere to some very strict guidelines.
In 2010, Walmart implemented new delivery compliance standards which established “must arrive by dates” (MABD) for their suppliers. These guidelines required that deliveries arrive no earlier than two days in advance of the MABD, and no later than one day past the MABD. If a supplier missed this 4 day delivery window more than 10 percent of the time, Walmart would charge the company 3 percent of its quarterly invoice. Over time suppliers were able to adapt to these strict delivery requirements, but now Walmart’s delivery compliance standards are about to get even more stringent.
Beginning in February of 2017, Walmart will reduce its required shipping window from four days to just two – the day prior to and the day of the MABD. It will also increase its delivery compliance requirement for North American suppliers from 90 to 95 percent. These impending changes have retailers scrambling to consolidate their shipping operations and update their internal logistics protocols to improve supply chain efficiency.
The changes could be especially difficult for suppliers that rely on less-than-truckload (LTL) services to get their goods to Walmart locations. These companies will likely have to collaborate with other suppliers to streamline their operations and consolidate shipments into full truckloads.
Initially, the changes will pose some significant challenges for Walmart’s suppliers, but over time the retail giant is optimistic that the new regulations will be better for everyone. By requiring their suppliers to maintain strict compliance standards, Walmart hopes to provide an incentive for these companies to update and improve aging shipping infrastructures. If there’s one thing you can count on, it’s that Walmart won’t be going away anytime soon. For the company’s suppliers, the new regulations constitute an ultimatum: adapt or fall by the wayside.
Stay tuned for more updates on the global supply chain from Western New York’s premier source for warehousing, cross-border shipping and more – SPEED Global Services.