As Walmart Suppliers begin assessing budget dollars for 2018, they are planning around a new factor: On Time In Full (OTIF). Whether working on a better scorecard or allowing for penalties, much discussion is taking place over navigating OTIF for a profitable year.
We were fortunate to visit with Colby Beland of CaseStack on a recent 8th & Walton Conference Call podcast. Beland gave us some interesting insight on the future of OTIF, things to consider when budgeting for 2018, and a look at how Walmart has supported suppliers up to the present.
Walmart Wants to Help Suppliers
One thing suppliers need to keep in mind is Walmart is on their side. Beland has been helping suppliers since OTIF was announced and recalls concerns from the first implementation.
“When OTIF first came out, everyone was concerned about the hurricanes, and what was going to happen from a penalty perspective,” Beland remembers. “Walmart announced they were granting a force majeure exception for the OTIF penalties. That was the right thing to do. Walmart really is in this to be a partner with suppliers and to do the right thing for suppliers.”
Take Advantage of Walmart’s Resources
In addition to the OTIF scorecard and analytics tools, Walmart has worked with suppliers through live forums. At 2017’s OTIF Fireside Chat, Beland speculated Walmart has a better idea of challenges suppliers face.
“Strictly my opinion, my biggest takeaway was Walmart realizes the OTIF initiative is critical to their mission of improving flow through the distribution center network,” he observes. “They also understand it’s a challenge for the suppliers to comply even though everybody’s been working on this for months.
“It’s a process, and I think Walmart understands it’s a process. Therefore, they’re going to partner with the suppliers and do the right thing by the suppliers.”
Thinking Ahead to Your 2018 Budget
Is there a way to plan around OTIF for the coming months? Beland advises that while each supplier is different, the common denominator will impact everyone: transportation.
“Transportation rates are going up. There’s no way around it,” he says. “I would expect all suppliers to see a cost of goods increase on transportation, whatever sector they’re in (parcel, LTL, full truckload). I think all categories are going to see substantial increases, especially in the truckload sector.”
Beland also recommends that when making your 2018 budget, plan OTIF on the high end to be safe. “Today, I would take the worst case scenario: assume 95% is the expectation, then figure you won’t be able to make it,” he advises. “Take a percentage of your sales to make up for the percentage you’ll be falling out of that 95%. At this point, just typical budget process. Assume an increase in your supply chain costs.”
Just Now Planning for OTIF?
Some suppliers waited to see their first penalties before deciding how to plan for OTIF. Beland concludes with advice for any supplier just now thinking of an OTIF strategy.
“You definitely need to be having internal meetings or external meetings with service providers that can help you obtain the goals,” he says. “The penalties are real. There are a lot suppliers not exceeding their baseline numbers with an improvement. If you need help, go find it.
“There are service providers that can help a company obtain 95% in multiple different ways. What CaseStack does is one solution. There are many ways to improve on what the supplier is doing.”
To hear our entire interview with Colby Beland, click here for the 8th & Walton Conference Call podcast.