Walmart Inc. is raising its delivery goal posts for suppliers, asking them to deliver more goods on time as it competes with Amazon.com Inc. for shoppers online and in stores.
The retailer wants suppliers that ship full trucks of products to deliver orders within a specified two-day window 87 percent of the time, up from an 85-percent rate it targeted previously. Suppliers that fill part of a truck with their goods must hit a 70-percent on-time threshold, a significant jump from the previous target of 50 percent.
Walmart also is changing how it penalizes suppliers when they make partial deliveries, an effort to make sure products are on shelves when needed, a particular focus for Walmart as it ramps up online grocery pickup and delivery services that pull from store inventory to fulfill orders.
“When we receive the product that we ordered, we see better sales,” said Steve Bratspies, the chief merchandising officer for Walmart U.S. Suppliers of the retail giant previously were evaluated on how consistently orders arrived on time, combined with how complete their orders were. Now Walmart will evaluate suppliers on each part separately so the performance of each piece of delivery can be evaluated more easily, said Mr. Bratspies.
Walmart executives announced the changes, which are set to take effect by May, at a recent supplier conference.
The country’s largest retailer, which has been pushing overall inventory levels lower, is in the midst of improving the precision of how products move through its warehouses and stores to cut costs and better prepare stores to become hubs for online sales.
Timely, incisive articles delivered directly to your inbox.