How Walmart suppliers can meet 98% OTIF rule and avoid fines

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How Walmart suppliers can meet 98% OTIF rule and avoid finesHow quickly do you think you could increase the percentage of orders that you ship on-time and in-full from 70 percent to 98 percent? If two weeks (or less) sounds daunting, consider Walmart’s announcement from September 1, where it gave suppliers until September 15 to make that change. That’s two weeks from when the company first made the announcement and right in the midst of an economic downturn and global pandemic.

Compliance may be a tough road ahead, but it isn’t impossible. For supply chains that can run multiple scenarios in minutes, understanding the impacts of this new mandate –  and other supply chain disruptions – happens quickly.

A powerful combination: Scenario planning and concurrency

Despite advances in technology, many companies' scenario planning happens outside of existing supply chain systems and business processes. Planners rely on assumptions to make decisions about which simulations to test. Analysis is time consuming and limited by the amount of data that can be managed by an outside system. Rather than work concurrently and holistically, planning happens slowly and in silos. But that isn't enough to keep up with today's pace of change.

Markets move quickly. Consumers expect goods to be available on demand. Industry leaders set the pace for innovation. Companies’ supply chains have to become agile just to keep up. Businesses need solutions that can combine better scenario planning with the right levels of automation and human intervention to ensure that the supply chain is meeting complex demands.

Concurrent planning solutions do more than just speed up scenario planning. They break down silos and increase visibility across the entire supply chain. A change at one end of the network is instantly recognized across functions and departments, such that everyone simultaneously understands the impact on themselves, their team, and the organization as a whole.

Consider Procter & Gamble. As Hurricane Irma approached Florida in 2017, the company used what-if scenarios to instantly calculate potential impacts to its manufacturing plants and other supply chain assets. Planners ran a variety of simulations within a single day, including what to do if the storm path suddenly shifted. Before the storm hit, P&G had already rerouted supplies and inventory to ensure that customers could find goods in stores once the storm had passed. What could have been a disruption instead became an opportunity.

Walmart suppliers may see and feel more doom than opportunity in the latest announcement, but making changes could benefit them beyond this current event. When Unilever began adopting concurrent planning processes, it significantly improved its ability to manage demand changes in real-time. Unilever saw vast improvements to the number of SKUs each planner could handle and it reduced demand/supply analysis from hours to seconds. These capabilities have allowed the company to quickly make necessary supply chain changes to meet the ever changing demand for hundreds of brands distributed to consumers in countries around the world. “At the end of the day, every dollar we spent on agility has probably got a 10x return on every dollar spent on forecasting or scenario planning,” says Marc Engel, Chief Supply Chain Officer at Unilever.

Agility is the expectation, not the stretch goal

Demand for greater supplier agility may become the new norm for retailers. As Talk Business & Politics notes, Walmart is the third major retailer to require 98% OTIF shipments. Amazon and Target led the way, and more stores will follow as they strive to meet customer demands. To keep pace with these constant changes, faster scenario planning is vital, but it’s only one part of an agile supply chain planning process.

Concurrent planning solutions, like those embraced by Unilever and P&G, facilitate end-to-end connection and agility across the entire business ecosystem. With this level of synchronization, a sudden change affecting suppliers is quickly communicated to carriers and distribution centers. These groups can then notify the network about potential delays, collaborate to make adjustments and/or rapidly prepare alternative plans.

For some Walmart suppliers, the two week OTIF deadline may still be impossible to meet, but concurrent planning can help even in these cases. Walmart will manage logistics for suppliers that are currently handling their own transportation, but suppliers will be expected to have orders ready for pick up. They must also track shipments to monitor for any issues. Those that have the ability to know sooner and act faster will position their businesses to remain competitive.

Discover how your company can increase its agility and resilience to thrive in an unpredictable world. Join us and our amazing speakers, including Kirk Niehaus, VP of Global Supply Chain and Technology at Clorox, on October 20 – 21 at Kinexions ’20 – the premier global event for supply chain planners, innovators and thought leaders from around the world.

 

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