We continue to see retailers such as Walmart, Target, CVS, and Walgreens tighten their shipping compliance requirements. It’s likely these entry barriers will only continue as companies are competing with Amazon to fully stock their shelves with readily available products.
In 2017, Walmart had an OTIF (On Time In Full) compliance requirement of 75%. That figure has since risen to 98% and is showing no signs of going anywhere but up. Other retailers are following suit, making it more important than ever to understand each retailer’s compliance guidelines so that businesses can navigate the retail market without being inundated with fees and not capturing shelf space.
As mentioned in our previous blog article, The Benefits of Consolidated Shipping, we’re also seeing distribution center (DC) labor staffing shortages as well as driver shortages as capacity continues to tighten, making it harder to secure truck space for consistent deliveries.
We certainly understand the frustrations this is causing shippers. It takes time to comprehend all of the unique requirements for each retailer. On top of that, you must be an expert on each to control costs and avoid fines.
Below, I broke down the challenges for shipping into all major retailers, then broke out the specific challenges for each. You will then see a checklist to mitigate these challenges and learn how a 3PL like GEODIS can help. These tips should provide you with all you need to know for getting your product on the shelves in a timely fashion without incurring fees.
Challenges All Retailers Face
While there are certainly challenges to specific retailers (which I highlight later) there are many that the industry is facing as a whole.
- Companies that sell their products into Big-Box retailers are racking up shipping costs. One of the pitfalls is that they’re receiving multiple orders from retailers throughout the week rather than once per week. Multiple orders cause more shipments and fewer optimization opportunities and less control over when to drop every week and what the MABD (Must Arrive by Date) should be.
- Scheduling drops into retailers may need to be weeks in advance. Once scheduled, meeting each retailer’s compliance requirements is essential.
- LTL is having trouble scheduling appointments until they are already at the destination terminal.
- LTL shipments are seeing a lot of chargebacks for late and early deliveries. Having consistent deliveries and building a relationship with each retailer you ship to is crucial for maintaining shelf space.
- Retailers are getting thousands of shipments in a day. There are bound to be some mistakes accounting for product. This makes it essential to have total visibility of your product as well as a paper trail to easily handle disputes.
- Seeing disruptions within the LTL network, which is only expected to get worse as peak season arrives.
- Seeing LTL embargos for certain lanes across the Big-Box retailers.
Specific Challenges: Walgreens
- Walgreens has 95% WSTA (Walgreens Scheduled-To-Arrive) requirements. If your products arrive early or late, you’ll face deductions. It’s important to have consistency with Walgreens to maintain a good relationship and grow your brand’s shelf space.
- Walgreens is very particular about the type of pallet and wrapping used for products. This even includes how stickers are placed. They enforce $50 flat deductions for pallets that are not to their standard.
Specific Challenges: Walmart
- Not enough lead time to make MABD. A program such as Retailer Consolidation Services (RCS) can double this, providing more time for flexibility.
- Walmart has been holding on to trailers longer than usual, with LTL trailers sometimes getting held for more than two days. That hurts LTL more than truckload.
- Walmart has a 98% OTIF compliance guideline, resulting in a 3% wholesale cost in fines for not complying to either. These fines can stack if you miss both, resulting in 6% fines of your total purchase order.
- Walmart does not allow split purchase orders. Only one purchase order per pallet is allowed.
Specific Challenges: Target
- 95% STA (Scheduled to Arrive) requirements with fines of up to 5% on time and 5% in full, which can stack.
- Fines for incorrect labels and packing slips. Similar to Walgreens, Target is very stringent on how each order is presented.
Specific Challenges: CVS
- CVS will charge up to a 6% purchase order fine for incorrect shipments. If your shipment doesn’t match the purchase order, they’re known for sending overages back, a policy that can have significant transportation cost implications.
- If you don’t have reoccurring appointments, the appointments they provide may be weeks or even up to a month past the MABD.
- Starting in August, CVS is allowing only a 30-minute grace period for live unloads. They’ll administer an appointment integrity charge of $275 for not meeting this window, on top of any OTIF deductions.
How an Expert 3PL Can Help
Having an expert on your side who understands retailers’ various stringent requirements and who has strong relationships with retailers can provide significant benefits. When you don’t have to worry about every pallet meeting requirements and getting your products to Walgreens on time, you can then better spend more time focusing on growing your brand. A good 3PL understands all the challenges involved with shipping into specific retailers and has the experience and expertise to help you deal with retailers on any unforeseen issues that might arise.
A Checklist for Repeated Success
Whether utilizing a 3PL or your own network, there are certain steps you can take to increase the success rates of your shipments. Below is a checklist of items that we’ve found will generate the most consistently successful shipments.
Keep in mind too that cheaper is not always better. Neglecting to optimize this checklist due to upfront cost savings can actually cost you more down the road when problems arise which can then be expensive to fix.
- Ensure that there is a large carrier network to prevent failures. Flexibility to pivot if there is an issue is essential. Feel free to ask GEODIS which carriers we prefer.
- Visibility throughout your entire supply chain is key. Disputes are almost inevitable when making consistent shipments with large volumes. A paper trail with proof and documentation is important so that you can defend yourself against disputes.
- Building relationships between DCs with your coordinators and planners is important for appointment and scheduling. Without a strong relationship, scheduling can become increasingly difficult. With a strong relationship, it’s possible to obtain a more flexible delivery window.
- Develop a strong understanding of Walgreens’ pallet and wrapping specifications. There are very specific specifications that will result in charges piling up if not accounted for properly.
- Utilize “lead time management” to gain a little more control over how Walgreens schedules your deliveries. This can help you move closer to receiving orders once a week rather than multiple times a week. GEODIS can help guide and assist you with completing the necessary forms.
How GEODIS Can Help
GEODIS is an expert on the above checklist items and has a strong relationship with Walgreens and their carriers which gives them a leg up on scheduling deliveries.
While other companies often deal with inconsistencies in scheduling appointments, GEODIS has a relationship that allows for consistent week-over-week deliveries. When using the GEODIS Retailer Consolidation Services program, you can ship in a day early and not be fined.
GEODIS also consistently exceeds Walgreens’ 95% WSTA goal. GEODIS utilizes tier 1 technology to make sure there is a paper trail and processes in place that maximize efficiency and cost reductions. This includes proprietary G-audit technology with image capture functionality that makes refuting flat deductions easy.
For added flexibility, GEODIS provides the options of either storing your product before consolidation in our warehouse or shipping individual pallets to a cross-dock directly from your DC.
As shown in the above graphic, while sometimes it’s easier to store your products outside of your own DC, it’s not a dealbreaker for our Retailer Consolidation Services program if you already have an established warehouse. GEODIS has flexible shuttling options as well as flexible pricing models that will best fit your business needs.
For more information or to subscribe to our Retailer Consolidation Services, click here. You can also email me directly with any questions.
Author: Evan Glick