We’ve talked about it before | Walmart Compliance Regulations
Suppliers are under tighter compliance regulations to get the right products to the right stores or distribution centers by a certain time or they pay a fee. Walmart suppliers now face paying a fee of 3% of the cost of goods of all non-compliant deliveries.
These regulations for Walmart were implemented back in January of this year, but other retailers such as Target and Home Depot have been charging these fees for some time.
Manufacturers and suppliers that work with large retailers like Walmart, Target and Home Depot are more successful in getting their merchandise on the shelves with the proper lead time due to partnering with a third party logistics provider (3PL).
A third party logistics provider, or a 3PL, is an expert in transportation management and supply chain optimization and has the ability to help estimate from start to finish where the MABD will impact the suppliers products.
The MABD Window
The MABD Window includes the day the merchandise is due to the distribution center or other facility, plus the three previous days. It’s not just the arrival date that counts, it is also the contents and the number of items. If less than 90 percent of merchandise cases are received within the MABD delivery window, the supplier must pay 3% of the cost of goods.
Basically, retailers like Walmart and Target are no longer acting as warehouses, with too much inventory in back stock rooms or in trailers behind stores.
With these regulations, you can see that a smaller manufacturer might have an issue in managing the stresses of logistics. If the supplier is currently using the “cheapest” route to get products from point A to point B, their goods may be affected and the transportation model may need to change to not conflict with the MABD.
This is where a 3PL with a proven track record would come in and provide a customized transportation plan.
Ship Truckload or Less-Than-Truckload?
Manufacturers and Suppliers who ship Full Truckload have a much easier time complying with the rules because their trucks deliver to one destination. Unlike Less-Than-Truckload (LTL), which has their freight combined on a truck with several customers and several deliveries and has more opportunities for delays; especially if the goods are being delivered by a cheaper mode like rail.
A third party logistics provider could assist in an LTL shipper’s evaluation of their supply chain.
The entire supply chain would be evaluated. A 3PL could help the supplier consider using a more efficient carrier or find ways of improving the proper lead times and shipping the full order.
A Way to Avoid Fees
If at least 90 percent of the merchandise complies with the MABD window in a month, then the supplier is not subject to fees. That means one order in a month might arrive late or only contain 85 percent of the ordered merchandise for that purchase order. However, if that is the only out of compliance purchase order, then the supplier likely has a 90 percent or better compliance average for the entire month.
The hardest thing is to resolve issues. It’s better to stay ahead of the game and track compliance and with Walmart’s “Retail Link.” 3PLs and suppliers will need to keep focused eyes on the MABD compliance reports.