Wal-Mart Stores Inc (NYSE:WMT) is planning to hand out fines to its suppliers if deliveries aren’t on time.
The new program for fining suppliers is called “On-Time, In-Full” (OTIF). WMT says that it will include fining suppliers that bring products to Wal-Mart Stores Inc two days late, or one day early.
The policy from Wal-Mart Stores Inc will also have it fining suppliers that don’t pack the products properly. This means that even if the orders make it to the stores on time, there will still be a fine if products are properly packed.
Wal-Mart Stores Inc will be working on a scoring system that goes with OTIF. It will use this system to determine whose fault it is for the packing being wrong, or the orders not arriving on time. However, it won’t stand for disagreement from suppliers when it comes to the new policy.
Wal-Mart Stores Inc says that it expects the new policy to bring it an additional $1 billion in revenue. It notes this will be possible by allowing it to have more items ready for customers. The policy will also likely help to company clean up its backrooms, which have become cluttered to the point of requiring additional outside storage, reports ESM Magazine.
Wal-Mart Stores Inc’s OTIF policy comes as it tries to better compete with online rival Amazon.com, Inc. (NASDAQ:AMZN). In this regard, it has also being working on new shipping programs to speed up deliveries to customers. This includes having employees drop off packages on their way home and offering free two-day shipping for orders of $35 or more.
As of this writing, William White did not hold a position in any of the aforementioned securities.
