Food and beverage shippers can be levied basketfuls of costly penalties for shipments to retailers that are not on time and in full (OTIF penalties). The trouble is that they do so in a way that makes it almost impossible to predict and react to the fines in a timely manner.
The Challenge
Walmart releases OTIF penalty data weeks after the shipments have been delivered. This latency impacted a Fortune 500 food and beverage shipper’s ability to respond to the penalties they were assessed within the time frame Walmart allowed. Moreover, they previously were unable to connect the dots between their deductions specialists and transportation teams in a meaningful way. Without being able to map transportation performance KPIs to Walmart’s SLA, predicting penalty exposure was nearly impossible.
This meant that they were stuck in a reactive pattern; when they received the fines, they accepted them as a cost of doing business and racked their brains to figure out the root cause of the service failure in time to correct procurement decisions in time to avoid next month’s fines. This data is also often behind paywalls, meaning the shipper actually had to pay Walmart to get access to details showing how much it owed the retailer in fines. This was a very frustrating dynamic that led to more OTIF penalties and less proactivity.
The Solution
Connecting the Dots Pinpoints the Issue
Our Food and Beverage shipper deployed Retailer Fine Intelligence to bring the right teams together to overcome this challenge.
With the tools to map the shipment and order data to Walmart’s service-level agreement (SLA), the shipper was able to connect its purchase orders and shipments at a granular level. This gave the shipper’s back office the ability to track ongoing transportation performance and directly forecast exposure to Walmart penalties each week. With these insights, the shippers could monitor the 90% on-time delivery (OTD) threshold and make adjustments on lanes where service was suffering each week.
In just the first quarter of 2024, the food and beverage shipper avoided:
- $220K in OTIF fines.
- 4% increase in on-time cases to avoid OTIF fines.
Stop Paying for Unjust OTIF Fines
ISO is helping some of the world’s largest companies improve their operations with a wide range of actionable supply chain performance data.
That valuable data provides insight for:
- Retailer fine mitigation.
- SLA compliance.
- Performance benchmarks.
- Dynamic scorecarding.
ISO creates a single source of truth by pulling data from multiple sources and streamlines that data reconciliation.