Walmart this week is beginning to share some previously private inventory data with its suppliers in an effort to better manage and maintain stock levels, Reuters reports.
Walmart discussed the sharing of data, known as On Shelf Customer Availability (OSCA) data, at its Supplier Growth Forum on the corporate headquarters campus Tuesday, according to the report.
The retail giant also has told large suppliers it will now require them to deliver orders within specified time windows at least 85% of the time, while smaller suppliers will be required to do so at least 50% of the time, with violators in both cases potentially facing fines.
So much of retail success depends on inventory — not just what kind of inventory but where and how much of it there is, as well as how effectively it is managed, renewed and made available to customers, wherever they may be.
Retailers are continually evaluating and revamping how they manage and move inventory. This week, Amazon made a move in this regard with the reported expansion its FBA Onsite program.
Walmart has pursued new technology for in-store deployment to help it keep better tabs on inventory, such as shelf-scanning robots, but managing inventory effectively also requires a deeper dive into the retailer’s processes and supplier partnerships. As has been the case with many new efforts by Walmart, a desire to be more competitive with Amazon may be at the heart of this move. Walmart likely is aiming to keep up with Amazon’s ability to successfully manage inventory levels on a massive, widely distributed scale.
But, Walmart is also acknowledging the reality of customer expectations in the age of omnichannel shopping and fast delivery. If customers can shop a retailer in-store, online and on mobile, they also will expect the items they want to be available at the store of their choice or one nearby or via fast delivery.
Making that happen more often could add as much as $1 billion of new revenue to Walmart’s coffers, the Reuters report stated. The retailer’s new on-time delivery requirements for its suppliers will go into effect in April, but in truth Walmart has been working in this direction for a while with its On-Time In-Full supplier delivery initiative, and its supplier partners have known it.
"Suppliers have had to adjust to increased demands by Walmart through the years, and most have seen this next step in supply chain speed and accuracy coming," Tony Uphoff, Thomas President and CEO told Supply Chain Dive. "This being said, it will be a very difficult transition for some suppliers, especially those that haven’t invested enough in the enabling technologies that will allow them to better manage their supply chains."
In fact, it's possible that some of the 4,000 suppliers to Walmart drop out given how low their margins already are, Uphoff added.
Yet, to get where Walmart wants to be with inventory availability, the company also needs create an open channel with its suppliers. Sharing the OSCA data should help make that happen.