Back in 2010, Walmart sent shockwaves through retail supply chains when it rolled out Must Arrive By Date (MABD) compliance standards to the thousands of suppliers that keep its shelves stocked year-round. An effort to increase productivity and performance via strict delivery windows and guidelines its stores and distribution centers, the "Big-Box" retailer managed to rewrite the supply chain playbook basically overnight as other vendors soon adopted similar policies.
Flash forward to 2016, it's become evident once again that retail suppliers are in for another wakeup call that will force them to take a good long hard look at their transportation and fulfillment strategies.
What's In Store For Retail Suppliers
In June of this year, Target took one of the first major steps forward in this new era of retail compliance. The "Expect more, pay less" retailer did away with its traditional multi-day delivery window and adopted a strict single-day requirement. Additionally, suppliers no longer have the benefit of a "grace period" to ship a few days late without risk of incurring penalties.
Walmart will also be increasing its compliance standards in 2017 as it reduces its four-day delivery window to just two days, as well as increasing its compliance rate from 90 percent to 95 percent.
With potential chargeback fees that are generally a percentage of the cost of goods, suppliers will need to begin preparing (if they haven't already) to identify weaknesses in their current practices and working with their transportation providers to ensure they are ready to meet increasing demands.
Why Compliance Standards Are Increasing
Many suppliers are asking themselves why they are being challenged to meet increasing industry requirements from their vendors. In short, it's a matter of finding ways to remain competitive in a retail landscape that has been upended by same- and next-day deliveries offered by many online retailers, such as Amazon.
For location-based retailers, maintaining a lean and productive supply chain ensures that their shelves will be stocked and allows them to reign in costs.
Compliance standards, however, are not only beneficial to vendors. Retail suppliers also stand to gain when they meet their delivery and compliance objectives because a missed sale for a vendor is also a missed sale for a supplier.
Act Now And Solidify Your Compliance Practices
As more retailers look to follow in the footsteps of Walmart and Target, suppliers should examine their supply chain practices sooner than later. Though delivery standards are becoming more strict, it's important to remember that they are not impossible to meet. Nonetheless, it will take an adept strategy and partnership with service providers that have the expertise and track record to keep your business moving forward in this new era of retail compliance.