Every major CPG retailer runs a version of the same brutal math. Walmart’s OTIF threshold sits at 98 percent for Collect Ready cases and 90 percent for prepaid On Time delivery, with a 95 percent In-Full requirement, and falling short triggers a 3 percent penalty on the cost of goods. [Source] When you scale that across a full year of shipments, it’s not hard to see how penalties reach seven figures for mid-sized suppliers, exceeding $20 million annually for major CPG firms.[Source]
A stalled line or a dead terminal doesn’t just cost production hours, but can cost you the MABD (Must Arrive By Date), and the chargeback that follows doesn’t go away when the line comes back up.