A Walmart Suppliers’ Guide to Reducing SQEP Fees

Intro

In February 2021, Walmart launched the Supplier Quality Excellence Program (SQEP), aimed at lowering receiving costs and improving product speed to shelf, thereby giving consumers the best shopping experience possible. The program will help chase out any product, packing, or shipment issues that interfere with the automated receiving processes at Walmart distribution centers (DCs) and stores by flagging and fining the suppliers for the defects.

This article is intended to help any supplier who is looking to learn more about tackling SQEP, including new suppliers who need to learn the basics or experienced supplier teams that want guidance on how to reduce fees and prevent more in the future.

Why Suppliers Need to Pay Attention to SQEP

Walmart has set a high bar of 100% compliance for the different measures they’re using to score the quality of supplier shipments. Any defect will result in a fine, and if a supplier isn’t paying attention to their SQEP performance, it can be a significant hit to their bottom line because the fines are incurred per defect.

More Details About SQEP

SQEP is focused on helping suppliers do things the “right” way when it comes to fulfilling orders and shipping products: right item, right condition, right invoice, and right time.

• Right Item: Are you shipping the right item?
• Right Invoice: Do the details of the invoice match the details on your item documentation (i.e., PO, ASN, and packing labels)?
• Right Condition: Are items arriving undamaged?
• Right Time: Are your shipments arriving on time?

These four “rights” are grouped in the following ways:

Phase 1: PO Accuracy/Advanced Ship Notice (ASN)

PO Accuracy looks at the fulfillment of a Walmart purchase order by the supplier and measures the number of total defects incurred compared to the total number of PO lines ordered. Accurate POs enable on shelf availability through an improved flow of merchandise from truck to warehouse to store. The penalties for ASN violations are not listed in Walmart’s packaging guide, but suppliers can access the SQEP dashboard via Retail Link to keep track of potential fines.

Phase 2: Barcode and Labeling

Barcodes in the improper format, barcodes with the wrong quantity, and labels without vital details like item descriptions, item numbers, and vendor stock numbers are all frequent problems the retail giant faces. Through this phase, suppliers are able to provide accurate barcode and labeling information.

Phase 3: Packaging Quality, Pallet Compliance, and Load Quality

The next phase focuses on packaging quality, pallet compliance, and load quality. You are deemed noncompliant if your packing is flimsy and the glue or tape doesn’t stay in place. Other no-nos include pallets without shipping labels and those that are too tall or have overhangs.

Phase 4: Scheduling and Transportation

At this time, Walmart has not yet put out details and descriptions of the defects for this phase. The article will be updated once details are released.

For detailed information on each phase’s defect description and definition, click here.

How can Suppliers Reduce Fee?

1. Proactively educate your ship locations on Walmart’s standard for labels, pallets, etc. Walmart’s detailed specifications are here.
2. Ensure item set up is accurate and complete in Item360, as this can lead to bad labels and incorrect orders.
3. Quickly fix compliance issues found in Walmart’s SQEP dashboard. Do this by identifying the ship locations or defects with the highest number of fines in the last invoiced period.
4. The Fix-It portal in Retail Link provides images taken by the auditor that highlight the compliance issue. Leverage these to effectively communicate with your ship locations and fix issues.
5. Dispute fees for any POs that seem unfairly flagged as noncompliant. File disputes are submitted and monitored through High Radius (https://walmart.highradius.com). Email HiRadCS@walmart.com for set up instructions. When submitting a dispute, be sure to include the full details for the best results (PO number, item number, defect type, DC, and impacted cases).

How TR3 Makes It Easier to Reduce Fees

The biggest challenge for suppliers wrestling with SQEP is the amount of prep work it takes to collect and analyze the data to prepare to dispute SQEP compliance penalties. TR3 has automated that process and presents the results in an easy-to-understand dashboard that recommends actionable insights for suppliers to reduce compliance fees.

This saves time and allows suppliers to focus all of their efforts on reducing penalties instead of dealing with data collection and processing.