In this article, learn about:
Understanding how fill rate, OTIF, and chargebacks create a sequence of accountability for new suppliers
A deep dive into Walmart’s latest OTIF targets and performance categories
How to leverage grace periods and root cause analysis to stop revenue erosion before it starts
For many emerging brands, starting to ship to a major retailer is exciting. But it also comes with a daunting reality check called a vendor scorecard. Your first look at a vendor scorecard often looks like an unintelligible jumble of percentages, acronyms, and tabs that can feel far from helpful.
However, a vendor scorecard, also called a supplier scorecard, is simply the foundation for data-driven management. It is designed to establish clear, measurable expectations so that both you and your retail partner can stay on the same page. While the sheer volume of data in portals like Walmart's Retail Link or Luminate can be overwhelming, to find your footing, you should focus on the three metrics that matter most for your bottom line:
Fill rate: This metric measures whether you shipped what was on the purchase order (PO).
OTIF (on-time in-full): This metric combines fill rate with delivery timing.
Chargebacks: This final metric is the financial consequences of when fill rate and OTIF fall below the standard established by the retailer.
Fill Rate
Fill rate is the best place to start because it is the most straightforward. Simply put, it is the percentage of the ordered quantity that you actually shipped. If a retailer orders 100 units and you ship 90, your fill rate is 90%.
Consistent shortfalls in fill rate usually point to capacity issues or gaps in your forecasting. While it seems simple, a low fill rate is often the first domino to fall in a series of compliance issues. Retailers rely on your fill rate to ensure they have enough product on the shelf to meet customer demand; if you ship less than what was promised, you are effectively creating a stock-out risk for them.
OTIF
If fill rate is the simple version, OTIF is the strict version. OTIF captures the reliability of your entire fulfillment process by combining delivery punctuality and order accuracy into a single unified score.
What often trips up new suppliers is the binary, pass-or-fail structure of OTIF. A shipment that is 95% complete but arrives perfectly on time still fails the OTIF requirement entirely. To count as a pass, the order must meet both conditions simultaneously: it must arrive within the agreed-upon window and contain every item in the correct quantity.
The math behind OTIF is where you can see how small errors compound. The metric is often calculated by multiplying your on-time delivery rate by your in-full delivery rate. For example, if 90% of your orders are on time and 95% are in full, your composite OTIF score is only 85.5%. This highlights how even decent performance in individual categories can result in a failing grade when viewed holistically.
Walmart's Current OTIF Benchmarks
Since February 2024, Walmart targets have included the following benchmarks:
Prepaid on-time: Cases must arrive at the distribution center (DC) within the Must Arrive By Date (MABD) window.
Collect ready: Cases must be ready for pickup by the appointment time. In this category, the supplier is responsible for having the product ready, while Walmart or their assigned carrier handles the actual transport.
In-full: Cases ordered must be delivered. This goal is applied individually across different merchandise categories, such as food, consumables, or apparel.
Related Reading: Should I Use Prepaid or Collect Shipping in Walmart?
Chargebacks and Deductions
Chargebacks and deductions are the financial penalties that retailers apply when performance falls below their set thresholds. While these terms are sometimes used interchangeably, depending on the retailer, they may represent different things.
Deductions typically occur when a retailer pays less than what you invoiced. These are often processed through accounts payable and might stem from shortages, damages, or pricing discrepancies.
Chargebacks or fines are more like a penalty bill sent to you for a specific infraction, such as a failure to meet OTIF standards.
In Walmart's system, OTIF fines are issued as an invoice through the accounts receivable department. If these invoices are not paid by the due date, Walmart will automatically deduct the amount from your future payments. It is a high-stakes environment where a few percentage points of underperformance can quickly turn into thousands of dollars in lost revenue.
Related Reading: How Working Capital Is Affected by OTIF, Fill Rate, and Deductions
Navigating the Apps and Supplier Portal
To manage all the metrics within the scorecard, you need to know where to look. For Walmart, most of the heavy lifting happens within Retail Link through two primary apps: the OTIF Scorecard and the Supplier Quality Excellence Program (SQEP).
SQEP focuses on quality before the product arrives. SQEP monitors defects like incorrect labeling or poor pallet stacking. Together, they form the core of your accountability system.
Many suppliers are also adapting to Luminate, which is evolving into Walmart's central hub for supplier operations, where you can pull a vendor scorecard report that provides a holistic view of your performance across the last 104 weeks. This report includes critical metrics like warehouse weeks on-hand, sales, and initial margin percentage, alongside your OTIF and fill rate data.
The Reassurance of The Grace Period
One of the most valuable pieces of information for a new supplier is the grace period. Many major retailers, including Walmart, offer new suppliers a window where performance is tracked on the scorecard, but financial fines are waived.
The grace period gives you time to familiarize yourself with the systems and build good operational habits before the financial ramifications kick in. Use this time to treat your scorecard as a diagnostic tool. If you see a low OTIF score during month one, don't panic; instead, dive into the granular details of the report to find out why.
Disputing and Root Cause Analysis
Not every deduction or chargeback is valid. Retailers make mistakes, too, such as receiving errors at the DC or failing to account for factors outside your control, like extreme weather.
When you spot an invalid charge, you should dispute it immediately. Successful disputing requires organized documentation, including your PO, bill of lading (BOL), advance ship notice (ASN), and proof of delivery (POD). Most retailers have a specific portal for this, such as Walmart's Accounts Payable Dispute Portal (APDP).
However, the best way to handle chargebacks is to prevent them from happening in the first place. Fill rate and OTIF failures are almost always symptoms of an upstream problem. If your OTIF score is dropping, the fix usually involves fixing inventory inaccuracies, improving the timing of your ASNs, or tightening your production scheduling, among other solutions.
A healthier supply chain starts with better data visibility. By monitoring your scorecard weekly and acting on early-warning signs, you can turn your supplier relationship into a strategic collaboration grounded in mutual accountability.
Related Reading: How To Dispute Walmart OTIF Chargebacks
Are Deductions Eating Away at Your Margins?
Identifying and reclaiming lost revenue doesn't have to be a manual, uphill battle. SPS Revenue Recovery helps brands automatically identify, validate, and dispute invalid deductions and compliance fines across major retailers like Walmart, Target, and Amazon. By connecting directly to retailer portals and surfacing the root causes behind recurring issues, our network allows your team to recover what you're owed while building a more resilient supply chain.