Retail Massive Goal to Crack Down on Providers
Retail giant Target is cracking down on suppliers as part of a multi-billion-dollar overhaul to speed up its supply chain and better compete with rivals including Walmart and Amazon.
The sixth-largest U.S. retailer by sales plans to tighten deadlines for deliveries to its warehouses, hike fines for late deliveries, and could institute penalties of up to $10,000 for inaccuracies in product information, according to a letter sent to suppliers recently.
The new rules and penalties are detailed in a letter sent to suppliers. They will start to take effect on May 30 and will be rolled out over the next 60-90 days. In the letter to suppliers, Target said the goal was to keep products stocked to help eliminate out of stock situations and therefore missed sales. The new rules, detailed in the letter, call for domestic suppliers to give a single-day arrival date for shipments to Target’s warehouses. Domestic suppliers constitute the majority of Target’s vendor base.
These suppliers will no longer have a “grace period” to ship a few days after the promised date without penalties, the letter says. Suppliers said the current grace period for shipments is two to 12 days depending on product category. Target will also hike fines on late shipments to 5 percent of the order cost, according to the letter, which adds that the retailer is considering “escalating charges of $5,000-$10,000” for suppliers who fail to provide complete and accurate product information.
Household, paper, pet products and center-store grocery suppliers have to comply with the rules in June; health and beauty vendors in July and divisions including apparel, home and electronics in August.