OTIF Fines / OTIF Penalties

OTIF – On-Time In-Full – is the metric retailers use to measure whether suppliers delivered the right quantity within the required delivery window. When a supplier misses the target, the retailer charges a fine. Walmart's OTIF program is the most well-known, penalizing suppliers 3% of the cost of goods sold on any PO that falls below its threshold (currently 90% for on-time and 95% for in-full on collectible orders), but Target, Costco, Kroger, and other major retailers enforce their own versions with varying thresholds and fee structures.

The "on-time" component measures whether the shipment arrived within the retailer's must arrive by date window – typically a one- or two-day range. The "in-full" component measures whether the delivered quantity matched the purchase order exactly, with no shortages. These two components are scored independently, and a shipment can fail on one, both, or neither. Some retailers score at the PO level, others at the line-item level.

OTIF fines hit CPG shippers especially hard because the penalties compound across hundreds or thousands of POs per year. A supplier shipping 500 POs weekly to Walmart with a 92% on-time rate is paying fines on roughly 40 POs every week. For food and beverage shippers with tight production schedules and temperature-controlled freight, even small disruptions – a carrier arriving a few hours late, a warehouse shorting a pallet – can cascade into six-figure annual penalty exposure.

Preventing OTIF failures requires tight coordination between order management, carrier selection, load planning, and real-time tracking. Shippers need to know the moment a shipment risks missing its window – not after the retailer's scorecard comes in 30 days later. Proactive alerts, accurate ETAs, and automated appointment scheduling are the operational levers that separate consistent OTIF performers from those bleeding fines.