Breaking

Late, Incomplete Deliveries Drain $100B Annually from North American Food, CPG Sector

Missed and partial shipments cost U.S. and Canadian food and consumer packaged goods manufacturers roughly $100 billion yearly, according to supply chain software company Cleo's analysis released Tuesday.

Direct expenses including retailer chargebacks, expedited freight and dispute resolution total $10 billion to $11 billion. The remaining $85 billion to $90 billion stems from hidden losses: forfeited shelf space, reduced retailer orders, excess inventory and production disruptions.

Walmart tightened its OTIF standard in 2020 to require 98% on-time, in-full delivery performance or suppliers face 3% chargebacks on goods costs. Amazon and Target maintain similar standards. Major retailers including Kroger, Costco and Publix typically set thresholds exceeding 95%, while most manufacturers achieve 85% to 91% compliance.

Suppliers meeting performance benchmarks rarely gain contractual financial rewards, leading companies to invest minimally rather than exceed requirements. A single missed delivery can cost manufacturers shelf placement, future orders and retailer relationships.