Report: Major Food Retailers Turn Up Heat On Suppliers

Walmart Inc. and Sysco Corp. are among food sellers demanding suppliers fill orders completely and quickly — or pay up, the Wall Street Journal reported.

The new policies reflect a reversal after companies extended suppliers considerable grace during the pandemic, according to the Journal.

Despite the strict enforcement of expectations, meeting them remains difficult for many suppliers, the Journal reported. The paper said challenges confronting food producers include difficulty finding workers, supply shortages and shipping delays.

The Journal quoted Henk Hartong, chief executive of Brynwood Partners, which makes Buitoni pasta and Pillsbury cake mixes, as having said, “The supply-chain challenges are still there…It’s not just one thing, it’s everything.”

The Journal quoted a letter it said was from Walmart to at least some suppliers as stating: “We must improve product availability.” The Journal quoted Tara House, a Walmart spokeswoman, as having said the retailer is looking out for its customers.

Walmart, according to the Journal, told suppliers last fall that if orders weren’t on time and 98 percent complete, they’d be assessed a penalty equaling 3 percent of the cost of missing items.

In April, according to the Journal, food distributor Sysco began penalizing suppliers that failed to meet orders.

The paper quoted a spokeswoman as having said, “We believe all our supplier partners subject to these policies have the capabilities to meet them.”

Another company that has resumed assessing fees for incomplete orders is grocer Albertson Cos., the Journal reported. The Journal quoted Chief Executive Vivek Sankaran as having said, “It’s about providing suppliers with better demand signals and making things simpler.”

Suppliers fear losing retailer customers if unable to provide the products they want when they want them.

The Journal cited examples of suppliers going to unusual lengths to meet demand from food retailers and distributors, including shipping products via expensive, but faster, methods such as refrigerated containers that aren’t necessary.