Walmart’s Supplier Quality Excellence Program, commonly referred to as SQEP, is the framework Walmart uses to measure the performance of inbound suppliers across its United States supply chain. The program applies to shipments delivered to Walmart distribution centers, fulfillment centers, grocery networks, and eCommerce operations.
SQEP establishes a standardized method for evaluating whether a supplier shipment meets Walmart’s operational requirements on the first attempt, without requiring correction, rework, or manual intervention. Walmart refers to this standard as First Time Quality.
To determine whether First Time Quality has been achieved, Walmart evaluates each shipment against four defined performance criteria known as the Four Rights of SQEP:
Right Item
Right Condition
Right Invoice
Right Time
Each SQEP defect, compliance finding, or financial chargeback is assigned based on a failure to meet one or more of these four rights. Together, they form the foundation of how Walmart measures supplier execution.
SQEP was designed to improve inbound accuracy, reduce operational cost, and increase supply chain efficiency. Walmart’s supply chain relies heavily on automation, system-directed receiving, and precise labor planning. Any deviation from expected shipment standards introduces inefficiency, cost, and risk.
SQEP is not limited to packaging or documentation. It evaluates the complete inbound process, including item accuracy, physical condition, electronic data integrity, and delivery timing. Walmart applies SQEP consistently across its networks to ensure uniform execution regardless of product category or fulfillment channel.
Right Item requires that the physical products delivered to Walmart exactly match what was ordered on the purchase order and defined in Walmart’s item master data. This requirement applies at the item number, GTIN, vendor pack, and quantity levels.
Any discrepancy between the purchase order and the received shipment constitutes a Right Item failure.
Right Item compliance includes the following requirements:
Shipment includes only items listed on the purchase order
Quantities shipped match the purchase order exactly.
Vendor pack configuration matches item setup.
Items are active, authorized, and not restricted.d
Items are not under recall or withdrawal. al
Parent and child UPC relationships are correctly configured.
Shipments are routed to the correct distribution network
Substitutions, overages, or unapproved changes are not permitted, even if they appear commercially reasonable.
Walmart identifies Right Item defects through system-based reconciliation processes, including:
Purchase order to receipt matching
ASN line-level comparison
Item file validation
Allocation and routing checks
Receiving exception handling
Typical Right Item defects include:
Item not listed on the purchase order
Overages or short shipments
Incorrect vendor pack quantity
Shipment against canceled purchase orders or lines
Parent-child UPC mismatches
Shipment of recalled or restricted items
Shipment to an incorrect distribution center type
Right Condition requires that all products arrive in a state that allows immediate processing through Walmart facilities without rework, safety risk, or operational disruption. This applies to the product, its packaging, labeling, palletization, and load securement.
Right Condition is the most comprehensive and operationally intensive component of SQEP.
Right Condition includes compliance across multiple operational standards:
Case integrity and corrugate strength
Packaging, construction,n and unit securement
Barcode format, placement, and readability
Case markings and labeling accuracy
Pallet quality, size, and construction
Pallet build standards, including height and overhang
Load stability and segregation
Automation eligibility requirements
Required ISTA transit testing
Hazardous material and lithium battery markings
A shipment may be correct in item and quantity but still fail SQEP due to a single condition-related noncompliance.
Right Condition defects are identified through:
Automated scanning and conveyor exceptions
Visual inspections during receiving
Load safety evaluations at dock doors
Rework activity tracking
Automation exception reporting
Inbound quality audits
Examples include:
Missing or unreadable barcodes
Incorrect barcode format or placement
Weak, crushed, or bulging cases
Loose shrink wrap or exposed product
Selling units not secured within cases
Non-compliant or damaged pallets
Pallet overhang or excessive height
Shifted or unstable loads
Missing or covered hazmat markings
Repackaging or relabeling was performed by Walmart
Each defect increases labor requirements and disrupts distribution flow.
Right Invoice requires that the electronic and financial documentation associated with a shipment accurately reflect the physical shipment Walmart receives. This right is enforced primarily through EDI compliance, particularly the Advanced Ship Notice.
Right Invoice focuses on data integrity rather than physical handling.
Right Invoice compliance includes:
Accurate EDI 856 Advanced Ship Notices
Complete ASN data structures
Correct item identifiers and quantities
Alignment between ASN, purchase order, and receipt
Timely ASN transmission before arrival
Right Invoice performance is evaluated through:
EDI transaction validation
ASN receipt and download confirmation
Comparison of ASN data to physical receipt
Monitoring of EDI error messages and corrections
Typical defects include:
ASN not received or not downloaded
ASN with missing or invalid data elements
ASN quantity mismatches
Missing SSCC labels linked to ASN data.
Invoice quantities do not match the receipt
💡 Pro Tip:
Understanding key Walmart acronyms like ASN, EDI, and OTIF can help you avoid compliance errors. Explore our Walmart acronyms guide for a quick breakdown.
Right Time requires that shipments arrive exactly as scheduled, within the assigned delivery window, and with proper appointment confirmation.
Both early and late arrivals are considered noncompliant unless prior authorization has been granted.
Right Time includes:
Appointment scheduling adherence
On-time arrival at the facility gate
Alignment between ASN timing and physical arrival
Carrier compliance with delivery windows
Right Time performance is monitored through:
Appointment scheduling systems
Gate arrival timestamps
ASN timestamp comparison
Carrier performance tracking
Examples include:
Missed or late appointments
Unscheduled deliveries
Early arrivals without approval
ASN submitted after arrival
Carrier failure to meet delivery windows
Walmart enforces the Supplier Quality Excellence Program through a structured system of financial accountability designed to recover costs created by supplier non-compliance. SQEP fines are intended to offset additional labor, processing, and administrative effort when shipments fail to meet inbound standards.
Fines are applied when a shipment does not achieve First Time Quality due to failure in one or more of the Four Rights of SQEP.
SQEP fines are triggered when defects are identified during inbound receiving. Defects may be detected through system validations, physical inspections, automation exceptions, or rework performed at the distribution center.
A single shipment may generate multiple defects if it fails across more than one right. Defects may be assessed at the purchase order level or at the unit or case level, depending on the issue.
SQEP fines generally align with the Four Rights framework:
Right Item Related Fines: Applied when shipments do not match the purchase order or item setup, such as overages, short shipments, items not on the purchase order, or incorrect vendor pack quantities.
Right Condition Related Fines: Applied when product, packaging, pallets, or loads fail to meet Walmart’s physical standards, often resulting in rework such as relabeling, repackaging, or pallet correction.
Right Invoice Related Fines: Applied when ASNs or invoices are inaccurate, incomplete, or not received on time.
Right Time Related Fines: Applied when shipments miss scheduled delivery windows or arrive without proper authorization.
SQEP fines typically include:
A fixed administrative charge at the purchase order level
A variable handling charge based on affected units, cases, or pallets
Dollar amounts may vary by defect type and distribution network. In most cases, Walmart applies a cap at the purchase order level to limit total deductions relative to the cost of goods sold.
Suppliers can review SQEP defects and fines through Retail Link, including defect type, impacted purchase orders, and quantities. Disputes may be submitted through Walmart’s standard deduction dispute process with appropriate supporting documentation.
Repeated SQEP failures may result in increased oversight, corrective action requirements, or changes to receiving or routing processes. As a result, SQEP fines should be viewed as indicators of underlying execution issues rather than isolated financial events.
SQEP compliance issues often surface as chargebacks and deductions after shipment. Even suppliers with strong operational controls must review and dispute deductions that result from data discrepancies, receiving errors, or system-related issues.
Managing Walmart deductions manually typically requires:
Gathering invoices, purchase orders, and proof of delivery
Navigating Walmart portals and dispute workflows
Meeting strict submission timelines
Tracking case status and outcomes
As SQEP enforcement increases, this workload can quickly exceed what manual processes can support.
iNymbus helps suppliers manage SQEP-related deductions through automation. Using Robotic Process Automation, iNymbus supports:
Centralized collection of required documentation
Accurate and timely dispute submission
Ongoing tracking of open and resolved cases
Identification of issues requiring immediate attention
By automating these steps, suppliers reduce manual effort, improve recovery consistency, and manage SQEP financial impacts without adding headcount.