Walmart SQEP: What Suppliers Need to Know

Key Takeaways

•Walmart's Supplier Quality Excellence Program (SQEP) fines suppliers for PO accuracy, ASN, barcode and labeling, packaging, and pallet defects, separately from OTIF.
•The core PO accuracy fine is $200 per defective purchase order plus $1 per impacted case, a structure that has held since the program launched in 2021.
•ASNs (Advance Ship Notices) are required on Walmart shipments and are checked against the original PO for accuracy before a truck ever reaches the dock.
•Most SQEP fines are preventable with the right EDI setup, accurate item data in Retail Link, and disciplined pick-and-ship processes.
•Suppliers working with a Walmart-experienced 3PL often avoid the bulk of SQEP fine exposure without building a compliance function in-house.

What Walmart's SQEP Program Actually Covers

Walmart's Supplier Quality Excellence Program, known as SQEP, launched its first phase on February 1, 2021, as a corporate program designed to drive a zero-based mindset toward quality defects across the supply chain. Where OTIF measures whether an order arrived on time and in full, SQEP measures whether the order itself was accurate and correctly built, covering purchase order accuracy, advance ship notices, barcode and labeling standards, packaging, and pallet and load quality.

SQEP rolled out in phases rather than all at once. Phase one covered PO accuracy and ASN accountability. Later phases added barcode and labeling requirements, then pallet, load, and packaging standards. As of this writing, Walmart has not introduced a further phase beyond those three, though suppliers should confirm their current requirements directly in Retail Link rather than assume the program's scope is fixed.

For a fuller breakdown of each SQEP phase, Bentonville-based Walmart consultancy 8th & Walton maintains an updated guide that tracks the program as Walmart adjusts it.

How PO Accuracy Fines Work

Suppliers are responsible for PO accuracy defects flagged inside the SQEP portal in Retail Link, and those fines are charged through Walmart's standard reimbursement process. It is important to note that SQEP fines are incremental to OTIF fines, not a replacement for them. A supplier can be fully OTIF compliant and still take SQEP charges on the same order.

The fine structure has held steady since the program launched: $200 for each defective PO, plus $1 per impacted case. If a Walmart PO has an overage of 100 cases, for example, the fine would be $300, $200 for the PO itself plus $100 for the 100 cases handled incorrectly. Walmart began invoicing PO accuracy fines on March 31, 2021, covering defects from the program's first month, and that cadence has continued since.

Compliance dashboard showing OTIF and SQEP performance tracking

Q: Do SQEP fines replace OTIF fines?

A: No. OTIF and SQEP are tracked and charged separately in Retail Link. A late or incomplete order can generate an OTIF fine, and a PO with a case-count or item mismatch can generate a SQEP fine, on the same shipment, for different reasons.

ASN, Labeling, and Pallet Requirements

Advance Ship Notices, or ASNs, were required on Walmart shipments as of SQEP's February 1, 2021 launch date, with fines for ASN-related defects phased in later that same year as Walmart finalized the fine structure for that portion of the program. An ASN is the EDI 856 document a supplier transmits ahead of a shipment, confirming what is actually on the truck against what was on the original PO, and Walmart's receiving teams use it to prepare and verify the shipment before it reaches the dock.

Later SQEP phases extended the same zero-based standard to barcode placement, label accuracy, and pallet or load quality, covering issues like mismatched UPCs, incorrect case dimensions, and pallets that do not meet Walmart's build specifications. Walmart has also layered additional traceability requirements, including FSMA 204, on top of SQEP for food and beverage suppliers, with some compliance timelines running ahead of the FDA's own extended national deadline, another reason SQEP requirements are worth reviewing on a recurring basis rather than treating as a one-time setup task.

Q: Can strong ASN performance offset a PO accuracy problem?

A: No. Each SQEP category, PO accuracy, ASN, labeling, and pallet quality, is scored and fined independently. Strong performance in one area does not reduce fine exposure in another, which is why suppliers need visibility across all of them, not just the categories that feel most urgent.

Five Things Suppliers Can Do to Avoid SQEP Fines

Most SQEP fines are avoidable with the right setup and a disciplined process before an order ships, not a reactive one after a fine posts. A practical starting checklist:

Complete ASN setup with your EDI provider early. Full mapping and test documents can take several weeks, so this should not be started the week ASN enforcement begins.
Review all item information in Retail Link, especially pack size, UPCs, dimensions, and TI/HI, and keep Item 360 current as packaging or specs change.
Confirm PO details before picking and shipping every Walmart order, and avoid shipping any PO or PO line that has already been cancelled in NOVA.
Verify the product being shipped meets the dating and shelf-life requirements on file for that item.
Build an internal process that specifically checks for over-shipping and case-count mismatches before a shipment leaves the warehouse.

Warehouse team preparing a pallet shipment for a retail distribution center

Why a 3PL Partner Can Reduce SQEP Risk

If you are working with a third-party logistics provider to fulfill Walmart orders, it is worth confirming exactly what they handle on the ASN and labeling side. New Nexus Group works closely with Walmart's trusted 3PL partners, including RJW, Hub Group, and Dot Foods, and most offer to manage the ASN and labeling portion of SQEP compliance for supplier partners at little to no added cost relative to the fine exposure it removes.

For suppliers evaluating whether to bring SQEP compliance in-house or lean on a 3PL, RJW's own guidance on navigating SQEP is a useful second read, since a 3PL that already ships high volumes into Walmart's network has typically solved most of the ASN and labeling setup work already.

Barcode scanning equipment used to verify labeling accuracy before a Walmart shipment

Q: Should every supplier work with a 3PL to manage SQEP compliance?

A: Not necessarily. Larger suppliers with an established EDI and warehouse operation can often manage SQEP compliance in-house effectively. For smaller or fast-growing suppliers without that infrastructure already in place, a Walmart-focused 3PL is usually the faster and lower-risk path to compliance.

Frequently Asked Questions

Does SQEP replace Walmart's OTIF program?

No. SQEP and OTIF are separate programs that run in parallel. OTIF measures whether an order arrived on time and in full, while SQEP measures the quality and accuracy of the order itself, PO accuracy, ASNs, barcodes, labeling, and pallet condition. A supplier can be fully OTIF compliant and still take SQEP fines, and vice versa.

Are SQEP fines negotiable or disputable?

Walmart provides a dispute process inside the SQEP portal in Retail Link for fines a supplier believes were assessed in error, but disputes require documentation and are not guaranteed to succeed. In practice, the more effective strategy is preventing the defect before it happens, since a very small share of Walmart deductions get reversed once charged.

Does SQEP apply to every Walmart supplier?

SQEP applies broadly across Walmart's supplier base for shipments into its distribution centers, fulfillment centers, and grocery network, though the specific requirements and phases a supplier is accountable for can depend on the shipment type and how the product moves through Walmart's supply chain. Suppliers should confirm their exact requirements in Retail Link rather than assume based on category alone.

How does a 3PL help with SQEP compliance?

A Walmart-experienced third-party logistics provider already has ASN mapping, labeling, and pallet-build processes tuned to Walmart's specifications, which removes most of the manual setup and error risk for a supplier managing compliance in-house. For smaller or fast-growing suppliers, that experience is often the fastest way to get compliant without building an internal compliance function from scratch.

How often should a supplier review its SQEP performance?

Weekly, at minimum, through the SQEP dashboard in Retail Link. Fines accumulate per PO and per case, so a supplier that only reviews compliance monthly can rack up avoidable charges across dozens of orders before the pattern gets caught and corrected.

The Bottom Line

SQEP has been part of Walmart's supplier scorecard since 2021, and it is not going away. The suppliers who manage it well treat PO accuracy, ASN setup, labeling, and pallet quality as standing operational discipline, not a one-time compliance project, and they know exactly where their fine exposure is coming from before the invoice arrives.

If your team needs help diagnosing where SQEP or OTIF fines are coming from, or wants a partner monitoring compliance across your Walmart shipments directly, you can start a conversation with our team about what your current fine exposure looks like and where it is coming from.