UNFI’s commitment to service level continues to be at the forefront of servicing our customers’ needs.
Upon the start of the pandemic, UNFI stopped applying service level fees in good faith and in recognition of the significant and extraordinary demand increases our supplier partners experienced. By doing so, our supplier partners had the opportunity to ramp up production and material sourcing. Since then, we’ve worked collaboratively with our suppliers to maximize productivity and production, while ensuring fair share inventory allocations.
Today, UNFI’s customers are extremely concerned with continued service level challenges and are seeking assurances that we’re jointly doing everything possible to support their needs.
As a result, effective December 1, 2020, UNFI will reinstate a significantly adjusted, thoughtful, and limited service level fee process. In respect for very real challenges our suppliers face, UNFI will consider the reinstatement of service level fees at purchase order fulfillment rates of 80% or less. Should a supplier fall below 80% inbound service level fulfillment for four weeks in a row, they will be included in a robust review by the Supplier Management/Merchandising team. If this analysis identifies UNFI is receiving our fair share of product, supplier partners are being open and transparent, and UNFI is positioned to deliver the best possible service level to our mutual customers, no service level fees will be applied.
Additionally, our supplier managers will reach out to you to provide a 30-day cure period when a decision to apply service level fees has been reached.
The fee structure commences at 3% of the value of entire shorted product, after applying a 20% out of stock grace factor (80% purchase order fulfillment rate as a base). In addition to the fee, UNFI may also deemphasize, in a variety of ways, brands or items exhibiting unacceptable service levels/corrective supplier actions for a period of time. These actions may culminate in brand or product discontinuations as necessary.
Please keep in mind that UNFI has refrained from applying automatic service level penalties in this environment that demand extraordinary fulfillment rates, as other retailers and distributors have introduced recently.
Service level performance is crucially important to the success of our mutual retail customers today. It is important to note that UNFI is solely focused on establishing a consistent level of service from our Suppliers and will work in partnership with you to ensure corrective action plans are put in place before assessing any fee.
Your UNFI Supplier Manager/Merchandiser
will work with you in every reasonable way to assist your delivery of a strong
service level. Should you have any questions or concerns, please promptly reach
out to your Supplier Manager/Merchandiser. Thank you for your continued
partnership and attention to this serious matter.
