SQEP Explained: Getting Labeling, Packaging, and ASNs Right
A plain-English look at the Supplier Quality Excellence Program, its four phases, and the prep work that keeps defects and fines off your account.
Walmart's Supplier Quality Excellence Program, almost always called SQEP, grades the quality of what suppliers send into the supply chain: how accurate the order is, whether the barcodes scan, whether the packaging and pallets hold up, and whether the paperwork matches. It is scored, and defects carry fines. If OTIF is about when your product arrives, SQEP is about whether it arrives right.
The four rights
SQEP boils down to what Walmart calls the four rights: the right item, in the right condition, with the right invoice, at the right time. Almost every SQEP defect is a failure of one of those four, and most of them are execution details set long before the truck leaves your 3PL.
The four phases
SQEP rolls out in phases. Phase 1 covers purchase-order accuracy and the advance ship notice, meaning what you shipped has to match the PO and the ASN exactly. Phase 2 covers barcodes and labeling, so cases have to be received with scannable, correctly placed labels. Phase 3 covers packaging, pallet, and load quality, the physical soundness of what shows up. Phase 4 covers scheduling and transportation. Each phase adds another category where a defect can be recorded and fined.
Phases 1 and 2 are a warehouse problem
PO accuracy, clean ASNs, and correct labeling all come down to how disciplined the fulfillment operation is. Orders that are hand-checked and scanned twice before they ship are what keep Phase 1 accuracy high, and label placement and barcode quality are set by whoever is building and closing the cases. This is why the warehouse floor, not the sales team, usually determines a supplier's SQEP score.
Phase 3 is where co-packing earns its keep
Packaging, pallet, and load quality is the co-packer's domain: cases that survive the trip, pallets built to spec, loads that do not shift. When display work, co-packing, and shipping happen in the same facility, the team building the packaging is the same team accountable for how it arrives, which is exactly the alignment Phase 3 rewards.
Keeping SQEP and OTIF from fighting each other
SQEP and OTIF pull on the same operation from two directions: one wants everything perfect, the other wants it fast and on time. The suppliers who do well on both are usually the ones running fulfillment, replenishment, and co-packing under one roof, close to the retailer, so speed and quality are not being traded between separate vendors. Ask any partner how they track SQEP defects and feed them back into the process, because a score you cannot see is a score you cannot fix.
Frequently asked questions
What is Walmart SQEP?
SQEP is Walmart's Supplier Quality Excellence Program, launched in 2021 to improve inbound quality. It measures whether shipments are accurate, correctly labeled, properly packaged, and documented, and it assigns defects and fines when they are not.
What are the SQEP phases?
SQEP is organized into four phases: Phase 1, purchase-order accuracy and the advance ship notice; Phase 2, barcodes and labeling; Phase 3, packaging, pallet, and load quality; and Phase 4, scheduling and transportation.
What are the four rights in SQEP?
The four rights are the right item, the right condition, the right invoice, and the right time. Most SQEP defects are a failure of one of those four.
How do SQEP fines work?
Walmart records defects against the SQEP categories and charges per-defect fines, with the specifics set by Walmart and updated over time. Confirm current defect definitions and fine amounts in Retail Link, and focus on prevention since defects are logged automatically.
How can a 3PL help with SQEP?
A 3PL helps by keeping PO accuracy and ASNs clean, applying scannable and correctly placed labels, and building packaging and pallets that survive transit. Running co-packing and fulfillment in one facility keeps the team that builds the packaging accountable for how it arrives.
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