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Complete guide to Walmart's Supply Chain Security program — options, color ratings, and compliance steps
What Is Walmart SCS Certification?
SCS (Supply Chain Security) is Walmart's factory audit program designed to ensure that suppliers have adequate security controls in place to protect shipments against tampering and prevent the introduction of un-manifested cargo. The program applies to all facilities involved in the production of goods where Walmart is the importer of record (Direct Import items).
Important distinction: Walmart SCS does not issue a traditional "certificate." Instead, facilities receive a color rating (Green, Yellow, Orange, or Red) based on their audit results. An acceptable color rating (Green or Yellow) activates the facility, allowing it to produce product for Walmart. Ongoing compliance is managed through periodic re-audits based on the color rating and country risk category.
The 5 SCS Compliance Options
Walmart offers five options for suppliers to demonstrate SCS compliance. These options are detailed in Walmart's SCS Factory Audit and Assessment Guidance document.
| Option | Description | Key Details |
|---|---|---|
| Option 1 | Walmart SCS Audit | Approved third-party audit firms conduct audits using Walmart-defined protocol based on CBP Minimum Security Criteria and AEO standards. Supplier pays for and arranges the audit. |
| Option 2 | Approved Third-Party Programs | SCAN (Supplier Compliance Audit Network) or WRAP (Worldwide Responsible Accredited Production) — both evaluated and accepted by Walmart. |
| Option 3 | SCS Small Supplier Program | Modified program operated by Intertek. Eligibility: global sales under US$3 million OR sales to Walmart under US$350,000 per year. Not available for facilities in high-risk countries. |
| Option 4 | CTPAT Tier I/II/III | Facilities with CTPAT Tier I, II, or III certification can waive the factory audit. Must submit request via CTPAT Portal (SVI section) and provide certification image. Waiver valid for one year. |
| Option 5 | Mutually Recognized AEO | Authorized Economic Operators under mutual recognition agreements between CBP and foreign customs administrations. AEO program membership is recognized as equivalent. |
SCS Color Rating System
After reviewing submitted audit reports, Walmart assigns each facility a color rating. This rating determines whether production is allowed and the cadence of follow-up audits. Ratings are applied across three Country Risk Categories (Category 1 = Lower Risk, Category 2 = Medium Risk, Category 3 = Higher Risk), based on BSI supply chain analysis.
| Rating | Definition | Production | Cat 1 Re-Audit | Cat 2 Re-Audit | Cat 3 Re-Audit |
|---|---|---|---|---|---|
| Green | High compliance with SCS standards | ✅ Allowed | No recurring audit (sample selection) | 3 years | 2 years |
| Yellow | General compliance with SCS standards | ✅ Allowed | No recurring audit (sample selection) | 2 years | 1 year |
| Orange | More serious security violations | ⚠️ Conditional (Cat 3: not for prequalification) | Annual sample | 1 year | 6 months |
| Red | Violations that may terminate facility's ability to produce | ❌ Inactivated | New Green/Yellow audit needed | New Green/Yellow audit needed | New Green/Yellow audit needed |
SCS Country Risk Categories
Walmart assigns facilities to one of three country risk categories based on supply chain analysis conducted by the British Standards Institute (BSI). These categories determine audit frequency and prequalification requirements:
| Category | Risk Level | Audit Requirement |
|---|---|---|
| Category 1 | Lower Risk | No regular audit schedule. Annual sample selection by Walmart. |
| Category 2 | Medium Risk | Regular audits required. Follow-up cadence determined by color rating. |
| Category 3 | Higher Risk | Regular audits with more frequent follow-up schedule. Stricter prequalification (Yellow/Green required for new facilities). |
New facility prequalification rule: All new factories must prequalify by obtaining an audit before producing for Walmart. Category 1 and 2 new facilities must receive Orange, Yellow, or Green. Category 3 new facilities must receive Yellow or Green.
SCS Audit Process: Step by Step
Step 1: Facility Disclosure
Suppliers must disclose all facilities involved in producing goods where Walmart is the importer of record. This includes facilities where goods are packed, stored, or loaded into containers. Facilities are added to the supplier profile in Retail Link.
Step 2: Choose a Compliance Option
Select one of the five options: Walmart SCS audit, approved third-party program (SCAN/WRAP), Small Supplier Program, CTPAT certification, or AEO mutual recognition. The choice depends on your facility's size, location, and existing certifications.
Step 3: Arrange and Complete the Audit
The supplier is responsible for contacting the audit firm or program, paying all fees, scheduling the audit, and cooperating fully during the on-site inspection. For Option 1 (Walmart SCS audit), approved third-party firms use a Walmart-defined protocol based on CBP Minimum Security Criteria.
Step 4: Submit the Audit Report
Submit the audit report to Walmart within specified timelines. Walmart validates that the report meets acceptance requirements and assigns a color rating. The supplier is solely responsible for submitting valid reports on time — Walmart does not send reminders.
Step 5: Remediate and Maintain Compliance
If the facility receives an Orange or Yellow rating, suppliers should work with the facility to remediate non-compliances. Three consecutive Orange ratings may result in a Red rating, which inactivates the facility. Critical findings should be remediated within 90 days. Red-rated facilities require a new audit with Green or Yellow to resume production.
SCS Compliance Responsibilities
Under Walmart's SCS program, suppliers have four key responsibilities:
- Choose an option: Select the best compliance path from the five available options.
- Arrange, pay for, and cooperate: Contact the audit firm, pay fees, and make the facility available for audit.
- Submit the report: Send valid audit reports to Walmart within required timelines.
- Remediate and improve: Address all non-compliances and prioritize higher-risk findings that could lead to an Orange rating.
Consequences of Non-Compliance
Walmart enforces strict consequences for non-compliance with SCS requirements:
- Red rating: Facility is inactivated — cannot produce product for Walmart until a new audit achieves Green or Yellow.
- Three consecutive Orange ratings: May result in a Red rating.
- Three Strikes rule: Three strikes in a two-year period typically result in suspension or termination of the supplier's business relationship with Walmart.
- Failure to provide an audit: Facility is inactivated in Walmart's system, making it ineligible for production.
- Failure to cooperate: May lead to consequences up to and including termination of supplier, facility, or both.
SCS Contact Information
Suppliers can reach Walmart's Responsible Sourcing team for SCS-related inquiries at the following regional email addresses:
| Region | |
|---|---|
| North, South & Central America | rssfaam@walmart.com |
| China & Far East | rssfacn@walmart.com |
| India, Europe, Africa, Middle East & Other | rssfain@walmart.com |
SCS Costs
Walmart does not set or publish fixed fees for SCS audits. The supplier is responsible for contacting the chosen audit firm or program and paying all necessary fees. Costs vary depending on the option selected (Walmart SCS audit via approved firms, third-party programs like SCAN or WRAP, or the Small Supplier Program via Intertek). Contact the chosen audit provider directly for written quotations.
FAQ: SCS Certification Frequently Asked Questions
The following are frequently asked questions about the Walmart SCS program.
Q: What is Walmart SCS certification?
A: Walmart SCS (Supply Chain Security) is a factory audit program that monitors whether security controls are in place to protect shipments against tampering and prevent un-manifested cargo. Facilities receive a color rating (Green, Yellow, Orange, or Red) rather than a traditional certificate. An acceptable rating activates the facility for Walmart production.
Q: How many SCS compliance options does Walmart offer?
A: Walmart offers five options: (1) Walmart SCS audit by approved third-party firms, (2) Approved programs (SCAN or WRAP), (3) SCS Small Supplier Program via Intertek, (4) CTPAT Tier I/II/III certification, and (5) Mutually Recognized AEO programs.
Q: What is the SCS Small Supplier Program eligibility?
A: Suppliers are eligible if their global sales revenue is under US$3 million per year OR their total sales to Walmart is under US$350,000 per year. Facilities located in high-risk country categories are not eligible. The program is operated by Intertek and includes training and a questionnaire-based assessment.
Q: What happens if my facility gets a Red rating?
A: A Red rating typically inactivates the facility, meaning it cannot produce product for Walmart. To reactivate, the facility must obtain a new audit with a Green or Yellow rating. Three consecutive Orange ratings may also result in Red. Walmart also applies a Three Strikes rule — three strikes in a two-year period may result in supplier suspension or termination.
Q: How often do I need to renew my SCS audit?
A: The follow-up audit cadence depends on your color rating and country risk category. Green-rated facilities in Category 1 have no required recurring audit (annual sample selection). Green in Category 2 needs re-audit every 3 years, Category 3 every 2 years. Orange-rated facilities in Category 3 need re-audit every 6 months. Walmart may audit any facility at any time regardless of rating.
Q: Can CTPAT certification replace an SCS audit?
A: Yes. CTPAT Tier I, II, or III certification satisfies Walmart's SCS audit requirement (Option 4). Suppliers must submit a request in the CTPAT Portal (SVI section) to monitor Walmart and provide an image of the CTPAT certification. The waiver is valid for one year or until the CTPAT certification is lost.
Conclusion
Achieving and maintaining SCS compliance is essential for any supplier that wants to produce goods for Walmart as a direct importer. By understanding the five compliance options, color rating system, and country risk categories, suppliers can choose the most efficient path to facility activation and ongoing compliance.
Need help navigating Walmart SCS compliance? Contact our supply chain security experts for guidance on option selection, audit preparation, and remediation planning.
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