Bloomberg reports that Walmart wants to “take over U.S. transportation services from suppliers in an effort to reduce the cost of hauling goods.
“The company is contacting all manufacturers that provide products to its more than 4,000 U.S. stores and Sam’s Club membership warehouse clubs ... The goal is to take over deliveries in instances where Wal-Mart can do the same job for less and use those savings to reduce prices in stores ... Under the program, Wal-Mart is increasing the use of contractors, as well as its own private fleet of trucks, to pick up products directly from manufacturers and transport the goods to its distribution centers and stores. The retailer currently moves most goods only from its distribution centers to stores.”
Negotiations won’t be easy. however. According to the story, Walmart is asking for a six percent reduction in the cost of goods based on its calculation of transportation costs, while suppliers apparently calculate the cost of transportation as being closer to three percent.
“There may be a disconnect when we walk into the room on what that cost might be, says Kelly Abney, Wal-Mart’s vice president of corporate transportation. “But we work collaboratively. As soon as a supplier shares the data, almost always those differences are quickly resolved.”
“The company is contacting all manufacturers that provide products to its more than 4,000 U.S. stores and Sam’s Club membership warehouse clubs ... The goal is to take over deliveries in instances where Wal-Mart can do the same job for less and use those savings to reduce prices in stores ... Under the program, Wal-Mart is increasing the use of contractors, as well as its own private fleet of trucks, to pick up products directly from manufacturers and transport the goods to its distribution centers and stores. The retailer currently moves most goods only from its distribution centers to stores.”
Negotiations won’t be easy. however. According to the story, Walmart is asking for a six percent reduction in the cost of goods based on its calculation of transportation costs, while suppliers apparently calculate the cost of transportation as being closer to three percent.
“There may be a disconnect when we walk into the room on what that cost might be, says Kelly Abney, Wal-Mart’s vice president of corporate transportation. “But we work collaboratively. As soon as a supplier shares the data, almost always those differences are quickly resolved.”
- KC's View:
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Sure. Resolved in Walmart’s favor. Because many, if not most, manufacturers would say that Walmart’s definition of “collaborative” is a little different than other retailers’.
I don’t know nearly enough about trucking and product transportation to be able to comment intelligently on this story. (Not that ignorance generally gets in my way...)
But here is the question I would ask. Is Walmart’s biggest problem right now the cost of goods? Or is it a store environment that somehow is not working for US consumers?
I’m just askin...
