Walmart Wants to Take Over Delivery of Products from Suppliers

May 27, 2010
Walmart believes it can ship and transport product more efficiently than its suppliers can, and so, the company is looking to take over delivery service from many of the manufacturers that provide goods to its U.S. stores. According to an article at ...

Walmart believes it can ship and transport product more efficiently than its suppliers can, and so, the company is looking to take over delivery service from many of the manufacturers that provide goods to its U.S. stores.

According to an article at Bloomberg.com, Walmart is currently negotiating this new plan with its suppliers. The company intends to increase the use of contractors, as well as its own private fleet of trucks, so that it can pick up products directly from manufacturers and transport the goods to its distribution centers and stores.

Of course, improved delivery efficiency has multiple benefits for Walmart, including lower supply chain emissions and reduced supply chain costs. These benefits will, in turn, translate into lower prices for Walmart shoppers, says Kelly Abney, Walmart's vice president of corporate transportation in charge of the project.

And I assume Walmart is hoping aggressive price reductions can reverse months of slowing U.S. sales.

But, how will this plan affect suppliers?

The answer to that question is complex. Sure, there are certainly significant advantages to successfully collaborating with a retail giant like Walmart. But, there are downsides to ceding control of your deliveries, too. For example, the Bloomberg article reports that under the new plan, some Walmart suppliers are being asked to surrender up to twice as much as their calculated cost of shipping. At the same time, manufacturers will be losing scale. They'll be losing shipping flexibility. And, they'll have to rethink their own process efficiencies, too.

When all is said and done, will Walmart suppliers be facing increased transportation costs on deliveries to other retailers? Will they be able to reconcile this new scheme with their current operations, while still keeping maintaining a positive relationship with Walmart? For some suppliers, I'm sure, this is going to be a painful bind.

Popular Sponsored Recommendations

Are You Positioned To Tackle Supply Chain Risk?

Sept. 20, 2023
Supply chain disruption is here to stay, but you can keep ahead of potential issues — and identify new opportunities — by regularly assessing your suppliers. Download our supplier...

Smarter Savings for Manufacturers - Guide

Sept. 12, 2023
Enhance your service experiences and boost revenue while reducing costs. Learn how one platform can help your business be more agile and productive in today's market.

The Supply Chain of Tomorrow

May 22, 2023
A control tower enables proactively managing complex supply chains in real time and achieving new efficiencies through connected visibility, continual improvement, and predictive...

Reimagine Supplier Collaboration to Build the Supply Chain of Tomorrow

May 22, 2023
To realize success, organizations must create a supply chain management approach that can continuously absorb change—and turn it into a competitive advantage.

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!