Walmart Takes Over Supplier Deliveries

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May 25, 2010

The world’s largest retailer has yet another plan to cut in-store prices. Walmart is asking suppliers to ceded their U.S. transportation services where the chain believes it can haul products for less. according to a Bloomberg report.

Kelly Abney, Walmart’s vice president of corporate transportation in charge of the project told Bloomberg the company is contacting all manufacturers that provide products to its more than 4,000 U.S. stores, including Sam’s Club.

“It has allowed our suppliers to focus on what they do best, manufacturing products for us,” Abney said. “With lower costs usually come increased sales.”

In addition to using its own fleet of 6,500 trucks and 55,000 trailers, Walmart plans to use contract truckers to pick up manufacturer products and transport them to its distribution centers and stores. Walmart currently transports products from its distribution centers to its stores.

“They are reaching further back into the supply chain,” said Leon Nicholas, a director at consulting firm Kantar Retail of Cambridge, Mass., who has spoken with vendors about the move. “It is an effort to ultimately reduce costs of goods sold, which will ultimately increase their gross margins. They believe they can ship and transport product more efficiently than the suppliers can.”

Abney said he has participated in approximately 100 supplier discussions about the switch, and some manufacturers have already shifted their deliveries and associated costs to Walmart.

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