Wal-Mart plans on capturing its suppliers' supply chains!
Saturday, June 5, 2010 at 12:04AM 
Bloomberg story by way of Thomas Frazel.
Gist:
Wal-Mart Stores Inc., the world's largest retailer, is seeking 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, said Kelly Abney, Wal-Mart's vice president of corporate transportation in charge of the project. 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, he said.
I referenced this in last week's WPR column on the myth of "deglobalization."
This is some serious ambition toward tightening up supply chains. Brutal to the manufacturers, who now lose economies of scale in their remaining shipments to other retailers--unless they follow suit.
Reader Comments (4)
Not only does Wal*Mart stand to reduce their own supply chain costs (probably relatively unlikely to result in huge cost reductions anyway), but they then control their competitors supply chains (as alluded to but not deeply explored) at the end of your post.
This is the equivalent of a management monopoly, and since it will probably not be realized as a monopoly by regulators early in the process this would be a huge short to medium term asymmetric advantage for Wal*Mart. Like them or hate them, you've got to respect their business acumen.
V/R,
B. Walthrop
I agree with B. Walthrop above about Walmart's ability to push into a monopoly.
However, I disagree with his assertion that it will be very difficult to create cost savings in this area. The trucking industry has not been able to contain rising fuel costs and Walmart has already been working toward a doubling and tripling of fuel efficiency in their own fleet (already the largest in the world). They will easily reduce those shipping costs enormously and drive changes in the trucking industry. Look for another shakeup there in the near future.
Phil
Phil makes a great observation (regarding fuel costs) that takes into account a relatively longer view than I had considered. I'll be watching over the next several years..
V/R,
Recent history may cause "too big to fail" concerns to be voiced about this company at some point. I like the increase in fuel efficiency.