Sunday, May 23, 2010

Wal-Mart Asks Suppliers to Cede Control of Deliveries (Update2) - Bloomberg.com

Wal-Mart Asks Suppliers to Cede Control of Deliveries (Update2) - Bloomberg.com
Walmart is going to begin to pick up their merchandise from their suppliers in Walmart's trucks, instead of having it delivered to Walmart distribution centers by the suppliers.

The story is that Walmart can do it at less cost than the suppliers can. But read the whole story, and see how this will result in higher costs for Walmart's competitors who still take deliveries from the same suppliers.

This will have a 'crowding out' effect on stores like Target & Kohls, etc as their deliveries become more expensive. And Walmart will eventually start to have a greater say in where the suppliers locate future manufacturing plants- the merchandise will need to be made either nearby a Walmart distribution center, or at least on a convenient route for Walmart's trucks to pick it up.

This is a bigger deal than it seems because it will make a lot of dominoes fall throughout the supply chain for Walmart's suppliers and Walmart's competitors.

Cash for Doctors | The Weekly Standard

Cash for Doctors | The Weekly Standard