Wal-Mart to bring logistics in-house

9 June 2010

9 June 2010 | Andy Allen

US supermarket giant Wal-Mart plans to overhaul the way suppliers deliver goods to its stores.

The retailer says it will increase the use of its own fleet of trucks and contractors to transport goods from vendor farms and factories to its outlets, rather than the suppliers taking responsibility for transport. In doing so, Wal-Mart also intends to negotiate a discount with the suppliers involved.

Using its own fleet of 6,500 trucks and 55,000 trailers would allow it to carry more per truck and improve on-time delivery rates to more than 4,000 stores, Wal-Mart said.

Kelly Abney, vice-president of corporate transportation, said the company has already discussed the plan with more than a hundred suppliers. The firm would not disclose how many of its thousands of vendors will be affected by the changes.

John Manners-Bell, chief executive of transport analysis firm Transport Intelligence, said the practice, known as factory gate pricing, was well established in the UK.

“In Britain the big retailers started doing this around five years ago. There was quite a bit of controversy because it involved unbundling prices. Before that there wasn’t much visibility in the pricing structure because retailers were being charged a “delivered price”; the price for goods which included delivery costs.

“One of the primary reasons to move to factory gate pricing was to say to suppliers: ‘charge us for the price of the goods, and we’ll organise transport’.”

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