Wal-Mart to control more of its freight distribution

| May 25, 2010

Where it can do it more cheaply, retail giant Wal-Mart is taking over delivery of supplies from manufacturers to its distribution centers and stores to cut costs.

Wal-Mart spokesman Lorenzo Lopez would only say the conversion program began last year and will continue for up to a year.

Russell Goodman, editor and chief of www.supplychainbrain.com, interviewed Kelly Abney, the retailer’s vice president of corporate transportation, in February.

During that interview, Abney said 60 percent of Wal-Mart’s non-grocery freight deliveries were controlled by manufacturers, while grocery suppliers managed 80 percent of deliveries. Currently, Wal-Mart directly transports supplies from its distribution centers to its 4,000 stores. “Visibility of in-bound transportation is really what it’s all about,” Abney said. “You can’t manage, you can’t optimize, control, what you can’t see.”

The Arkansas-based chain will increasingly contract with owner-operators directly and make more pick ups with its own private fleet of 8,000 drivers and 7,000 trucks.
 
“We feel by managing that for [manufacturers], we really allow them to do what they are good at and then we also can do what we are good at,” Abney said.

On Feb. 1, the retailer began charging a reimbursement charge of 3 percent of the cost of goods sold to each case not delivered and recorded in its system within the required delivery time.

OverdriveOnline.com strives to maintain an open forum for reader opinions. Click here to read our comment policy.