Wal-Mart to control more of its freight distribution

Jill Dunn | May 22, 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.