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The Long Arm of Walmart

Thursday, June 10th, 2010

Is Walmart reaching too far back into the supply chain? According
to a recent article, in Business Week,Walmart announced that it is seeking to take over transportation services from
its suppliers to reduce the cost of hauling goods. The company will pick up
products directly from manufacturers and deliver the goods to its distribution
centers and stores. Walmart believes it can transport product more efficiently
for less. The objective of this move is to (you guessed it!) pass these savings
to its customers through price reductions.

But as manufacturers lose scale, will they face increased
transportation costs? And if so, will they pass those increased costs to other
retailers? And will Walmart really care?

What are your thoughts? Should the largest retailer in the
world garner this much power over suppliers? And if not, who’s going to stop
them?

Photo Source: floridatrend.com

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