Wal-Mart sings “R-E-S-P-E-C-T” for 3PLs

Wal-Mart sings “R-E-S-P-E-C-T” for 3PLs

Wal-Mart sings “R-E-S-P-E-C-T” for 3PLs

   A Wal-Mart official said the giant retailer is changing its tune when it comes to logistics providers.
   The company with a reputation for squeezing its suppliers to make good on its low-price guarantee to consumers now takes the approach that supplier performance provides better long-term cost control than cheap rates, said Bob Duron, Wal-Mart Stores’ vice president for direct imports and e-commerce.
   The world’s largest retailer “has a broader vision” these days that price is not the overriding factor in determining third-party logistics relationships, he said. “The overall mindset is more about that we are able to meet the customers needs. I can drive 3PLs to a price that works, but if there’s a service failure, if the organization implodes, what have we done? We’ve added cost into the process.”
   His remarks came last week during the Council of Supply Chain Management Professionals annual conference in San Antonio.
   The “new Wal-Mart” is more interested in ongoing collaboration to ensure supply chain efficiency, Duron said. The discount chain has an open-door policy for 3PLs to take concerns to a supervisor and “if you are being treated in a way that you don’t feel comfortable with, there’s an open door beyond that person to try to address those issues.”
   Wal-Mart, which contracts with more than 30 3PLs by some estimates, is known for its strict initiatives requiring suppliers to phase in efficiency mandates such as using radio frequency identification tags on shipments and reducing excess packaging, but also works closely with vendors to teach them best practices for achieving those goals. It also provides fresh inventory data through its Retail Link information system to help suppliers better manage product flows to stores and cut costs.
   “It’s tough to fail because there is so much support from Wal-Mart” and the ability to correct problems, Duron said.
   One way some suppliers have improved relations with their large retail customer is by having personnel next door to Wal-Mart headquarters. Procter & Gamble has a customer service office in Bentonville, Ark., so it can react quickly to any Wal-Mart needs, said Raymond Bisczat, P&G purchases group manager for North American distribution.
   Logistics provider UTi Worldwide, which operates the
4-million-square-foot Wal-Mart distribution center in Houston, is considering having someone locate in Bentonville too, said Elijah Ray, the company’s senior vice president of customer solutions.