Wal-Mart to squeeze out suppliers

BENTONVILLE, Ark — The world’s largest retail powerhouse expects to trim up to $12 billion in costs by squeezing more third-party suppliers out of the supply chain.

According to The Financial Times, Wal-Mart wants to buy directly from the manufacturer more often, increasing its purchases from the original source from 20 percent to, eventually, 80 percent.

The first goods to be directly purchased at North American stores are fruits and vegetables, towels and sheets, and some clothing lines.

Such a move would have significant impact on global supply chains, cutting logistics and procurement costs between 5 and 15 percent over the next five years.

In North America, the move could mean consolidating freight among fewer transport suppliers and eliminating cross-docking activity at third-party warehouses, which in turn could help the company meet some of its carbon-reduction commitments.

Wal-Mart, which is notoriously tough in negotiating discounts with suppliers, has annual sales of more than $400 billion. 


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