Friday, November 04, 2005

Wal-Mart’s Impact

I’m in the midst of a fascinating conference on the economic impact of Wal-Mart upon our society being held today in Washington D. C. I’ll have some great info to report on the 10 studies that are being presented over the next couple of weeks.

One of the conclusions that I got from the first, keynote study by Global Insight, which was given access to confidential company info back to 1985, is that perhaps Wal-Mart is an average retailer, but a tops of class world class supply chain manager. They have figured out how to get products from the manufacturer better than any other company in the entire world has.

Some of the finds of the first study were: Wal-Mart pays slightly higher wages than its competition ($9.17/hour vs. $8.46/hour); they have a higher capital investment ($6 billion more than a comparable retailer—again not significant at the scale of Wal-Mart); and they are able to buy slightly better than their competitors are.

But, it is in the area of productivity that Wal-Mart really shines. The two keys here are information technology and supply chain management. In the area of supply chain management, one of the factors that I have argued for the past five years is that part of their advantage is the location of their Distribution Centers (DCs) in rural markets. I’m convinced that the lower costs and more productive labor in these markets is a huge benefit to the company.

They’re ready to start the next session. I’ll hopefully get in another blog later today and do several over the weekend. Info on the conference and the papers are available at

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