Walmart's Sam's Club Addresses a Massive Problem (Costco Hasn't)

Walmart's Sam's Club Addresses a Massive Problem (Costco Hasn't) ...

The supply chain problem that resulted in the covid epidemic forced retailers to become more smart about how they get items into their stores.

Walmart''s (WMT) - Report Sam''s Club and Costco (COST) - Report Costco Wholesale Corporation Report have long been a major part of their business model.

Both chains have focused on delivering the best possible value for their members. It requires being focused on finding ways to reduce costs and do things more efficiently. Both Costco and Sam''s Club use their limited selection and purchasing power to get vendors to offer lower prices.

The two businesses are constantly looking into how they may save money while operating no-frills warehouses, with the goal of selling to their members at the best price possible.

Rising gas prices, labor labor problems, and rising consumer demand forced the price of goods to rise. Costco and Sam''s Club can''t control higher labor costs at the manufacturing level, although they have some leverage in negotiating pricing, however they can continue to revise their logistics to avoid losing the equation.

Sam''s Club, however, has a significant problem facing retailers right now, namely the absence of truck drivers.

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Sam''''s Club Uses Driverless Trucks

Thirty-four Sam''s Club locations in the Dallas-Fort Worth area will receive shipments of Northern toilet paper and Dixie products from autonomous 26-foot trucks. The trucks, provided by Gatik, "will automate a part of the Georgia-Pacific-KBX on-road transportation network in the Dallas-Fort Worth metroplex, delivering goods 24 hours a week across a network of 34 Sam''s Club locations."

Walmart''s efforts to automate last-mile and mid-range deliveries have made a significant step forward. Gatik explained in a press release how it will work.

The operations consist of moving Georgia-Pacific shipments from point to point on predefined short-haul routes using a dedicated autonomous vehicle fleet with 26-foot boxes. This represents the first time that class 6 autonomous box trucks have been used to disrupt long-haul logistics networks traditionally involving class 8 trucks. By replacing traditional tractor trailers with autonomous box trucks, Gatiks will establish a more responsive and flexible logistics network, increasing the cadence of delivery runs and the flow of goods, while reducing logistics costs and enabling near real

Taking drivers out of the equation solves a vast problem for Walmart/Sam''''s Club as- America has a large shortage of truck drivers. It also frees the business from the limitations that impact drivers and allows for 24/7 flexibility.

Costco Has a Logistics Plan Too

While truck-free deliveries are in early days, Costco has also invested in its supply chain. When it comes to getting goods to members, the company is focusing on expanding its delivery network.

"With logistics, we continue to transition from vendor drop ship to direct ship from our own inventory, particularly in large and bulky items. This reduces the cost of merchandise and improves customer delivery times and service levels," said Senior Vice President Bob Nelson of the chain''s third-quarter earnings call.

This investment has enlisted the help of the chain in delivering large quantities.

"Costco Logistics continues to drive huge and extensive sales for us. We averaged more than 58,000 stops a week in the third quarter. For the entire year, we estimate total deliveries will be up 23% and will exceed 3 million," he added.

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