Two Sustainability Costs & Walmart’s New Supply Chain Fees

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Walmart announced last week it would require all suppliers to pay warehousing and shelf stocking fees. The new policy, the company says, brings consistency to supplier treatment as some vendors had been charged in the past, whereas others had not.

Wal-Mart claims the changes are aimed at working with suppliers to serve “shared customers” and achieve the low prices “they expect and deserve.”

I don’t disagree. Consumers need low prices. But, and as is always the case with WalMart, the question is: at what cost?

There are two points worth note.

First, if you have or are a supplier to Walmart, you will know the siren call of sales volume. But you will have also likely felt the sting of restrictive delivery rules and the great, constant pressure for ever lower prices.

Most venders have already cut costs to the bone, so it is not hard to imagine how this new squeeze might tempt suppliers, particularly in lax jurisdictions, to externalize labor, environmental and social costs more than they already do.

Squeezing the last bit of margin juice out of every product is just what Walmart does, so we shouldn’t be surprised about that. But several studies show charging warehousing and stocking fees are done to the detriment of the vendor without much price benefit to consumers.

Second, do we really need such low prices? Perhaps on food and other necessities, but perhaps not so much on others items. Indeed, lower prices in many ways only perpetuates a vicious cycle of 2 for 1 economic self-flagellation we mostly live in North America.

That is, we want too much stuff, more than we can afford really, so most of us need everything at the lowest price possible. We also want expensive things most can ill afford.

So we work extra hours, or take on crazy credit levels to pay for things. When we get the stuff we want, we quickly become unsatisfied with it (cause stuff doesn’t make us happy) and so we start the cycle again.

Many, too many, of us have been willing to live this way for some time despite often grave personal and financial consequences. We sacrifice long-term quality life for the short-term gains of buying cheap or dear, and wittingly or not, encourage inevitable and avoidable environmental and labor exploitation.

We don’t like it but we still like our cheap and expensive stuff.

Companies are smart, they pay attention and they respond. We shouldn’t be shocked when companies like Walmart try to deliver our “needs” by pushing costs down to suppliers who in turn will, if they can, externalize them to labor, the environment or communities.

The only escape from our own self-inflicted punishment: want less stuff.

In the meantime, we shouldn’t be surprised that Walmart and other companies are charging for space and logistics. Pushing these costs along to venders is just another way for the company to do exactly what it is telling us it is doing: giving us low prices. Telling us it’s for our own good and that of venders, however, may be stretching the point.

If you believe we don’t need such material lifestyles you might want to you join the Story of Stuff movement…

(part of this post is adapted from the original published in www.csrcounts)

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