Originally Posted By: Gary Allan
You keep revolving round a number of other instances of such behavior. There have been many "can't afford not to" scenarios due to some HUGE market at stake. They rarely extend into otherwise stable and functional businesses and leave it looking like you took a wrecking ball to it. This is not just limited to this lone act or acts of this nature. It's but one element that's a disposition of "supplier be aware". Dance with the devil and you don't change the devil. It changes you.
You can pull out example out of example of cut throat competition. It rarely ends up with as much supplier destruction that would have been just fine if they had never participated.
Gary, don't get me wrong, I understand what you mean by Walmart being a wrecking ball that many though they can stop, but end up getting blown into pieces.
Sometimes you have to look at Walmart and the way it runs businesses, and see if this make sense, both to the society and to the suppliers. I know it is ruthless as you said, but this is not really because only of Walmart's size. Somewhere, somehow, if Home Depot, and to a bigger extend, the American consumer market, is doing this to the rest of the world.
You'd be surprised how much pricing power the American market has over the Asian suppliers, even if they are not the size and/or volume of Walmart. One of my friend's family is in the furniture business and they were constantly evaluate and decline to enter the American market. According to them, American market buy a huge volume, to a point of guaranteed business, but at a price point that you can barely make a profit.
I'm not talking about a hundred men factory paying American salary to manufacture Chinese junk, I'm talking about a factory paying Indonesian salary to manufacture between Chinese and American made quality furniture. You can say that their workers and businesses are exploited just as much as our workers whose jobs got outsourced. While the store markup the product prices by 2x to 8x as much as the contract price.
You can say it is destroying good business practice, or you can say that it is efficiency. Whatever you want to call it, it is not because of just Walmart, but the trend of the market in general. If transportation cost becomes high, and labor cost becomes low, then we would eventually switch back to more local production and less centralized production and large scale shipping. It is a fact of life, and sometimes businesses have to change, merge, go out of business, to adapt or not, just like our society has to. If you can't compete with Walmart on price, you have to do something that they do not do well, like high end products. Sometimes if they flat out refuse to give you a price that you can accept, you really shouldn't accept it.