Logistics Outsourcing: Is It Still a One-Way Street?

According to a report in the The Press-Enterprise, Walmart is bringing operations at two California warehouses, which it had outsourced to Schneider Logistics for the past 13 years, back in-house. Here are some details from the article:

Walmart spokesperson Michelle Malashock said the company plans to retain “as many people as possible” who are currently employed by Schneider, and it plans to add more staff, possibly bringing the total of employees to 700 in Eastvale. Workers will be offered Walmart benefits without the standard 90-day waiting period [and they will] receive a higher starting wage, paid time off, discount cards for retail locations and other benefits.

Malashock added that Walmart has already taken over operations of two other distribution facilities in other regions that had been run by third parties.

Logistics outsourcing, especially of warehousing operations, was traditionally considered a one-way street — that is, once you outsourced, you rarely (if ever) brought the operations back in house. While this Walmart case is just a single data point, does it signal, nonetheless, a potential risk for third-party logistics providers (3PLs)? In other words, as manufacturers and retailers start to view logistics as a core strategic function (instead of a cost center, which has been the traditional view), will their desire to take more direct control of their operations increase? Moving forward, will a 3PL’s biggest competitor be its own customers?

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For related commentary, see Keeping Control: What 3PLs Must Convince Their Customers.

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