The world’s largest retailer, Wal-Mart, owns and manages its own fleet of trucks. The
company has often received praise for its distribution capabilities. The practice, however,
seems to represent a stark contrast to the practice of outsourcing not only shipping, but
other logistics operations to third-party logistics providers. Discuss the advantages and
disadvantages of these different policies. Also, under what conditions would it make sense
for a firm to own and manage its own trucking operation?
Due to the well-formed system, especially in distribution and logistics, Walmart has successfully
become the world’s largest retail store, and it is continues growing. Walmart operates in ten
countries worldwide. Walmart also owns the distribution system with a fleet of trucks against
other outsourcing organizations. However, there are some advantages and disadvantages of
owning the fleet of trucks by itself.
The primary advantage of self-own the fleet of trucks is it saves lots of costs. Even though third-
party logistics enterprises offer customized computer program service, the cost of the system is
expensive for the larger organization. Only small organizations can save some budget from it.
Another advantage of owning the fleet of trucks is increasing capability flexibility in the
distribution system. Setting up the distribution center in many areas can help sales and business
to meet customers’ requirements. If Walmart outsources the distribution system, they would not
have the full-controlled on its logistics operations. Therefore, the entire operations of Walmart
may be affected (Advantages and Disadvantages of Owning a Delivery Fleet, 2016).
However, there are some drawbacks of owning the fleet of trucks by itself are: The cost of
purchasing trucks is expensive. Walmart may need to divide its interests to the distribution center
instead of concentrating on the significant business. Moreover, Walmart may not be able to
provide high-quality services compares with other outsourcing enterprises which focus their
businesses on the distribution system (Advantages and Disadvantages of Owning a Delivery
Fleet, 2016).