Right now, we have been enjoying lower fuel prices. Although we will never see the $ .35 gallon price that I remember 50 years ago, regular unleaded in late May is hovering close to the $2.20 mark in New Hampshire. Yes, we love it! That price will surely creep up, however – actually, it has been on the upswing the past few months. Diesel fuel that propels most of the nation’s trucks is in the very low two-dollar range.

To that end, one challenge facing marketers and that is impacting logistics is the projected increase in fuel. Diesel fuel is around $2.159/gallon. When it heads further north, it will impact delivery costs, which are passed on (reluctantly) to the customer.

Certainly the cost of energy, i.e., diesel fuel in particular, will cause major heartburn. We saw this when diesel fuel was above $4.00/gallon around 24 or so months ago. This manifests itself in the prices we pay for goods, as the marketer passes on to each channel member the cost of transportation, which has to include fuel costs.

Walmart was similarly affected. Walmart owns its fleet of trucks. Let’s look at this more in-depth… why is Walmart so good at managing logistics? What do they have going for them? How might this tie to energy costs for logistics?

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preview of the answer..

One way that makes Wal-Mart efficient in managing the logistics is the application of the cross docking as an inventory tactic. This practice allows for the inbound and outbound loading of the trailers without loading process in between. Cross-docking has the advantages of cutting down the costs of transportation as well as the eliminating the inefficiencies. Additionally, the …

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