In the paper “Getting the Goods: Ports, Labor, and the Logistics Revolution” Edna Bonacich and Jake B. Wilson focus on the issues of high volume of big retailers, low-price strategies and their impact on logistic activities which pushed down both the costs of manufacturing and the costs of transportation for manufacturers and transportation providers. Further, the authors discuss how U.S. mega-retailers affect offshore production in East Asian Tiger country.
This article also addresses how mega-retailers managed to obtain power over offshore production being important customers of manufacturers and transportation providers. The authors compare the traditional “push” system to new “pull” system to make readers understand the shift in power from manufacturer to retailer. There are many factors that have led mega-retailers to obtaining such power over manufacturers. Among key factors is the collection of POS (Point of sale) data which provides significant information about consumers’ preference and predicts future sales. Actually, POS has played important role in granting arrogant attitude of giant retailers toward producers and manufacturers.
The authors successfully make readers subconsciously experience how competitive the manufacturing and transportation market is. The authors interview ex- and current managers from practically each type of logistic activities such as manufacturer and transportation provider. They write that market become more competitive in manufacturing as well as in transportation market and is ready to meet retailer’s demand, certain shipping and packaging conditions. If there is a tiny error on packaging they will fined for it. Therefore, manufacturers and carriers (transportation provider) have to spend more money on packaging and manufacturing goods to avoid tiny errors.
The authors also argue that mega-retailers provide too low-prices for products to be consumed, and, therefore, they drive manufacturers to cutting the costs for products and that led to worse working environment, that is, for sweatshop style production. Despite ongoing argument that globalization affects the U.S. workers as it creates outsourcing jobs while losing jobs in U.S., Bonacich and Wilson focus on offshore production in other country because its nature of low-cost strategy deteriorates working environment, that is, sweatshop style production. Factually, in East Asian Tiger Country many workers at factory exporting goods to U.S. retailers are working with low salaries and at the health threatening work environment including hygiene and safety problem.
If mega-retailers want lower-end product in already low-end product, the manufacturers have to cut the cost on already low cost manufacturing. In other words, they have to lower wages for workers or if it’s not possible, the products in mega-retailers may be defined as disposable products which we can allow only to use for one day because of low quality as manufacturers spent half cost in making the products because of unreasonable low price they receive from Mega-greedy-retailers.