Decision Diagnostics Corp (DECN)

[Alydyr]

The profit/loss issues come down to the companies managing their Wal-Mart product sales.

Product shipped to a Wal-Mart distribution center needs to be shipped in particular box size, and every single item needs to be packaged in a certain way (UPC up in the right corner) for example. If the DC finds even one error, they ship everything back until it is corrected. This is a total pain in the butt, especially for a small company like DECN.

Never mind that the sales price is already cut to the bone.

Then we have the cash flow issues. Terms like net 90 day are brutal, especially when the small company needs to pay the vendor in 30 days. Let's not forget about product returns, where Wal-Mart returns product (for any reason) and can take an immediate credit to be offset against the next payment (due in 90 days). Brutal and totally favorable to Wal-Mart.

Then we have inventory management for just Wal-Mart. Wal-Mart requires that the small company manage their product inventory (for every store) remotely. That includes managing the order points, and calling the stores for obvious mistakes (like negative inventory quantity). Time consuming and extremely frustrating for the small company.

Why can Wal-Mart do this? Because they can.

How do I know all of this?

Because Wal-Mart had me teach other companies how to work with Wal-Mart.

IMHO, best for any small company to avoid dealing with Wal-Mart.