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Walmart announces new global sourcing structure

Wal-Mart Stores, Inc. announced on 28 January that it has implemented a number of related events that position the company to leverage its global scale to reduce costs of goods, accelerate speed to market, and improve the quality of products.

Walmart’s new global sourcing strategy involves the creation of global merchandising centres (GMCs), a change in leadership and structure, and a strategic alliance with Li & Fung, a global sourcing organisation.

These announcements, according to Walmart vice chairman Eduardo Castro-Wright, are "important elements in the company’s strategy to deliver even greater value to its customers and shareholders."

Walmart first announced a consolidated global sourcing structure centred around new GMCs at its annual meeting for the investment community in October. This new structure is expected to leverage the company’s global scale in both general merchandise categories and global food sourcing.

"The newly established global merchandising centres represent the largest and most important element of our new sourcing strategy," says Castro-Wright. "These centres will create alignment between sourcing and merchandising and drive efficiencies across various merchandise categories."

The core of the company’s overall global sourcing strategy will be to continue increasing direct sourcing for the company’s private brands. Private brand merchandise represents more than USD100 billion in purchasing annually. "Our new strategy and structure should drive significant savings across the supply chain," adds Castro-Wright.

Ed Kolodzieski, currently president and CEO of Walmart Japan Holdings GK and Seiyu, has been promoted to executive vice president and will lead Walmart’s Global Sourcing. Kolodzieski will report to Castro-Wright.

As part of this new strategy, Walmart also finalised a series of agreements with Li & Fung. The agreements are non-exclusive and do not include volume or shipment commitments. The strategic alliance between the two companies will allow Walmart to realise the benefits of consolidating a portion of its sourcing portfolio. Li & Fung, which is forming a new company to manage the Walmart account, is expected to build capacity that would enable it to act as a buying agent for goods valued at around USD2 billion within the first year.

"In sum, we are redefining how we source products that are imported into Walmart retail markets around the globe," says Castro-Wright. "By realigning our resources, leveraging our scale, and restructuring our relationship with suppliers, we will enable our businesses around the world to offer even more competitive pricing on merchandise and to provide our customers a clear and compelling assortment of better quality products at lower prices."

About Wal-Mart Stores, Inc.
Wal-Mart serves customers and members more than 200 million times per week at more than 8,000 retail units under 53 different banners in 15 countries. Fiscal year 2009 recorded sales of USD401 billion and Walmart employs more than 2.1 million associates worldwide. Active in sustainability, corporate philanthropy and employment opportunity, Walmart ranked first among retailers in Fortune Magazine‘s 2009 Most Admired Companies survey.

For more information, visit Walmart.

(Source: Walmart )