Wal-Mart Stores has announced in a press release 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 its products.
The new global sourcing strategy involves the creation of Global Merchandising Centers, a change in leadership and structure, and a strategic alliance with Li & Fung, a global sourcing organisation.
The announcements are “important elements in the company’s strategy to deliver even greater value to its customers and shareholders”, according to Wal-Mart vice-chairman Eduardo Castro-Wright.
Walmart first announced a consolidated global sourcing structure centreed around new Global Merchandising Centers (GMCs) at its annual meeting for the investment community in October 2009. 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 Centers represent the largest and most important element of our new sourcing strategy,” said Mr Castro-Wright. “These centers 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. Today, private brand merchandise represents more than US$100bn in purchasing annually. “Our new strategy and structure should drive significant savings across the supply chain,” Mr Castro-Wright said.
Ed Kolodzieski, currently president and CEO of Walmart Japan Holdings G.K. and Seiyu, has been promoted to executive vice-president and will lead Walmart’s Global Sourcing. Mr Kolodzieski will report to Mr Castro-Wright.
As part of this new strategy, Walmart also finalised a series of agreements with Li & Fung, which is forming a new company to manage the Walmart account, and is expected to build capacity that would enable it to act as a buying agent for goods valued around US$2bn within the first year.
“In sum, we are redefining how we source products that are imported into Walmart retail markets around the globe,” Mr Castro-Wright said. “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.”
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