Walmart unveils global sourcing strategy

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Retail giant Walmart has unveiled a new global sourcing strategy designed to reduce costs of goods, accelerate speed to market, and improve the quality of products.

The 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.

Li & Fung 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$2 billion within the first year.

Walmart announced the GMCs in October. Walmart vice chairman Eduardo Castro-Wright said: “These centres will create alignment between sourcing and merchandising and drive efficiencies across various merchandise categories.”

The company said the core of its overall global sourcing strategy would be to continue increasing direct sourcing for the company’s private brands. Today, private brand merchandise represents more than $100 billion in purchasing annually. “Our new strategy and structure should drive significant savings across the supply chain,” Castro-Wright said.

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

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.”

Walmart has also made a series of organisational changes, notably the creation of a new organisation to drive online growth around the world – both in developed markets where it currently has stores and an online presence and in markets where it doesn’t.

The new organisation will be headed by Wan Ling Martello, formerly chief financial officer of Walmart International. She will be responsible for development and execution of a global strategy for e-commerce; establishing cross-functional and cross-border Walmart relationships designed to accelerate and broaden growth in the global online channel; and creation of technology platforms and applications that can be used effectively in every Walmart market.

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