Walmart to slash supply costs

飞雪寒冰

Walmart is launching a drive this year to cut billions of dollars of costs from its supply chain by combining its store purchasing across national frontiers in a new stage in the globalisation of its business.

The effort is part of plans by the world's largest retailer to increase the proportion of goods that it buys directly from manufacturers, rather than through third-party procurement companies or suppliers.

Eduardo Castro-Wright, the head of Walmart's US stores, has said that the retailer sees the opportunity to consolidate global sourcing as “a major source of leverage for the company in years to come”.

With annual sales of more than $400bn, Walmart is famous- ly tough in negotiating with its suppliers, exploiting the scale of its buying to gain discounts. It spends about $100bn on purchasing private label products such as its Faded Glory and George brand clothing, or its Great Value food and home products. But it acquires less than a fifth of these goods directly from the manufacturers, and has generally made its purchases on a country-by-country basis

飞雪寒冰

Mr Castro-Wright has estimated that shifting to direct purchasing could reduce costs by 5-15 per cent across the supply chain within five years – suggesting potential savings of $4bn-$12bn if the retailer were to meet its long-term goal of shifting to sourcing about 80 per cent of purchases directly.

As part of its effort to combine purchasing for the 15 countries in which it operates, Walmart has established four global merchandising centres for general goods and clothing, including a centre in Mexico City focused on emerging markets, and a centre in the UK to serve its George brand. It is also shifting to direct purchasing of its fresh fruit and vegetables on a global basis, rather than working through supplier companies