US: Wal-Mart to consolidate global sourcing structure

Wal-Mart is to consolidate its global sourcing structure in a bid to reduce costs and accelerate its speed to market.

The global sourcing strategy announced yesterday (27 January) will involve the creation of global merchandising centres, a change in leadership and structure, and an alliance with global sourcing organisation Li & Fung

The moves, Wal-Mart vice chairman Eduardo Castro-Wright said, are "important elements in the company's strategy to deliver even greater value to its customers and shareholders”.

Wal-Mart first announced a consolidated global sourcing structure centred around global merchandising centres at its annual meeting for the investment community in October. The 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," Castro-Wright said. "These centers will create alignment between sourcing and merchandising and drive efficiencies across various merchandise categories."

The core of the company's strategy will be to continue increasing direct sourcing for the company's private brands.

As a result, Ed Kolodzieski, currently president and CEO of Walmart Japan Holdings G.K. and Seiyu, has been promoted to executive vice president and will lead Wal-Mart's global sourcing.

In addition, Li & Fung, which is forming a new company to manage the Wal-Mart account, is expected to build capacity that would enable it to act as a buying agent for goods valued around $2bn within the first year.

"In sum, we are redefining how we source products that are imported into Walmart retail markets around the globe," 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.”