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Wal-Mart strengthens its global sourcing strategy

Feb. 3, 2010

Bentonville, Ark.-based Wal-Mart Stores Inc. intends to leverage its global scale to reduce costs of goods, accelerate speed to market, and improve the quality of products. The company's new global sourcing strategy involves the creation of Global Merchandising Centers (GMC) a change in leadership and structure, and a strategic alliance with Li & Fung, a global sourcing organization. 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 around $2 billion within the first year.

This new structure is expected to leverage the company's global scale in both general merchandise categories and global food sourcing. 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.

At the core of the company's overall global sourcing strategy is 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," said vice chairman Eduardo Castro-Wright.

The world's largest retailer will consolidate some operations in the U.S., where it has 3,700 stores, and will divide the country into three regions with separate presidents.