Published on: January 29, 2010Walmart yesterday announced a series of initiatives that the company’s vice chairman, Eduardo Castro-Wright, said would be "important elements in the company's strategy to deliver even greater value to its customers and shareholders."
The goal, according to the announcement, is to “position the company to leverage its global scale to reduce costs of goods, accelerate speed to market, and improve the quality of products.
“Walmart's 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 organization.”
The consolidated global sourcing structure centered around new Global Merchandising Centers (GMCs) was first announced at the company’s annual meeting last October, and Castro-Wright said they “represent the largest and most important element of our new sourcing strategy. These centers will create alignment between sourcing and merchandising and drive efficiencies across various merchandise categories." The company said that 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 $100 billion in purchasing annually.
Walmart said yesterday that 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, reporting to Castro-Wright.
Walmart also said yesterday that it has “finalized a series of agreements with Li & Fung. The agreements are non-exclusive and do not include volume or shipment commitments. The strategic alliance between the two companies will allow Walmart to realize the benefits of consolidating a portion of its sourcing portfolio. 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 US$2 billion within the first year.”
In addition, the Wall Street Journal reports, Walmart “is consolidating its U.S. realty, store operations and logistics divisions, which will operate under three geographic business units, as the world's biggest retailer aims to become more efficient and lower operational costs.” The company “plans to break up its U.S. business into North, South and Western regions, each of which would have its own real estate teams to scout and build new stores, and merchandising teams to fine-tune the mix of products sold to suit local customs. The new model more closely resembles the company's international operations, which are headed by country presidents with similar teams working underneath them.”
Castro-Wright, in a memo to employees, said that the regionalized approach "will also support our efforts to accelerate our speed to market with new formats.”
- KC's View:
- Not much to say about these announcements except that yet again, Walmart proves that it is restless about both efficiency and effectiveness.
I do have to admit that I smile every time I see Ed Kolodzieski’s name, because in all my years of doing this, Ed is the only person (that I know of) who, when he took me on some store tours, was armed.
For good reason. (Having nothing to do with me.) As I recall, this was when Ed was working for Kash n’ Karry in Florida, and one of the things that he’s always done in the various places he has worked is get involved in the police auxiliary. Which means that you have to be prepared, and why I noticed that he was wearing a gun on an ankle holster. (Trust me. He may not have been worried about me, but I didn’t ask him any tough questions that day. No fool I.)