Retail giant Wal-Mart Stores Inc. has created a consolidated global sourcing structure centered around new Global Merchandising Centers (GMCs). This 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,” explains Eduardo Castro-Wright, Wal-Mart vice chairman. “These centers will create alignment between sourcing and merchandising and drive efficiencies across various merchandise categories.”
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. “Our new strategy and structure should drive significant savings across the supply chain,” Castro-Wright says.
As part of this new strategy, Wal-Mart also finalized a series of agreements with Li & Fung, a multinational group of companies focused on export sourcing, distribution and retailing. The agreements are non-exclusive and do not include volume or shipment commitments. The strategic alliance between the two companies will allow Wal-Mart to realize the benefits of consolidating a portion of its sourcing portfolio. 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 US$2 billion within the first year.
“We are redefining how we source products that are imported into Wal-Mart retail markets around the globe,” Castro-Wright says.