Sourcing strategy said to lower costs at Walmart
Improved speed to market, better product quality and reduced costs are the anticipated benefits of a new global sourcing organization that will be led by Ed Kolodzieski who was named EVP global sourcing for Walmart today.
Kolodzieski previously served as president and CEO of Walmart Japan, and in his new role he will report to Walmart vice chairman Eduardo Castro-Wright. Toru Noda, EVP and COO of Walmart Japan will assume Kolodzieski’s responsibilities and report to Scott Price, who joined Walmart last September as president and CEO of Walmart Asia with oversight of Japan, China and India.
The appointment of Kolodzieski is the next step in a revamp of Walmart’s global sourcing operations that began last fall when Castro-Wright announced a strategy to increase the company’s direct source and establish what Walmart calls, “Global Merchandising Centers,” which are intended to increase alignment between sourcing and merchandising.
“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,” said Castro-Wright.
The potential to reduce costs is thought to be huge given that Walmart says it spends more than $100 billion annually purchasing private brands. A portion of that amount, approximately $2 billion, will be managed by Li & Fung. The global supply chain and sourcing company will act as a buying agent for Walmart and rename an existing subsidiary WSG Pte. Ltd. to provide buying agency service exclusively to Walmart. As part of the arrangement, Walmart was granted a call option that it has the right to exercise after January 1, 2016 at an undisclosed price that would essentially transfer ownership of WSG to Walmart. The Li & Fung Group operates more than 80 offices globally and works with 15,000 suppliers to serve 2,000 customers.