Tuesday, February 22, 2011

Taking a Pulse of Wal-Mart’s Suppliers

Wal-Mart’s promise of “always low prices, always” is partly based on the volume of its business with its vendors and hence its ability to command prices that no other retailer can command. This has always created the perception of Wal-Mart squeezing their suppliers to drive the costs out of the system. Myth or reality?

Retailing Today recently released the first ever “2010 Walmart Supplier Survey”. On what makes it so special, Mike Troy, the editor writes, “Well, aside from the fact that it’s never been done before, the opinions of suppliers are particularly relevant at this point in time because Walmart is looking to restore momentum to its business in 2011, and, for the past six months, has sought to re-engage with its supplier community in order to do so”. In part, this fits well with Bill Simon’s strategy to re-engage with suppliers that he articulated after taking over as the CEO of its US operations.

CPFR (collaborative planning, forecasting, and replenishment) and supply chain are among the top concerns of Wal-Mart suppliers. Some highlights:

  • On “Suppliers’ greatest concerns regarding managing their business with Walmart during the next five years”: In the first place, 69% of the suppliers listed “driving profitable sales growth” as their top-most concern. This is followed by “store–level execution” (50%) in third place and “joint business planning and collaboration” (42%) in fourth place.
  • On “Walmart suppliers’ greatest need in the coming year”: In the first place, 46% selected “shopper insights/market research”, followed by 33% selecting “Supply chain management/replenishment”.
  • On “Retailers that suppliers believe represent the greatest competitive threat to Walmart U.S. in the next five years”: “Dollar General/Family Dollar” won the top spot with 63% suppliers votes with “Target” in second spot with 54% suppliers, followed by Kroger (33%) and Amazon (30%).

The report is full of data and charts that would be interesting to those who follow retail/Wal-Mart.

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© Vivek Sehgal, 2011, All Rights Reserved.

Want to know more about supply chain processes? How they work and what they afford? Check out my books on Supply Chain Management at Amazon.

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