How Wal-Mart Can Offer Made In USA At Such Low Prices.

FREDERIC J. BROWN / AFP / Getty Images

Police man the front of a Walmart store amid heightened Black Friday security in Paramount, Calif., on Nov. 23, 2012

From Time Magazine

 

Walmart doesn’t make anything. But the giant retailer could play a part in the manufacturing rebound that is taking place in the U.S. with its promise to buy $50 billion more U.S. made goods over the next decade for its Walmart and Sam’s Club stores. It’s a bit ironic, given Walmart’s vast global sourcing organization. But the same forces that are making the U.S. a more hospitable place for manufacturing —higher shipping costs and wage rates overseas among them—have prompted the company to reevaluate its sourcing on a variety of products. “This is a commitment around manufacturing and more economic renewal. We see it as a critical issue for us in the American economy,” says Duncan Mac Naughton chief merchandising and marketing officer for Walmart U.S.

 

What Walmart sees is a way to lower costs while smoothing its supply cycle by looking more broadly at its distribution system. Although the company may be able to buy an item cheaper from China, the price it pays per piece doesn’t always reflect what it spends to get the product to the shelves. “When we buy from overseas, we may buy more than we need to fill the container,” says Mac Naughton. “We’re looking at carrying costs through the system in addition to landed costs.” (Walmart has recently been criticized for being out of stock on items, due to a lack of store employees, but the company says its in-stock position is at record levels and that it hasn’t cut employee hours.)

Walmart is also hitting some unexpected supply snags as local demand increases in the developing countries where it buys goods. Recently, it found itself short of memory foam for mattress toppers and had to add a U.S. supplier, Sleep Studio, to augment its foreign source. That need to increase capacity can only increase as the middle class grows in India, China and elsewhere. The company will still likely rely on foreign suppliers for those products, such as cut-and-sew garments, that have a very high labor input. But given the more robust regulatory environment in the U.S., domestic suppliers are far less likely to run shoddy plants that endanger workers, as some of Walmart’s overseas subcontracters have been accused of doing.

Which suppliers stand to benefit from Walmart’s strategy? The company says that products with a “high cube” (supply-chain speak for big and/or bulky, such as furniture) are candidates. So are products that have more highly-automated production, meaning lower direct labor, or products that have a less predictable sales curves and might have to be produced quickly to meet a sharp rise in demand. The company says items such as sporting goods, storage products, games and paper products are likely categories.

One of the first companies to benefit is 1888 Mills in Griffin, Georgia, which makes better-quality towels. Walmart’s version will be labeled “Made Here.” 1888 Mills had some spare manufacturing capacity, but since the size of Walmart’s orders can distort any vendor’s production, 1888 Mills needed a longer-term deal to be able to make the investment required to produce the needed quantities. “We made a commitment that was longer term than we would normally do. There’s transparency on the part of both parties: we worked with collaboratively with them,” says Michelle Gloeckler, Walmart’s senior vice president of home.

Camping and outdoor goods company Coleman is another participant. The firm, owned by Jarden Corp. is manufacturing its hard-sided coolers and personal flotation devices in the U.S., adding 160 jobs according to Walmart. Jarden, whose brands range from Quickie mops to K2 skis, has been ahead of Walmart on domestic manufacturing. Jarden has been on a reshoring kick for about two years.

Some of Walmart’s vendors will get a chuckle out of the idea that Walmart is willing to become more transparent. Walmart has a reputation for getting vendors into its buying rooms and beating the hell out of them on price, essentially leaving them with little margin. But Mac Naughton says that Walmart has to start thinking longer term, rather than season-to-season and that this kind of collaboration will reduce costs for both parties over time, paving the way for lower prices for consumers. For instance, a U.S. manufacturer can bypass Walmart’s distribution centers and deliver directly to stores, so-called “no touch” distribution.

Although $50 billion is a lot of goods, it’s about 10% of what Walmart will sell this year at retail. The company says the $50 billion is just a starting point, and that if other retailers joined the party the figure could be much, much higher, perhaps $500 billion. Walmart’s U.S. president, Bill Simon, suggested in a speech to fellow retailers that the power of their order books can help reshore U.S. production in textiles, furniture, pet supplies, some outdoor categories, and higher end appliances.
This isn’t Walmart’s first crack at a Made in America program. An earlier one fizzled, amid some bad publicity, because Walmart couldn’t get enough low-priced merchandise to sell. Americans may love their country, but they will buy Chinese if the price differential is too high. This time Walmart says consumers won’t have to pay up to buy domestic. “I hope the American consumer values this and we’ll make it easy for them,” says Mac Naughton. If not, consumers won’t make it easy for Walmart.

Read more: http://business.time.com/2013/04/12/how-walmart-plans-to-bring-back-made-in-america/#ixzz2QdYh03Ku

Wal-Mart's Supply Chain - The Result of a Convergence of Technology

By Brittany Wallach - walmart.blogspot.ca

“Sam Walton didn't care much for technology. The legendary patriarch of Wal-Mart Stores was well-known for his lack of excitement about ‘computers,’ as he called the company's IT systems. ‘Truthfully, I never viewed computers as anything more than necessary overhead,’ he wrote in his 1992 memoir, Made in America. ‘A computer is not—and will never be—a substitute for getting out in your stores and learning what's going on.’ Many still consider Wal-Mart's pioneering, IT-driven supply chain to be the world's most efficient, and the company's technology standards still command respectful attention from its thousands of suppliers.” – (Thomas Wailgum, cio.com)


The leading innovative progression of technology through Wal-Mart has been a key issue to its success. The technology aspect of the retail giant has kept Wal-Mart’s prices lower than its competition. Wal-Mart’s networks are cutting edge, communicating to every employee in the company from the cashier to the CIO. Strategically outsourcing their technical communication has allowed Wal-Mart to focus on the business itself with efficient mobility and low prices. The biggest move Wal-Mart has made to improve their system intelligence is outsourcing their databases to NCR Corporation bringing their total disk storage to over 7.5 terabyte make it the largest commercial database system in the world. The Neo Vista Company, providing Wal-Mart with software which was tailored to match the requirements of the database environment makes a great collaboration with their NCR databases. The software provided by Neo Vista, ERP, has helped management effectively communicate with other departments such has accounting and human resources which is called Data-Mining. Data mining enables any employee in Wal-Mart to access key information about any particular item sold in real time. To help the communication, Wal-Mart has pioneered satellite system linking stores and headquarters, but has switched to the frame relay method of transmitting data over shared, publicly owned phone lines which is used on its DS3 network that runs at 44.736 Mbps which virtual circuits connects multiple offices. Although one can see how a Data-Ware house is the foundation of Data-Mining, the incredible idea of reaching the information from any location has been so innovative that it had brought Supply Chain Management a basis for any retailer.



What my team has found the most interesting about Wal-Mart is the simplistic idea which had created supply chain management. The interesting aspect of the whole idea is how it all comes together. There has been so much though and innovation developed to create the success of supply chain management. The company who controls the database, the company who provides a particular software, the LAN connections, interface and the devices and components such as the network hubs which all collaborate to enable employees to access make sense of the information. Wal-Mart has been the pioneer of Supply Chain Management and it would not exist without the network planning and configuration of the Data-Warehouse, Data-Mart and Data-Mining.