Retail giant Wal-Mart Stores Inc has agreed a strategic alliance with Li & Fung as part of a shake-up of its global sourcing structure in a bid to reduce costs, improve quality and accelerate its speed to market.
Under the deal, Li & Fung is forming a new company to manage the Wal-Mart account and will act as a buying agent for goods valued at around two billion dollars within the first year.
"We are redefining how we source products that are imported into Walmart retail markets around the globe," said Wal-Mart vice-chairman Eduardo Castro-Wright. However, he said the core of the company's overall global sourcing strategy will be to continue increasing direct sourcing for the company's private brands.
Wal-Mart also plans to set up global merchandising centres to align sourcing and merchandising and drive efficiencies across various merchandise categories. And it has promoted Mr Ed Kolodzieski, currently president and CEO of Walmart Japan Holdings GK and Seiyu, to executive vice president in charge of Wal-Mart's global sourcing.
The retailer first announced a consolidated global sourcing structure centred on global merchandising centres at its annual investor meeting in October. By realigning its resources, leveraging its global scale, and restructuring its relationship with suppliers, Wal-Mart believes it should be able to drive significant savings across a supply chain that already buys 100 biilion dollars worth of private brand merchandise each year.
This, in turn, will be seen in better quality at lower prices in its Wal-Mart retail stores around the world.
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