Executive Briefings

Walmart Meets Resistance from Some Suppliers in Efforts to Combine Purchasing Power

Hernan Muntaner, Walmart's vice-president for international purchase leverage, is on the hunt for ways to reduce costs. Like many retailers, Walmart has a large and growing set of private-label products in its stores. They realized that they could have better leverage with suppliers and lower costs by combining the spend with their private-label brands. It seems to be working. According to Muntaner, in the U.K. they teamed up with one of their soda manufacturers and are now buying sugar at 14 percent below their usual costs. In a similar arrangement with a paper supplier in Chile, they are saving 2.5 percent on printer paper.

Walmart is trying to take that a step further by combining spend with their national brand suppliers as well, but many of them are balking. Teaming up with suppliers to purchase commodities is something the automotive industry has been doing for a while, as well as large electronics manufacturers like HP that sometimes purchase components and materials on behalf of their contract manufacturers. However, combined purchasing power with your suppliers is not a widespread practice in the retail industry so far. 

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Hernan Muntaner, Walmart's vice-president for international purchase leverage, is on the hunt for ways to reduce costs. Like many retailers, Walmart has a large and growing set of private-label products in its stores. They realized that they could have better leverage with suppliers and lower costs by combining the spend with their private-label brands. It seems to be working. According to Muntaner, in the U.K. they teamed up with one of their soda manufacturers and are now buying sugar at 14 percent below their usual costs. In a similar arrangement with a paper supplier in Chile, they are saving 2.5 percent on printer paper.

Walmart is trying to take that a step further by combining spend with their national brand suppliers as well, but many of them are balking. Teaming up with suppliers to purchase commodities is something the automotive industry has been doing for a while, as well as large electronics manufacturers like HP that sometimes purchase components and materials on behalf of their contract manufacturers. However, combined purchasing power with your suppliers is not a widespread practice in the retail industry so far. 

Read Full Article