Blog: Wal-Mart sourcing shifts
Leonie Barrie | 21 September 2012
In the same way that retail organisations are in a constant state of flux, Wal-Mart's decision to change the terms of its supply deal with Li & Fung shows that sourcing policies, too, have to shift in line with the changing needs of a business.
Back in January 2010, when Li & Fung set up a new sourcing unit for Wal-Mart called Direct Sourcing Group, it was said to have the potential to buy goods worth about $2bn in its first year of operation. The world's largest retailer was focused on cutting costs by consolidating its global sourcing operations, so moving away from the Hong Kong firm's wholesale operations and tapping instead into Li & Fung's vast buying operations around the world was one way of doing this.
But Wal-Mart, with its mix of products, brands and countries of operation, has probably the most complex buying needs of any major clothing retailer. It continues to buy some clothes direct, some own-branded clothes through wholesalers, and some specially developed brands from branded companies. Each is bought in a way best suited to the product concerned, the market it's bought for and the country it's bought from.
And meeting these needs now requires a new change of direction - at least as far as its relationship with Li & Fung is concerned. The Direct Sourcing Group will continue as the main direct resource for the retailer's Sam's Club warehouse format in the US; and it will provide buying agency services to Walmart in the US and some international markets in specific categories.
Another of Li & Fung's subsidiaries will move to a supplier relationship with Walmart's international markets, where it will provide design, replenishment and other services "that could not be provided as a buying agent."
Li & Fung is playing down the change of arrangement. "Wal-Mart is now one of the group's largest customers," it says, adding that the new agency agreement "will allow the group to build on this relationship."
…Nike, at least according to Forbes. Its annual ranking of the top 100 most valuable companies is not surprisingly dominated by technology brands – led by Apple in the number one slot. But plenty of c...
Innovation was the hot topic last week as a raft of apparel and textile companies revealed new fabrics, fibres and technologies designed to shake-up the industry. ...
Textured Jersey Lanka has again been recognised at the World Textile Awards sponsored by The Textile Institute, being named ‘Dyer & Finisher of the Year’ for the second year running....
Struggling teen apparel retailer Aeropostale has finally filed for bankruptcy protection, joining the ranks of American Apparel, Quiksilver, Pacific Sunwear and Sports Authority as the latest in a ser...
- How M&S plans to revamp its clothing business
- The difference between compliance and safety?
- Yarn-forward rules weigh on Vietnam TPP potential
- UK retailers key to domestic manufacturing growth
- Central America must make better use of DR-CAFTA
- Gap accused of rights violations in supply chain
- M&S to see "departure" of sourcing chiefs?
- US Q1 in brief – Guess, Burlington Stores, Sears
- H&M, Inditex and Nike rated supply chain leaders
- Adidas Speedfactory eyes large-scale production