As the largest retailer on the planet, Walmart handles some serious coordinating feats to run its supply chain and streamline operations with its suppliers. But according to reports published Friday (May 22), the store will be doing a bit of reshuffling of its supply chain procedures in the name of cost savings.
The company is reportedly set to begin handling some sourcing business that it usually outsources to Direct Sourcing Group as Walmart looks to cut spending. Direct Sourcing Group, which is based in Hong Kong, will still reportedly do Walmart’s sourcing for its Sam’s Club unit.
The retailer confirmed the news Friday, offering a statement that said, “we have made a business decision to transfer certain sourcing functions for Walmart in-house, and, as such will work collaboratively with DSG to ensure a smooth transition over the next several months.”
Following Walmart’s deal with DSG parent company Li & Fung, struck in 2010, DSG was established specifically to handle the estimated $2 billion worth of product sourcing Walmart needs for its stores in a single year. Li & Fung revealed in 2012 that Walmart withdrew its intention to acquire DSG, a move that first began a change in the business relationship between the companies.
With Walmart now doing its own purchasing directly with suppliers, some analysts believe that the move could cause other businesses to re-examine their own sourcing strategies and perhaps follow suit.
Walmart has been making several shifts in its business model in response to lackluster sales in recent years. Last week the company announced its 2015 first quarter earnings, revealing the growth of its mobile commerce efforts. Days prior, the firm announced plans to release its own version of Amazon Prime as it refocuses efforts on online commerce to stay competitive.