Wal-Mart to increase sourcing of US products

on Wednesday, January 16, 2013

Large retailers are often criticized for their strategic sourcing of inexpensive goods produced overseas and sold to American consumers, but Wal-Mart recently announced big changes in its supply chain that will increase its procurement of goods made in the U.S. The company announced the coming changes at the National Retail Federation's annual BIG Show.


The initiative will call for Wal-Mart and Sam's Club to purchase an extra $50 billion in goods produced domestically over the next decade. This will mean increased business for the corporation's current U.S. suppliers, as well as give companies operating overseas the opportunity to nearshore​their facilities and earn more opportunities to provide Wa-Mmart with products.


"At the heart of our national political conversation today is one issue: creating jobs to grow the economy," said Bill Simon, the company's CEO. "We are meeting with our suppliers on domestic manufacturing and are making a strong commitment to move this forward."


Sourcing can lead to savings

The new sourcing initiatives could save the company plenty in procurement expenses, resulting in long term cost savings. While the costs of manufacturing can be higher in the U.S. than they often are in Asia, Wal-Mart may save on logistical costs, as it would no longer have to have goods shipped from across the world. This would also eliminate the time it takes factories to ship products overseas and have them distributed to the company's locations across the country, allowing merchandise to get to market more quickly and better serve consumers.


"Seventy percent of cotton grown in the U.S. is shipped overseas, spun into products like towels, and then often shipped right back here," said Simon, explaining how the process can help the company. "We can cut out two shipments across the world and weeks on the water and cut our costs in the process. We can save our customers money by employing more of their neighbors - why wouldn't we do this?"


Help from several states

Wal-Mart is working not only with domestic manufacturers, but also with state and local governments to increase its commitment to purchasing U.S. products. Simon mentioned the company had spoken with governors and politicians in Oklahoma, South Carolina and Arkansas about its new program and how the states can help it increase its partnerships with domestic manufacturers.

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