The following headline managed to really make me angry and at the same time very sad ...
Walmart is planning a supplier summit in New Delhi early next year as it eyes $10 billion in annual exports by 2027.
Why is it making me angry? It seems like Walmart is communicating a huge achievement of their procurement strategy, but is this a worthy achievement? That is why it then made me sad, extremely sad because all i could see was lost opportunities for NA suppliers. It is not Walmart's fault so don't judge them. it is our own fault.
I recall my initial conversation with Don Soderquist several years ago in Bentonville during a dinner ceremony where after he asked me about my feelings about Walmart, I explained that "I felt that the company (Walmart) was the biggest conduit of economic destruction to invade NA economics." Probably not the most appropriate thing to say at the time, but those were my optics of Walmart at the time. Don then took the time during several discussions to explain the singular role of Walmart to us the consumer.
The sole and only role of Walmart is to act as your household purchasing agent. They will scour the planet to find solutions that they feel will provide optimum value to you and your home. This is then measured through actual sales of that product from the shelves ... pure and simple. If we as a consumer do not see the value, we just simply will not engage with a purchase. That is at the product line level. This also supports Walmart's tag line "Save Money, Live Better."
Overall organizational performance is measured by the total sales generated by the company (Walmart). The more items of value they can identify for you and that you are willing to pay for then of course sales will increase. Judging by their sales and the current size of the company people must be pretty happy with how Walmart provides value.
Let me be very clear I do not believe that the Walmart strategy was to be a consumer of Low-Cost-Country (LCC) products. Consumers were not willing to pay the price for domestically produced items, so Walmart had to go shopping. I will be bold to also say our domestic companies were likely too lazy to figure out how to become globally competitive domestically so eagerly joined Walmart on their shopping excursions. It was much easier to hop onto a plane and go shopping in a Low-Cost-Country and export back into NA. Problem Solved ... or is it?
Indeed, corporate shopping is easier that collaborating with your operations and manufacturing team on how to become thin, agile, athletic and very competitive. I experienced this while at a furniture manufacturing facility where we had to compete against the "Green Sofa". This sofa had been imported from China at a very competitive price which we had to match ... and surprise we did it! Not happily, and not to our corporate quality standard but in comparison to the example we were able to produce a similar unit on par.
I acknowledge some organizations will constantly pursue a LCC sourcing strategy. Those that have sourced from China are now shifting there needs to Vietnam, Thailand and of course India. But all of this activity also takes a lot of time and money, not to mention the agony of trying to get quality compliant products.
I know it is simply a headline and it is for a mere 10 Billion Dollars ... but that also means around 312,000 jobs that would pay around 80K per year ... ouch !!
In conclusion, no matter where in the world you go the material cost is pretty equal, the cost to procure technology and machines is also pretty equal, which just leaves us with the labour portion, here I truly believe the combination of Lean Thinking and automation can make us in NA a competitive source ... I challenge you.