Walmart Announces Comprehensive Sourcing Deal With Li & Fung

Wal-Mart Stores Inc. on Thursday announced a comprehensive sourcing deal with global sourcing organization Li & Fung Ltd.

In a release, Walmart said its new global sourcing strategy involves the creation of "global merchandising centers," a change in leadership and structure, and the new strategic alliance with Li & Fung.

"The newly-established global merchandising centers represent the largest and most important element of our new sourcing strategy," said Walmart vice chairman Eduardo Castro-Wright.. "These centers will create alignment between sourcing and merchandising and drive efficiencies across various merchandise categories."

Walmart said the core of the company's overall global sourcing strategy will be to continue increasing direct sourcing for the company's private brands. Today, private brand merchandise represents more than $100 billion in purchasing annually for Walmart. "Our new strategy and structure should drive significant savings across the supply chain," Castro-Wright said.

According to Walmart, its strategic alliance with Li&Fung will allow it to realize the benefits of consolidating a portion of its sourcing portfolio.
"Li & Fung, which is forming a new company to manage the Walmart account, is expected to build capacity that would enable it to act as a buying agent for goods valued around ($2 billion USD) within the first year," Walmart said in Thursday's release.

"In sum, we are redefining how we source products that are imported into Walmart retail markets around the globe," Castro-Wright said. "By realigning our resources, leveraging our scale, and restructuring our relationship with suppliers, we will enable our businesses around the world to offer even more competitive pricing on merchandise and to provide our customers a clear and compelling assortment of better quality products at lower prices."
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