Andrew White

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Andrew White
Research VP
8 years at Gartner
22 years IT industry

Andrew White is a research vice president and agenda manager for MDM and Analytics at Gartner. His main research focus is master data management (MDM) and the drill-down topic of creating the "single view of the product" using MDM of product data. He was co-chair… Read Full Bio

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Wal-Mart sends shivers through the consumer goods supply chain

by Andrew White  |  February 1, 2010  |  1 Comment

The Financial Times reported last week (print edition, January 29th, 2010) on Wal-Mart’s announcement of a strategic partnership with Li & Fung, a Hong Kong sourcing company.  The intent is that Wal-Mart is moving closer to taking more direct control of its supplier relationships, and ultimately, the manufacturing supply resources that feeds its humongous business.

Given Wal-Mart’s size and reach this announcement has significant ramifications; short term impacts relate to those suppliers working, right now, to keep Wal-Mart shelves full; and long term, this move will put further stresses and strains on the relationship between Wal-Mart and its large suppliers.  Consumer Goods suppliers and retailers share a tortuous relationship.  I have been on the supplier side of this equation several times in reality, and as a consulting/vendor assisting and facilitating.  If you ever want to learn a lot about how people work, and “collaborate”, get a customer facing job at a consumer goods company!  You can learn a lot about “people” in a very short period of time.

Over the last 20 years the word, “globalization” has implied increase complexity, ever longer supply chains, and resulting increased risk.  Wal-Mart could be signaling a reversal of this “trend”.  Might Wal-Mart be close to replacing a generally “participative” role in the industry to a completely dominant supply chain partner?  It already dominates the retail front, but can it also play a key role on the supply side?  Quite possibly.  It could.  Yes, it will.  But maybe not in 2010 or 2011.  

I don’t know how suppliers took this announcement but I suspect strategic thinkers are hard at work exploring extraneous conditions and leverage points.  These relationships are fraught with worry and concern on a good day.  And with P&G announcing (back to the “.com” era) recently increased direct to consumer sales efforts, building on its growth in retail businesses, such relationships are showing additional strains.

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