The Supply Side: Wal-Mart’s McKenna talks ‘simplicity,’ supply chain

Retail veteran Judith McKenna took over as the chief operations officer for Walmart’s U.S. division just seven weeks ago and she’s wasting not a single minute in reaching out to suppliers with a message of “simplicity,” according to Carol Spieckerman who recently heard McKenna address a room of suppliers in Bentonville.

Spieckerman owns the retail consultancy business newmarketbuilders.

“McKenna spoke of her affinity for simplicity several times and her belief that even difficult tasks can be accomplished in simple ways. She called on suppliers to bring ‘new items at great prices,’ to focus closely on how products get into the store, including pack sizes, and to recommend fixture solutions that have worked well for other retailers,” Spieckerman recalls in her blog from the Bentonville-Bella Vista Chamber of Commerce Walstreet Breakfast event.

“In general, she is asking suppliers to double-down on small-format-friendly supply chain efficiencies. At first glance, that might seem a bit retro for one of the world’s global logistics leaders but not when Walmart’s ambitious next-stage convergence goals are thrown into the mix,” Spieckerman notes.

McKenna, a United Kingdom native, was handpicked to help U.S. CEO Greg Foran get the retailer’s biggest division back to positive comps. Her expertise in small format and online grocery via several key management positions held at Asda also have readied her to oversee the Walmart’s tests and trials now underway from lockers, drive through pick up and convenience formats in beta phase in Bentonville and elsewhere.

McKenna also spoke on supply chain opportunities and best practice sharing among supplier partners.

Mike Troy, publisher of Retailing Today, also noted from the recent WalStreet event that “McKenna didn’t drop any bombshells that would give suppliers immediate cause for concern, but her comments about simplification and supply chain efficiency reveal a lot about the mindset of an executive poised to have a huge impact on Walmart’s operations this year.”

McKenna reportedly sees the need for closer internal collaboration between merchants and operators at Walmart. “The phrase ‘Better Together,’ is how McKenna characterized the internal collaboration she expects to see the company do a better job of going forward, reeling off the names of senior merchants at Walmart with whom she is in close communication with. It is an approach McKenna said Walmart’s Asda division used effectively during her tenure as COO at the U.K. retailer,” Troy noted.

McKenna, who oversaw the supply chain at Asda, has said some of the concepts used in the U.K. can be applied to Walmart U.S. particularly in the areas of home delivery and grocery pick up. McKenna and Foran told analysts in October that accelerating best practices from the international arena is already happening. 

Insiders say McKenna is also calling upon suppliers to help identify new opportunities that exist in the supply chain as the retailer looks at multiple formats and delivery options for its 140 million weekly shoppers.

The majority of growth this year is expected to come from the smaller format stores, which are being closely scrutinized by McKenna and Foran for their maximum operational efficiencies. Foran told analysts in October there are multiple opportunities upstream and downstream to employ for more discipline around inventory. He said there is also work to be done with competitive pricing and more private label offerings both of which involve supplier collaboration.

“We can do more,” he said noting there are four of five things that need tweaking in the small format model and at least half of those involve suppliers.