The Supply Side: Wal-Mart suppliers face tight talent capacity amid steady growth

The “Vendorville” ecosystem that has cropped up around Wal-Mart Stores Inc. continues to add jobs and positive contributions to the region and state’s economy. But, anywhere from 80 to 100 jobs remain unfilled at any given time, according to Cameron Smith, CEO of Cameron Smith & Associates of Rogers.

Corporate recruiters on Cameron Smith’s team describe the talent pool as “tight” despite consolidation of teams resulting from mergers taking place in the consumer packaged goods (CPG) sector such as Tyson Foods and Hillshire, and Heinz and 3G. 

The Tyson Foods and Hillshire merger likely had the biggest impact but General Mills had a significant restructure last year that cost between 5 to 10 local jobs, which was about 13% of their local team, according to Scott Crossett, partner and senior recruiter with Cameron Smith & Associates. He said the Heinz acquisition by 3G caused job displacement and Coca-Cola is going through a restructuring in the next couple of months. On the flip side, restructuring at Kimberly Clark brought a small team back to Northwest Arkansas.

KEEPING PACE 
The recruitment experts said these shifts in local numbers are nothing new, but overall the number of jobs in the local sector continue to increase as many of the teams are adding positions to keep up with changes at Wal-Mart.

“Some supplier teams have expanded their local organizational structures in the past year bringing shopper marketing in-house and adding small format specialists to their teams,” said Denise Natishan, senior partner at Cameron Smith & Associates. “The small format is brilliant on Wal-Mart’s part and suppliers are taking it very seriously because it affects shelf space and inventory replenishment changes.”

The recruitment experts estimate the local supplier jobs increased by 4% to 5% annually with the bulk of that being the growth in third-party service providers such as technology and data analytics firms. Atlas Technology Group for instance, expanded its staff from six to 42 employees over the past two years keeping pace with demand for analytical data and weather-related content desired by suppliers and retailers.

“This type of third party supplier growth is happening across the area and I expect it to continue throughout the next few years as real-time data collection for consumer marketing becomes more mainstream,” Smith said.

By some estimates the supplier, marketing, third-party service and packaging jobs account for as many of 15,000 jobs in Benton and Washington counties. The annual payrolls of these firms exceeds an estimated $1 billion, given the starting pay for college graduates is around $47,000 and top managers pull down a minimum six figure income, the recruiters said.

Smith said the growth in this sector prompted him to increase his staff by 5% over the past two years to 25 employees. His company revenues are also up 18% from a year ago.

CAPACITY CONSTRAINTS
Natishan said suppliers value professionals with astute Wal-Mart knowledge and there are opportunities to move up the ladder regardless of age as long as the employee brings knowledge and experience to the table. That said, Natishan said the team structures of many companies are somewhat siloed which means professionals may have to change companies if they want to move up to other roles.

For instance a small food company has a lean team of just six professionals, ranging from one director, two business managers, two customer service managers and one business analyst. 

Smith said when teams first locate to the region to do business with Wal-Mart they may only send one or two sales executives to lay the groundwork. Over time the new teams that do business with Wal-Mart will ramp up to at least six people, maybe more. The organizational chart for a typical CPG supplier of cleaning products or frozen foods is likely to have added at least one national account manager who works below the director, a supply chain manager and two shopper marketing managers in addition to the business analyst.

“There are plenty of one person teams calling on Wal-Mart. The account manager does all their own analytical work,” said Mike Whittington, senior partner at Cameron Smith & Associates. “Teams can range from one to 200 members.”

The smaller teams outsource some of their service needs to third party firms which also has helped fuel the demand for indirect suppliers.

Natishan said it’s easy to see that there are relatively few places to move up the chain within these tight organization structures, which is why there is frequent movement between suppliers for the average professional. It’s not uncommon to see recruits who locate to Northwest Arkansas with one company, jump ship two or three times to move up the ladder or sometimes just to remain in the region. Tim Marrin, associate director at Proctor & Gamble, has said getting people to relocate to Northwest Arkansas from Cincinnati used to be challenging but not nearly as hard as it was lure them back to the home office once they got acclimated to Fayetteville and the rest of Northwest Arkansas.

The medium to large teams working in the region typically have a minimum of four at the vice president level. There are an average of six senior directors ranging from insights to sales managers and sales directors. Teams also have at least two category managers and two category analysts in addition to six replenishment experts and six junior sales managers over specific geographic regions.

JOB CHURN
Crossett said there is a lot of churn in the category manager positions because because it's a growing discipline and there are less qualified candidates than other disciplines.

“There is a high burnout rate of job candidates in category managers who are wanting to get out and move into sales," Crossett said. 

He said the highest turnover position is in replenishment jobs – people who work with Wal-Mart to keep the shelves stocked. Crossett cites heightened expectations at Wal-Mart for “Must Arrive By Date” fines as the retailer is slowly rolling out its new “Global Replenishment System” program known as Retail Link 2.0. He said GRS has caused companies to become more demanding of their supply chain and replenishment employees.

Natishan said there has been more movement from Wal-Mart employees into supplier jobs in recent years, something once considered taboo. She said the larger teams are sensitive to recruiting from Wal-Mart’s talent pool but that’s usually not the case with smaller vendors. 

“The need is to hire the best for your best customer. It remains a candidate driven market. Having experience and understanding of knowledge gives a credibility that many younger candidates do not have,” Natishan said.

She said most of the candidates she places are sourced locally from the available talent pool. On occasion Natishan said she finds recruits elsewhere that have former Wal-Mart expertise, which is crucial to most every placement.

“There is some poaching by the request of the suppliers looking for talented candidates who are local,” senior recruiter Jim Mikula added.

The experts also said some companies steer away from hiring from the unemployed pool of applicants, which also keeps the talent pool tight. And that pool remains tight even with the NorthWest Arkansas Community College graduating about 50 each year through its Certified Retail Analysts program. The college said over the past 15 years it handed out 630 certificates to students who had an 87% job placement rate in the local supplier community.

UNIQUE MARKET
Smith said the local supplier community is unlike any other vender ecosystem in the world. Even though Wal-Mart does not require its suppliers to have an office in Bentonville all the major vendors do so because a significant amount of their business is with Wal-Mart.

Greg Foran CEO of Walmart U.S., told suppliers at the retailer’s Year Beginning Meetings in February that they needed to have their “best and brightest” talent calling on Wal-Mart. He said the retailer is looking to suppliers for shared innovations and insight and that will require the most talented professionals be seated at the table.

Smith said even though Wal-Mart has never demanded a local presence, the retailer’s buyers encourage it which has been enough motivation for many.

“Even though we have hundreds of teams represented in the region, we are not close to scratching the surface of Wal-Mart’s expansive global supplier network,” Smith said. 

He said suppliers tend to move to meet Wal-Mart’s latest initiative whatever it is, from selling more beer and wine to focusing on smaller formats. In 2013 when Wal-Mart made a conscious effort to sell more adult beverages, at least three liquor companies brought in local sales teams, creating more jobs in this region.

Whittington said even if no more new suppliers opt to move into Northwest Arkansas  the future for the supplier jobs market remains bright. With Wal-Mart developing more store formats, incorporating more e-commerce and digital services, revamping its replenishment system and wooing Millennials and Hispanics, the opportunities will continue to grow for suppliers and those who service the suppliers.

“It is a win-win for all of Northwest Arkansas,” he added.