The Supply Side: Jobs cuts likely in the Wal-Mart supplier community

The number Northwest Arkansas supplier community jobs has grown in recent years along with Wal-Mart Stores growth. This expansion led a shortage of talent and competition for talent which keeps anywhere from 80 to 100 jobs open in the supplier network, according to corporate recruiting firm Cameron Smith & Associates.

The recently reported paring down of jobs at Wal-Mart’s home office and consolidation among vendor companies will likely result in fewer area supplier jobs. Several local supplier consultants expect to see a scale back in hiring, or at the very least suppliers reconfiguring their Wal-Mart sales teams to better align with a trimmer Wal-Mart and its renewed focus on store performance.

The City Wire has learned that some of the Wal-Mart HQ job reduction is coming in the marketing department. Wal-Mart has reduced supplier marketing funds in an effort to reduce promotional pricing and adhere to its Every Day Low Cost model. In recent years, some suppliers reduced merchandising teams and spent more resources toward social and shopper marketing and analytical data analysis. Experts say that could change with Wal-Mart’s renewed focus on supply chain efficiencies, better in-stocks and faster rotation of products.

Wal-Mart also shifted modular display decisions back to store managers which in recent years was controlled by merchants and their supplier counterparts in Bentonville. As more autonomy is given to the stores, suppliers will likely want to shift more of their budgets away from marketing vice presidents and funnel that money into merchandising teams, either their own or outsourced to third party partners like Acosta or Crossmark.

INVENTORY CHANGES
Wal-Mart’s decision to hold more inventory upstream could also impact suppliers as they will need to have accurate demand planners and sharp replenishment teams in place. One of the hardest jobs to fill in the local supplier community is that of replenishment manager. These jobs also have the highest turnover rate, according to local recruitment specialist Scott Crossett of Cameron Smith & Associates.

Crossett said earlier this year the turnover rates in replenishment jobs escalated after Wal-Mart began rolling out its “Global Replenishment System.” He said heightened expectations at Wal-Mart and the higher fee structure associated with delivery requirements caused companies to become more critical of their supply chain and replenishment employees.

Walmart U.S. CEO Greg Foran said last week that holding more inventory in distribution centers and less in the back of the stores, along with better management of seasonal inventory and reducing modular changes and future shipments to the stores, allowed the retailer to reduce comp store inventory while improving in stock levels and sales in the recent quarter.

"Inventory management will continue to be an ongoing focus for us," Foran said in the Aug. 18 earnings call.

CONSUMER COMPANY MERGERS
Local supplier teams are built to match up with Wal-Mart’s structure and nearly every time the retailer scales up, so do the suppliers. It stands to reason that the same would be true in a Wal-Mart scale down. There is also another factor at work in the local supplier community and that’s the active merger and acquisition pace that continues to take place, particularly in consumer goods companies.

Crossett said the Hillshire merger into Tyson Foods which was completed last year caused a significant job reduction by Hillshire teams in Northwest Arkansas. He said General Mills also restructured and reduced between 5 and 10 local jobs, or roughly 12-15% of their local team.

Heinz has been through a couple of transitions. The more recent merger of Heinz with Kraft is likely to have more impact on those companies and the local headcount. Earlier this month Kraft Heinz announced plans to purge 2,500 corporate jobs  — 700 of those were at the company’s co-headquarters in Northfield, Ill.

Insiders within the Northwest Arkansas supplier community expect this will impact local jobs within these two Wal-Mart suppliers. Heinz and Kraft each have their own sales teams devoted to Wal-Mart on the ground in Benton County and in many cases when large suppliers merge any duplicated jobs in social media or shopper marketing as well as senior team leaders are cut.