The Supply Side: Wal-Mart restructures replenishment operations

by Kim Souza ([email protected]) 5,127 views 

Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Propak Logistics.
Wal-Mart is cutting an estimated 200 jobs from its replenishment operations as part of the around 1,000 corporate jobs cuts announced Jan. 20. On Monday the retailer sent at least two documents to suppliers outlining the restructuring of replenishment functions.

The memo sent to suppliers outlined Wal-Mart’s desire to transform the business for shoppers by first revamping how it operates internally. The memo was accompanied by a PowerPoint presentation with graphics illustrating the structural changes.

“We believe more than ever in using our strengths to exceed our customer’s expectations. Our emphasis now is on reshaping our organization in ways that will deliver those expectations, as well as improve associate and inventory efficiency that will position us all for the future. We have created roles that will enable associates to specialize on key components of replenishment,” Wal-Mart noted in the memo to suppliers.

Wal-Mart wants suppliers to have more focused communication that is concise and actionable. On this point, the retailer gave suppliers a list of instances where the retailer should hear from suppliers.

In the past the replenishment manager has been the contact person for suppliers to handle a myriad of issues whether it was about items out-of-stock, logistics and supply chain, seasonal inventory, modular processes or store support. The new configuration divides those responsibilities among four people in an effort to lighten the load for replenishment managers and create a replenishment team with each member dedicated to one specific area. Following is the new structure.

Replenishment Manager
This person will handle inventory management and in-stock, modular processes, feature pricing events, and aligning with the supplier and buyer on common goals.

Demand Manager
The demand manager will be responsible for forecasting demand, planning for seasonal items and managing safety stock.

Supplier Solutions Manager
This person will have the responsibility of supplier training, supplier setup and maintenance and on-time-in-full deliveries of product.

Business Support Manager
This person will be the one to research store and distribution center issues pertaining to product displays and in-stocks, category management and reporting to the other team members and suppliers.

Three of the four replenishment team members will interact regularly with suppliers in the following ways.

If a supplier has a question about an item, they will contact the replenishment manager who will research in-stock and fill-rate exceptions. This person will also be responsible for planning a pricing event such as a rollback.

If the supplier has a question about remedying a problem such as out-of-stock then they would reach out to the Business Support Manager who will find a solution.

If the supplier’s question involves a truck then it’s more a supply-chain issue and the Supplier Solutions Manager is the person to call.

Wal-Mart said it will take a few weeks for these new teams to get up to speed in the new organizational plan, and asked for suppliers’ patience as the changes are implemented.

Wal-Mart said the replenishment manager and the business solutions manager are the primary supplier contacts for most issues, which will free up time for the demand manager to focus on forecasting and increase system expertise.

Consultants representing suppliers told Talk Business & Politics the plan looks good on paper but execution is critical and it’s too early to tell if the new structure will benefit suppliers.

One of the biggest complaints voiced by suppliers in recent years has been the difficulty in getting a replenishment manager to return a call or email, because of the heavy workload they were under. In the old system the replenishment solved for everything that could be wrong and that often meant searching multiple systems for possible answers. This was a timely and less-than effective way to help suppliers get to the root cause of their out-of-stock issues.

Clint Lazenby, a supplier consultant for private label, said replenishment managers were spread too line under the old system and he likes the possibilities of the new team approach. He said the new structure better aligns with suppliers and manufacturers.

Other suppliers said they were glad to get the information and are hoping they have an opportunity to learn more at supplier meetings set for Feb. 14 and 15 in Bentonville. Suppliers said they understand how important communication is and one concern they have at the present time involves knowing if their replenishment manager under the old system will still be their point of contact through this transition.