The Supply Side: Walmart asking suppliers to focus on ‘new, innovative ways’ to serve customers

by Kim Souza ([email protected]) 3,621 views 

Walmart recently hosted more than 1,700 suppliers for a one-day forum in Rogers, where executives outlined expectations for this year and beyond. Suppliers saw some new faces in crucial leadership roles this year for Walmart U.S. Among them was Scott McCall, the new chief merchandising officer, who said, “The customer is the center of everything.”

That was the central theme throughout the event, and that was made clear by President and CEO Doug McMillon, who told suppliers about the company’s plan to grow sales by $16 billion this year.

He said Walmart will continue evolving to grow, and customers will see value in price, quality and innovation. He said Walmart will also offer a brand assortment of first- and third-party items and will continue to work toward a seamless omnichannel experience for customers.

“Let’s continue to focus together on new and innovative ways to serve our customers however they want to shop,” McMillon said. “The customer will see the incredible value and appreciate the seamless experience.”

He said Walmart needs suppliers to share mutual expectations at a high level. Suppliers will be expected to think about the large picture, which includes Sam’s Club, e-commerce growth and international. And they must be fast and creative with strong execution. McMillon said Walmart shared those expectations and didn’t ever want to miss a sale because of performance.

John Furner, CEO of Walmart U.S., spoke to suppliers about the benefits that come with doing business together. He said Walmart’s unique assets allow the retailer to do things others can’t at the same scale. He said Walmart would continue to evolve, and it must work faster while also being transparent with suppliers and customers.

Furner also said the customer would be at the center of all decisions at Walmart, and he asks suppliers to use the same mentality.

McCall said execution is a priority, and Walmart will actively enforce on time, in full (OTIF) requirements, because it is key to reducing out-of-stocks.

Walmart is also asking suppliers for clean packaging because customers are demanding it. He said Walmart is looking at making some modular and seasonal transitions. McCall said the merchandising team will be looking to improve the quality of products sold online and in-stores.

Walmart updated suppliers on the progress that’s been made with OTIF. Last year, Walmart said 81% of orders were on time, and 93.4% were in full. The expectations for this year will be 87% on time for full truckload with 80% minimum expected by less than truckload. On the in full metric, Walmart said general merchandise and health and wellness would have a 95% minimum expectation. Food and consumables will have a 97.5% expectation.

Greg Smith, head of Walmart’s supply chain, asked suppliers to meet OTIF guidelines with no exceptions. He said perfect labeling and readable barcodes are also expected to help expedite the movement of products through the system. Smith asked suppliers to partner with Walmart on this journey, which is key to products being in-stock and driving more sales.

McCall said everyone is a merchant, and units are the true health of the business. He said by driving unit sales, the dollars will follow. He said Walmart and its suppliers must think ahead and plan now for what the customers will want three years from now.

McCall replaced Steve Bratspies, who recently left the company after four years as the chief merchandising officer.

Furner recently promoted Dacona Smith as his chief operating officer, a position that has been vacant for nearly three years. Smith said operations would focus on delivering expectations. He will focus on ease of stocking and ease of shopping areas, which benefits employees and customers.

Smith asks suppliers to consider shelf-ready packaging because it saves time and allows for more efficiency among store labor. He said being in-stock and ensuring case-pack information is accurate are two significant areas where suppliers can help Walmart deliver on customer expectations.

Walmart executives told suppliers to bring their best and newest and even exclusive offers across all categories, but they need to be prepared to provide the lowest cost possible. Suppliers were also told to take ownership and help to reduce returns overall that are a drain to both parties.

Brett Biggs, executive vice president and chief financial officer at Walmart, also recently spoke to the investor community in Florida at the Raymond James Investor Conference. He reiterated the focus on customers, saying every division is focused on improving customer experiences in-store and online. He said as Walmart is now able to play some offense with e-commerce, the company will continue to bring together the omnichannel experience customers want at scale.

Biggs said not only is Walmart consolidating some operations and management of and in-store, but suppliers also are able to contribute to help solve customer challenges and demands together.

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.