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REDISCOVER Supply Chain Management

Delivering Your Promise

By Lynda C. Corpuz

It is not only a link. It could be a chain or web of events that is disrupting your business. Learn from the following examples to strengthen your SCM, and ultimately, your business

Oprah Winfrey’s favorable words about a particular product (being the powerful television host that she is) can create megawatts of smile among brand marketers but can spell blackout to a business’ supply chain. As such, from enjoying the “Oprah effect,” your business could be suffering from the “Oprah crash.”

A cake business in Florida flourished after the TV host named it as her “favorite thing.” In August 2009, downtown Chicago was blessed with her presence during her show’s season opening. The Michigan Avenue shopping district approximately gained 10% net in shopper traffic (according to ShopperTrak).

Oprah’s words could be a double-edged sword. Her magic overwhelmed the operations of a robes company, after Oprah swore her love for its products. In 1996, when she featured the Mad Cow Disease and exclaimed that she would never eat another burger ever, the cattle industry plummeted, and pundits called it the “Oprah crash.”

Whether it is contending with Oprah’s “Midas Touch” or dealing with differing strategies of your company’s public relations or marketing department, you must always ensure that your product is always available to meet the market demand. Read the following examples and see how they strengthened their supply chain.

WALMART’S GLOBAL PROCUREMENT:

Improving Function Procurement, being one of the critical supply business processes, is slated as the next niche for outsourcing and offshoring.

The Pricewaterhousecoopers research on the trends and survey results in outsourcing (in partnership with Duke University’s Offshoring Research Network), further shows that procurement providers are also seen to expand the scale of their services from 44% in 2008 to almost double last year, and registering a 19% cost saving margin for procurement companies.

In this light, Walmart Global Procurement past Senior Vice President and Chief Operating Officer Chiqui Qui shares that the world’s largest retailer, Walmart (with USD401 billion in fiscal yearend sales for 2009), has realigned its procurement system. Prior to 1991, Walmart used combined in-house and outsourced; from 1991 to 2001, it went 100% outsourced, and from 2002 to present, it went 100% in-house by establishing its own global procurement.

During the Philippines’ 10th e-Services Global Sourcing Conference and Exhibition held in Pasay City last February, Qui explains that the rationale for global procurement include becoming closer to suppliers and cutting out middlemen; leveraging global scale; synergizing with Walmart China retail; expanding value-added services; improving quality and ethical sourcing; enhancing integrity and transparency, and integrating with Wal-Mart Stores, Inc.

Integration is the Key Integrating with Walmart retail markets; Walmart strategies; Walmart processes/systems, and Walmart culture are must for Walmart to evolve its procurement function from replication to transformation.

Ensuring seamless transition; employing “business as usual” mindset; minimizing disruption; changing management, and communicating with all stakeholders – from buyers, suppliers, factories, and third-party providers, are also essential for Walmart’s smooth transition.

Qui cites understanding the role of global procurement was also vital. The role covers: extending each retail market’s buying organization; creating a simplified environment for direct import and becoming the compelling choice for buyers; sourcing the best possible value by aligning with the right supply base, and supporting the growth of WalMart (one of retail formats of Walmart’s chain of grocery and discount department stores), and protecting the brand by implementing a program for ethical compliance and integrity.

Qui also shares that Walmart’s global procurement strategy of extending retail buying organization globally by managing the supply chain, and leveraging buying power led to recent developments such as announcing the creation of global merchandising centers to: improve alignment

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Written by Lynda C. Corpuz

May 6, 2010 at 10:38 pm

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