In the light of the National Retail Federation’s annual conference being held in New York, Wal-Mart has made some significant and noteworthy announcements.
Bill Simon, the head of Wal-Mart’s U.S. group announced plans to buy an additional $50 billion in U.S. sourced products over the next ten years. According to a Wal-Mart document, this initiative will include increased buying from existing U.S. based suppliers in categories such as sporting goods, apparel, storage products, games and paper products. It further includes the sourcing of new suppliers in textiles, furniture, pet supplies and outdoor categories. Wal-Mart indicates that it will collaborate with U.S. manufacturers on long-term product forecasts as well as making longer-term product commitments.
In its announcement, the retailer tried to diffuse building consumer belief that the majority of its retail items are sourced external to the U.S., indicating that according to data from its suppliers, about two-thirds of Wal-Mart U.S. procurement spend is related to U.S. sourced product. In the view of Supply Chain Matters, that statement would be more meaningful if it could be verified by an objective third-party audit.
As a U.S. combat veteran, this author was especially pleased with the further announcement of a pledge to hire more than 100,000 veterans during the next five years. Beginning on the Memorial Day holiday, Wal-Mart will offer a job to any honorably discharged veteran in his or her first 12 months off active duty, in both U.S. Wal-Mart and Sam’s Club stores, the home office, or in distribution centers. We however would offer a partial caveat to the implications of that statement, namely that Wal-Mart has been outsourcing distribution services to third-party logistics providers, and has been under fire for labor practices in those centers.
The retailer indicates that it has reached out to First Lady Michelle Obama to build upon this commitment. Missing is a statement that Wal-Mart will also reach out to its logistics and distribution services providers to add their voice in this hiring initiative. To his credit, Simon did call on the broader retail industry to come together to provide greater career opportunities for veterans.
Mr. Simon further committed to help existing Wal-Mart part-time employees to receive more information regarding full-time job openings and to bring more transparency to the retailer’s labor scheduling system so that part-time workers have further options for either more consistent weekly scheduling or to work further hours.
As we all would expect, these announcements have drawn mixed opinion in both business and social media. Our Supply Chain Matters overall perspective was best expressed in an article from Bloomberg Businessweek, Wal-Mart Tries to Improve Its Image. That commentary concludes that the retailer had to take some public actions in the wake of U.S. Department of Justice and SEC investigations alleging corruption by the company’s executives, labor activist groups such as OUR Walmart staging protests for more hours and better pay during the past Black Friday holiday weekend and not to mention that the retailer stands to gain $960 million in tax breaks because of its veterans hiring initiative.
We would add that the overall tone of the written announcement also triggers thoughts of political motivations. Wal-Mart has apparently timed the veterans hiring initiative to begin on Memorial Day, four months from today, no doubt in conjunction with a large public relations campaign. Why not begin the effort immediately? The announcement for expanded U.S. sourcing specifically mentions working with certain state governors which opens speculation as to whether the retailer will extract in-kind measures such as additional state tax breaks.
In any case, we should as a supply chain community, step back and applaud Wal-Mart for making these commitments and trust that they will be fulfilled. U.S. based supply chains will certainly benefit. As U.S. consumers, we need to add our own commitment to buy U.S. sourced and produced goods, when they are made available, and to support Wal-Mart employees in their needs for access to broader opportunities in making a decent wage and access to affordable healthcare for their families.
Beyond the retail industry, more U.S. sourced products imply more manufacturing and supply chain related jobs, which are certainly welcomed.
For our part, Supply Chain Matters will certainly continue to monitor Wal-Mart’s actions in following through with its stated commitments, and with its actions in influencing others in the industry to do the same.