/share/PPT/WEM.ppt#382, 14, Walmart logistics procurement and supply operating procedures:

Walmart procurement chain from beginning to end

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www.jctrans.com 2006-6-21 7:30:00

Summer is approaching, and Wal-Mart’s cotton shoe suppliers are eager to give it a try.

In July and August, Wal-Mart's Shenzhen headquarters will hold its annual winter product purchasing conference, and footwear suppliers will go there to try out samples of shoes that may be popular this winter. Wal-Mart's purchasing department has a buyer who is responsible for purchasing shoes, and he will host this "draft" competition.

After the game, the suppliers returned to the production site with the selected sample shoes. Usually, Wal-Mart's suppliers are often secondary buyers and are not responsible for production, but send orders to factories. There are many such factories in Wenzhou, which indirectly provide products to Wal-Mart.

Wal-Mart's procurement chain

About 45 days later, the shoes produced according to the order were officially rolled off the production line. For example, shoes produced in Wenzhou will be transported by car to a processing factory in Beijing, where shoe boxes produced by other manufacturers will be delivered. After the shoes are packaged, they are packed into boxes and shipped to Walmart’s Tianjin Logistics and Distribution Center.

Tianjin Logistics and Distribution Center is the most important quality supervision link of Wal-Mart. Counting and box inspection at the receiving window mainly depends on the quantity and whether there are empty boxes. In addition, relevant Walmart staff must carefully check various documents such as product production batch numbers, safety inspection certificates, exclusive product licenses, and anti-counterfeiting labels provided by suppliers. Then the products are directly inspected. After being put into storage, Wal-Mart's winter shoe purchase is basically completed. Soon, winter shoes will depart from the Tianjin Logistics and Distribution Center and be sent to all parts of the country. In Wal-Mart supermarkets in the north, you may see thin cotton shoes on the shelves in August.

During the inspection process, Wal-Mart only inspects products such as shoes, boxes, bags, and clothing with the naked eye and does not have relevant equipment. For example, there were problems with children's clothing in Shenzhen Wal-Mart some time ago. Wal-Mart did not have quality monitoring equipment for dyes. If the quality supervision documents provided by the supplier are complete and the clothing does not have any defects on the outside, the invisible quality of dyes and other The problem can be solved smoothly.

Therefore, from a process perspective, it is crucial to see whether the supplier conducts strict quality inspection on the product and whether the documents issued by the relevant quality supervision department are true and valid.

Wal-Mart's "Ten Commandments of Moses"

There is also an unwritten rule between Wal-Mart and its suppliers: if a product provided by the supplier has quality problems in a single store, The supplier needs to compensate about 5,000 yuan. If there are many stores, or if it causes major losses, Wal-Mart may seek legal compensation.

Most of Wal-Mart's suppliers are selected long-term business partners. Every time a new product is added, in addition to the inspection by the purchasing department, the legal department will also participate in the review of documents such as the trademark registration certificate or authorization certificate of the product to ensure the legality of the product and prevent counterfeit products.

In order to prevent "collusion" between suppliers and buyers, so as to avoid losses caused by purchasing personnel's lax control of goods. Walmart also has several departments that provide long-term training to suppliers: the loss prevention department teaches suppliers how to refuse bribe requests and complaints from buyers, and also requires suppliers not to pay bribes, treat guests to dinner, or give Convenience provided to families of Walmart employees. The finance department will educate Wal-Mart's suppliers on how to check out quickly, while the merchandise administration department of the purchasing department will be responsible for training suppliers to use Wal-Mart's online electronic tools.

Wal-Mart's internal corporate culture has risen to the level of corporate religion. It also has its own "Ten Commandments of Moses," the first of which is that dishonesty is not allowed.

After the incident of problematic children's clothing in Shenzhen, according to common practice, Wal-Mart's loss prevention department will immediately investigate the supplier and investigate whether the purchasing department's purchase was a mistake or a fault? The Government Affairs Department will also immediately enter the crisis public relations phase. In any case, the cooperation between Walmart and this supplier is expected to end soon. The person in charge of purchasing and the store manager may both be punished accordingly.

If domestic consumers find problematic products in Wal-Mart, they are advised to sue Wal-Mart in the United States. Because U.S. laws have greater consumer protection, and as a U.S. company, even if it breaks the law abroad, U.S. laws will still strictly pursue it.

Note: This article is based on the dictation of former Wal-Mart purchasing department staff

Wal-Mart’s purchasing secrets

Before February 1, 2002, Wal-Mart did not have its own Products are purchased directly from overseas, and all overseas products are purchased by agents. Wal-Mart asked Cui Renfu, the newly joined Wal-Mart Global Vice President and President of the Global Procurement Office, to use half a year to prepare and take over the global procurement business that supports a turnover of US$200 billion on February 1. As a result, he not only established more than 20 procurement branches around the world in a tight period of time, completing the task of synchronizing operations around the world as scheduled, but also increased the global procurement business by 20% after one year, exceeding the entire Wal-Mart business. The growth rate of Amount 12. So what’s the secret of Walmart’s global sourcing business?

Organization of Global Procurement

In Wal-Mart, global sourcing means that a Wal-Mart store in a certain country imports goods from suppliers in other countries through the global procurement network, and purchases goods from suppliers in that country. The purchasing department of Wal-Mart in that country is responsible for purchasing the goods. For example, Wal-Mart's stores in China purchase goods from Chinese suppliers, which is the work of Wal-Mart China's purchasing department. This is local procurement; Wal-Mart's stores in other countries purchase goods from Chinese suppliers through the global procurement led by Choi In-fu. Conducted online, this is global sourcing. Such global procurement requires appropriate arrangements in organizational form.

As for the global layout of corporate activities, there are two relatively mature organizational forms today: one is based on geographical layout, and the other is based on business category layout. The regional business unit system helps the company make full use of the opportunities of the region's economic, cultural, legal, market and other external environments. The disadvantage is that it requires a lot of cost for each business to achieve deep cultivation in the same region. The pros and cons of business divisions are exactly the opposite.

Cui Infu's global procurement network is first composed of four regions: Greater China and North Asia, Southeast Asia and the Indian Subcontinent, the Americas, and Europe, the Middle East, and Africa. Secondly, national branches are set up according to different countries in each region, and satellite branches are set up under them. The country branch is the backbone of specific procurement operations and has comprehensive functions in relation to procurement business such as factory certification, quality inspection, commodity collection, transportation, personnel and administrative management. The satellite branch will decide which one or several of these functions to have based on the amount of commodity collection.

Global Procurement Process

In Wal-Mart's global procurement process, its global procurement network is like an independent company, between Wal-Mart's global store buyers and global suppliers. Build a bridge between buying and selling.

“Our global procurement office does not buy anything.” Cui Renfu explained that the global procurement network is equivalent to an “internal service company” that serves Wal-Mart’s store buyers in various retail markets—— As long as buyers put forward their demand for goods, the global procurement network will try its best to search for the best suppliers and the most appropriate goods around the world. The global procurement network's services for store buyers are also reflected in actively recommending new products to buyers. Walmart's global purchasing process is divided into two types: repeat purchasing and new product purchasing. The so-called new products are products that the buyer has not imported before. For this type of product, Wal-Mart does not have ready-made suppliers, so it needs business personnel from its global procurement network to find new suppliers and products through participation in exhibitions and introductions. Due to Wal-Mart's high popularity, many manufacturers will also volunteer to provide their new products to the global procurement network. The global sourcing network then provides this information to buyers.

Supplier Partnership

In global procurement, the global procurement network must not only serve foreign buyers well, but also invest in the selection of suppliers and the establishment of partnerships. "No matter which country the manufacturer is from, our criteria for selecting suppliers are the same." Cui Renfu said that the first criterion is high quality and low price. The product price must be competitive, the quality must be good, and the product must be delivered on time.

The second requirement is that suppliers must comply with laws and regulations. "Walmart attaches great importance to social responsibility, so we hope that our suppliers can abide by the law like us. We must make sure that they provide workers with due protections such as overtime pay and benefits in accordance with the requirements of the law."

One more point That is, suppliers must reach a certain scale. “We have a principle that our purchases should not exceed 50% of the business of any one supplier.” Cui Renfu explained that although the larger the purchase volume from the same supplier, the stronger the negotiation power on price, but the supplier’s It is not entirely a good thing for buyers to be overly trusting. If the supplier can continue to manage and operate, that's okay; if the supplier fluctuates in management and operation, it's not just a problem of the buyer's supply shortage. Once the buyer terminates purchasing from the supplier, the supplier will face the risk of bankruptcy, which will also cause larger social problems. "This is what we don't want to see."