Wal-Mart Explores New Way to Cut Costs
Wal-Mart Stores is always looking for ways to cut costs
and the company’s head of purchasing thinks he has a solution that will work
for the retailer and its suppliers.
According to a Bloomberg Businessweek article,
Hernan Muntaner, who has the official title of vice-president for international
purchase leverage, wants to team with large suppliers to jointly purchase raw
materials at prices that neither party could get on their own.
"Around the world, we found we were buying the same raw materials" Mr.
Muntaner said. "When you put the volume together of what we bought and
what [suppliers] bought, and buy from just one supplier, you can reduce the
Wal-Mart, according to the report, has teamed with a supplier in
Chile to buy paper. The result has been a 2.5 percent decrease in its
Mr. Muntaner sees PepsiCo as a potential partner and believes the
companies could work together to buy items such as potatoes, although the owner
of Frito-Lay has yet to commit.
"Sometimes it’s very hard with a big company to have conversations like
this," Muntaner told Bloomberg Businessweek. "That is the
main reason why we don’t have Pepsi yet."
Discussion Questions: Do you see Wal-Mart being successful recruiting brand
manufacturers to jointly purchase raw materials? What do you see as the pros
and cons of this approach?