Editing Supply chain management (section)

===Wal-Mart strategic sourcing approaches===
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In 2010, [[Walmart|Wal-Mart]] announced a big change in its sourcing strategy. Initially, Wal-Mart relied on intermediaries in the sourcing process. It bought only 20% of its stock directly, but the rest were bought through the intermediaries.<ref name="ReferenceB">Cmuscm, 2014 {{full citation needed|date=February 2019}}</ref> Therefore, the company came to realize that the presence of many intermediaries in the product sourcing was actually increasing the costs in the supply chain. To cut these costs, Wal-Mart decided to do away with intermediaries in the supply chain and started direct sourcing of its goods from the suppliers. Eduardo Castro-Wright, the then Vice President of Wal-Mart, set an ambitious goal of buying 80% of all Wal-Mart goods directly from the suppliers.<ref name="ReferenceC">Lu, 2014 {{full citation needed|date=February 2019}}</ref>  Walmart started purchasing fruits and vegetables on a global scale, where it interacted directly with the suppliers of these goods. The company later engaged the suppliers of other goods, such as cloth and home electronics appliances, directly and eliminated the importing agents. The purchaser, in this case Wal-Mart, can easily direct the suppliers on how to manufacture certain products so that they can be acceptable to the consumers.<ref name="ReferenceD">Gilmorte, 2010 {{full citation needed|date=February 2019}}</ref> Thus, Wal-Mart, through direct sourcing, manages to get the exact product quality as it expects, since it engages the suppliers in the producing of these products, hence quality consistency.<ref name="ReferenceC"/> Using agents in the sourcing process in most cases lead to inconsistency in the quality of the products, since the agent's source the products from different manufacturers that have varying qualities.

Wal-Mart managed to source directly 80% profit its stock; this has greatly eliminated the intermediaries and cut down the costs between 5-15%, as markups that are introduced by these middlemen in the supply chain are cut. This saves approximately $4–15 billion.<ref name="ReferenceB"/> This strategy of direct sourcing not only helped Wal-Mart in reducing the costs in the supply chain but also helped in the improvement of supply chain activities through boosting efficiency throughout the entire process. In other words, direct sourcing reduced the time that takes the company to source and stocks the products in its stock.<ref name="ReferenceC"/> The presence of the intermediaries elongated the time in the process of procurement, which sometimes led to delays in the supply of the commodities in the stores, thus, customers finding empty shelves. Wal-Mart adopted this strategy of sourcing through centralizing the entire process of procurement and sourcing by setting up four global merchandising points for general goods and clothing. The company instructed all the suppliers to bring their products to these central points that are located in different markets.<ref name="ReferenceD"/> The procurement team assesses the quality brought by the suppliers, buys the goods, and distributes them to various regional markets. The procurement and sourcing at centralized places helped the company to consolidate the suppliers.

The company has established four centralized points, including an office in Mexico City and Canada. Just a mere piloting test on combining the purchase of fresh apples across the United States, Mexico, and Canada led to the savings of about 10%. As a result, the company intended to increase centralization of its procurement in North America for all its fresh fruits and vegetables.<ref name="ReferenceB"/> Thus, centralization of the procurement process to various points where the suppliers would be meeting with the procurement team is the latest strategy which the company is implementing, and signs show that this strategy is going to cut costs and also improve the efficiency of the procurement process.

Strategic vendor partnerships is another strategy the company is using in the sourcing process. Wal-Mart realized that in order for it to ensure consistency in the quality of the products it offers to the consumers and also maintain a steady supply of goods in its stores at a lower cost, it had to create strategic vendor partnerships with the suppliers.<ref name="ReferenceB"/> Wal-Mart identified and selected the suppliers who met its demand and at the same time offered it the best prices for the goods. It then made a strategic relationship with these vendors by offering and assuring the long-term and high volume of purchases in exchange for the lowest possible prices.<ref name="ReferenceC"/> Thus, the company has managed to source its products from same suppliers as bulks, but at lower prices. This enables the company to offer competitive prices for its products in its stores, hence, maintaining a competitive advantage over its competitors whose goods are a more expensive in comparison.

Another sourcing strategy Wal-Mart uses is implementing efficient communication relationships with the vendor networks; this is necessary to improve the material flow. The company has all the contacts with the suppliers whom they communicate regularly and make dates on when the goods would be needed, so that the suppliers get ready to deliver the goods in time.<ref>Wisner, Leong, & Tan, 2005 {{full citation needed|date=February 2019}}</ref> The efficient communication between the company's procurement team and the inventory management team enables the company to source goods and fill its shelves on time, without causing delays and empty shelves.<ref>Roberts, 2002 {{full citation needed|date=February 2019}}</ref>  In other words, the company realized that in ensuring a steady flow of the goods into the store, the suppliers have to be informed early enough, so that they can act accordingly to avoid delays in the delivery of goods.<ref name="ReferenceC"/>  Thus, efficient communication is another tool which Wal-Mart is using to make the supply chain be more efficient and to cut costs.

Cross-docking is another strategy that Wal-Mart is using to cut costs in its supply chain. Cross-docking is the process of transferring goods directly from inbound trucks to outbound trucks.<ref name="ReferenceB" /> When the trucks from the suppliers arrive at the distribution centers, most of the trucks are not offloaded to keep the goods in the distribution centers or warehouses; they are transferred directly to another truck designated to deliver goods to specific retail stores for sale. Cross-docking helps in saving the storage costs.<ref>Gilmorte, 2010 {{Full citation needed|date=February 2019}}</ref> Initially, the company was incurring considerable costs of storing the goods from the suppliers in its warehouses and the distributions centers to await the distribution trucks to the retail stores in various regions.