e-Procurement: Wal-Mart’s Domestic Procurement Plan Bodes Well for U.S. Manufacturing
It’s impossible to find a bigger retail giant than Wal-Mart. Without question, the chain is a mainstay across the United States, with a supercenter on almost every street corner. Americans love a good deal and, more often than not, they turn to their local Wal-Mart store for just that - to the tune of $444 billion in sales for 2012 alone. However, due to the recent economic crisis, Americans have also become more educated and aware of exactly where their purchases are originating from, which has led to a growing clamor for businesses to increase sourcing from homegrown suppliers rather than the typically cost-friendly offshore options. This week’s announcement that Wal-Mart will increase its domestic procurement by an additional $50 billion over the next decade suggests the retailer has taken notice of the trend.
With American manufacturing expected to resurge and other mega corporations, such as Apple, planning to reshore some of the manufacturing jobs that had previously been lost overseas, Wal-Mart may very well be helping to promote a growing trend in supply chain management: sourcing products with a “Made in America” tag. Currently, energy and transportation costs are comparatively low in the United States, which has made the prospect of reshoring more attractive. Additionally, recent “black swan” events have wrought havoc on the supply chain and prompted many companies to consider returning manufacturing to American shores where they can gain more definitive control over their sourcing and procurement.
All of the supply chain and procurement shifting has plenty of retailers tightening up their own purchasing processes, whether through negotiating more advantageous supplier contracts, implementing technology upgrades such as e-procurement systems or automated catalog management solutions, or increasing control by sourcing closer to home.
Wal-Mart currently increases its annual procurement budget by $21 billion per year, which means they are dedicating 25 percent of that to additional American-made products. The future is certainly looking brighter for American manufacturing and the stock market appears to agree, as orders for long-lasting manufactured goods reportedly rose significantly in December.
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