Tag: Sourcing

Guest Post: From No Frills to Trendy Food, Fashion and Home, Walmart’s New Product Assortment 

Professor Misty Blessley, at Temple U., cohosts many of our podcasts, as well as sharing her insights with our readers monthly.

 Value retailer, Walmart, known for focusing on price-sensitive shoppers, has moved into premium products and broader brand assortments, with the goal of winning over customers with more buying power. Appealing to higher-income customers (those earning over $100,000), requires the firm to shift from a no-frills mindset. 

The firm remains committed to everyday-low-pricing (EDLP), thus it must continue managing this highly effective strategy while integrating broader lines. This requires a supply chain flexible enough to support both high-turn grocery and slower fashion and lifestyle products, for example. 

On the inbound supply chain side, Walmart diversifies its supply base to procure new products. As is outlined in Chapter 11 of your Heizer/Render/Munson book, this requires identifying, vetting and selecting new suppliers as well as a host of supply-side tasks like vendor and contract management. 

Managing inventory requires additional adaptations. Walmart refreshed the look of its website and stores while avoiding alienating its historical customers. It did so by keeping flagship items in stores and premium lines at distribution centers. Chapter 12 outlines inventory concerns Walmart faces, from the importance of inventory record accuracy to strategies for managing inventory. 

On the outbound side, the firm’s e-commerce and fulfillment operations must be capable of satisfying wealthier customers, who often expect faster, higher-service delivery options, such as same-day delivery or premium curbside pickup. Meeting these expectations puts pressure on Walmart’s fulfillment network for more micro-fulfillment centers and localized inventory pools to reduce delivery times. Facility, inventory, and transportation cost trade-offs are also covered in Chapter 11.

Walmart is an exemplar in omnichannel retailing because it seamlessly integrates its physical stores, online platforms, supply chain, and last-mile services into a unified customer experience. Its customers purchase and receive products when, where and how desired. Walmart is offering frills next to its no-frills strategy.

Classroom Discussion Questions:

  1. How would you call upon Ch. 11 and 12 as a Walmart supply chain manager? 
  2. Some firms target different customer segments under different brand names. For example, Gap Inc. owns Gap, Old Navy, Banana Republic and Athleta. Walmart has chosen a different strategy. How is Walmart capable of serving its price-sensitive and wealthier customers under one brand?

Guest Post: Building Resilient Supply Chains Through Sourcing Risk Management

Temple U. Prof. Misty Blessley shares her insights with our readers monthly.

In Ch 11 of your Heizer/Render/Munson textbook, the importance of buyer-supplier collaboration is discussed. In collaborative relationships, firms manage risk by working jointly to anticipate and address sourcing challenges, thereby fostering resilient supply chains. 

Hershey, the iconic American confectionary company, offers a compelling example of collaboration in action. Confronted with unprecedented cocoa market volatility, Hershey strengthened its partnerships with farmers, NGOs, and governments. Through its Cocoa For Good initiative, the company committed $500 million to improving sustainability and stability in the cocoa supply chain. This includes investments in farmer livelihoods, agronomic training, and expanded market access. Hershey’s desire to collaborate is rooted in the belief that a resilient supply chain starts with a resilient farming community.

Global coffeehouse chain, Starbucks, employs a similar collaborative model in the coffee industry. It’s Coffee and Farmer Equity practices enable direct engagement with producers across Latin America, Africa, and Asia to improve sustainability, productivity, and income generation. Starbucks operates regional farmer support centers, provides pre-harvest financing, and integrates ethical sourcing into its procurement decisions. These long-term collaborations help Starbucks secure a dependable supply while positively impacting over 400,000 farming families.

In contrast, Taylor Farms, a major North American producer of fresh-cut fruits and vegetables, exemplifies a different risk management strategy– backward vertical integration. Rather than relying on external suppliers, Taylor Farms owns and operates its farms in addition to its processing, packaging, and distribution facilities. By controlling the key upstream stages from seed selection to harvest, the company reduces dependency on independent growers. Its farm-to-shelf model demonstrates how owning the supply base can offer long-term resilience.

Transactional buyer–supplier relationships often reflect a zero-sum mindset, where one party’s gain comes at the other’s expense. In contrast, the strategies employed by Hershey, Starbucks, and Taylor Farms showcase the value of moving beyond transactional interactions in pursuit of win-win partnerships/ownership to manage sourcing risk and assure resilient supply chains.

Classroom discussion questions: 

  1. Hershey and Starbucks manage upstream risk through collaboration, while Taylor Farms does so through backward vertical integration. Both strategies aim to strengthen supply chain resilience. What unique challenges do the two approaches pose for supply chain managers?
  2. Transactional supplier relationships often focus on short-term cost savings rather than long-term stability. Based on the strategies used by Hershey, Starbucks, and Taylor Farms, what specific risks do transactional relationships present in building resilient supply chains?