Wal-Mart Stores Inc. has fueled its superheated growth through rock-bottom prices made possible by low-cost offshore manufacturing, primarily in China. But now the retail giant is beginning to rethink that model. The megaretailer has started working with suppliers to restore production in the U.S. market in cases where it makes economic sense, said Michelle Gloeckler, the company's executive vice president of consumables and U.S. manufacturing lead. Gloeckler spoke about Wal-Mart's strategy at the Council of Supply Chain Management Professionals' (CSCMP) Annual Global Conference in September.
According to Gloeckler, Wal-Mart has evaluated more than 1,000 product categories to determine which ones are suited for "reshored" manufacturing. They include those with a lot of "air," or empty space, in their shipping containers; those with highly automated production processes; and seasonal products that require short leadtimes. Domestic production also makes economic sense where raw materials can be readily sourced in the U.S. or where energy is a major factor, since U.S. energy costs are declining in comparison with costs in other parts of the world, she added.
One of the biggest obstacles facing suppliers when it comes to reshoring production is the variability of state regulations. To help address the problem, Wal-Mart has been hosting "trade fairs" where state economic development officials are invited to meet with the suppliers to discuss business conditions in their areas.
Gartner, Inc.
