Walmart, A Leader in Offshoring, Now Champions Re-Shoring

Walmart may be a giant corporation, but give it credit for being nimble enough to respond to a changing world around it. It wasn’t all that long ago that Walmart was leading the way offshore, with the leverage of its huge purchasing power and aggressive purchasing strategies that drove suppliers to manufacture in low cost countries.But times change, so Walmart is now committing to a $50 billion increase in purchases of U.S.-made products, and it recently attracted nearly 1,500 high level executives and government leaders to its U.S. Manufacturing Summit. GE Chairman and CEO Jeffrey Immelt used the occasion to announce that GE will begin manufacturing high efficiency light bulbs for Walmart in a U.S. facility, bringing back 150 jobs from overseas.
When you consider that the jobs coming home are counted in the hundreds, while the U.S. manufacturing jobs that went offshore over the last few decades number in the hundreds of thousands, these actions could be written off as more about PR than substance.
On the other hand, when Walmart decided to “go green” and promote compact florescent bulbs in its stores, it signaled that energy consciousness had gone mainstream. It may be the same for re-shoring. Walmart has likely looked at its supply chain and decided that in a total cost analysis, the gap between sourcing locally and sourcing offshore has narrowed for some products it sells. I’d guess that Walmart calculated the marketing value of re-shoring offsets that gap for about $50 billion of the items it sells. And that’s how it came up with a $50 billion commitment.
So I would not discount Walmart’s actions as simply marketing stunts, nor applaud them as truly patriotic gestures. There may be elements of both of those, but there’s also likely some very businesslike sourcing calculations.

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3 responses to “Walmart, A Leader in Offshoring, Now Champions Re-Shoring

  1. Our founder/president Harry Moser of The Reshoring Initiative attended the Walmart Manufactring Summit. Here’s Harry’s takeaway:

    “I came away convinced that Walmart is doing everything it can to dramatically increase its purchases of U.S. manufactured products. I met dozens of companies that are doing their best to provide a U.S. made product at a price and quality that U.S. consumers will find acceptable and choose vs. imported products.

    To put Walmart’s goal into perspective: $5 billion of extra purchases per year will mean about 30,000 reshored manufacturing jobs. That will be a one-time doubling of the number of jobs reshored, currently about 30,000 per year.”

    The not-for-profit Reshoring Initiative’s free Total Cost of Ownership http://www.reshorenow.org/TCO_Estimator.cfm software helps corporations calculate the real P&L impact of reshoring or offshoring. In many cases companies find that, although the production cost is lower offshore, the total cost is higher.

    The Reshoring Initiative http://www.reshorenow.org tracks all reported and some private cases of reshoring and concludes that about 80,000 manufacturing jobs have been reshored since Jan. 1, 2010.

    Any company, including Walmart suppliers, trying to evaluate the feasibility of reshoring is encouraged to use our free software or call us for free advice. Readers can help bring back jobs and increase profitability by asking their companies to reevaluate offshoring decisions. Component suppliers can use the TCO software to convince their customers to reshore.

  2. Wouldn’t it be interesting if they looked in the mirror and followed the same logic with their own internal IT services?

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