Will Walmart’s Executive Reshuffling Produce A Smoother Supply Chain?
Walmart is making major changes to its organizational structure, adapting to evolving shopper needs by integrating various store and digital operations positions, most notably within the supply chain.
The timing of the integration is interesting, especially given the recent report that the retail giant is projecting $1 billion in e-Commerce losses. The report, from Recode, revealed that the losses have put significant pressure on Walmart’s e-Commerce CEO Marc Lore, and have created tension between Lore’s camp and the Walmart Board of Directors, including CEO Doug McMillon.
The Retail TouchPoints editors share their take on whether Walmart is making the smart move to integrate its supply chain teams, and gives insight into what the fallout from these changes may be.
Adam Blair, Editor: Walmart’s move to bring together the supply chain operations for both its online and store divisions makes a lot of sense to me; after all, one of Walmart’s key strengths has been its buying power and the efficiency of its supplier network. Why dilute that by having separate internal organizations sourcing product for what’s often the same eventual consumer? As has been pointed out numerous times, shoppers don’t think ‘I’m buying from Walmart’s online division,’ they think ‘I’m buying from Walmart.’ What’s more interesting to me, however, is whether these executive changes and restructuring efforts are being accompanied by changes in compensation structures — both for the top executives and those reporting to them. If, for example, Walmart wants to pursue a strategy that takes advantage of its vast store network to outshine Amazon in grocery delivery (which, by the way, sounds like a great idea), the Bentonville Behemoth had better shape everyone’s salaries, bonuses and incentive plans to make that a reality. Otherwise, changing titles and org charts will be just so much PowerPoint pointlessness.
Glenn Taylor, Senior Editor: There’s obviously a lot more to Walmart’s internal power struggle than the public probably knows about, but it’s crazy that it seemingly took a major butting of heads to really get the company to streamline operations. I would have thought that the acquisition of Jet.com three years ago — and the almost instant benefits Walmart got out of it from a growth perspective — would convince the company to integrate sooner. If anything, this whole saga has exactly pinpointed the problem from an executive standpoint in traditional retail (and honestly, most businesses in general). Too many people are simply unwilling to sacrifice potential profits in the short term for a better business model in the long term. It’s apparent looking at the Recode article that even Walmart, which has managed to create a glimmer of real competition with Amazon, isn’t immune to the problems that come with expensive investments. Will the new corporate structure likely create some resentment within the ranks, especially if profits don’t reach full potential? Sure. But I feel that at this stage, the company’s ability to bring some of the biggest digital names into its ecosystem, such as Jet.com’s Nate Faust and Bonobos’ Andy Dunn, will only attract better employees that fit the company’s integration plans going ahead.
Bryan Wassel, Associate Editor: As technology brings us towards a truly omnichannel world, there’s no reason for companies to avoid merging their e-Commerce and brick-and-mortar supply chains whenever they can. Large companies like Walmart have a head start when it comes to adopting true omnichannel practices, so it makes sense that it would be one of the early adopters of this practice. Combining both sides of the supply chain has at least one major benefit: it removes the silo effect of handling sourcing under two departments, a move that can be extremely valuable for larger retailers looking to improve their agility where they can. Of course, this move will no doubt cause friction as the backbone of the company takes on a completely new shape, which will provide plenty of lessons to retailers catching up in the future. Being the trailblazer is a double-edged sword — Walmart will be among the first major retailers to reap any benefits from this setup, but it will also be the first to run into previously unforeseen challenges.