Winning at Wal-Mart: best practices of top vendor teams and the strategies they pursue to achieve success

DSN Retailing Today, Feb 27, 2006 by Mike Troy

The shelves in a Wal-Mart store are filled with products from thousands of suppliers, many of whom have been immensely successful over the years in working with the company to serve a mutual customer. For those that achieved the greatest success, a key factor was the creation of a Wal-Mart-dedicated team based in Northwest Arkansas.

This approach and the advantages related to speed, understanding Wal-Mart and the development of relationships that resulted from proximity was at one time regarded as a best practice when it came to serving Wal-Mart.

That's not the case anymore as the company has grown, become more complex and the significance of relationships has diminished. Wal-Mart's needs are more complex today and have required suppliers to devote increased resources to their teams. Now, Wal-Mart looks to take its business to a new level and is doing so by pursuing new initiatives in areas such as merchandising, marketing, supply chain, store operations and environmental stewardship, and vendor teams intent on taking their business to a new level are redefining what constitutes a best practice.

"It is imperative that the suppliers calling on Wal-Mart have the top talent in their companies assigned to the team," according to a team leader with a major supplier who contends it is essential to rotate people on and off the Wal-Mart team to maintain creativity. 'I have a concern that some of the people that are here today are either the ones that early on were willing to live in Northwest Arkansas or don't want to leave because they have been here too long. I don't think you want to have people down here camping out."

The rationale behind that strategy is to ensure people have management experience in different disciplines and even international exposure. Doing so ensures flesh ideas are flowing to the organization in much the same way Wal-Mart has infused itself with new ideas by hiring people from outside the company while also exposing tenured executives to different aspect of the business.

"What Wal-Mart doesn't need is more people who are experts on Wal-Mart," according to the team leader.

What Wal-Mart needs is insight in consumer behavior as it looks to encourage broader shopping throughout the store and refine its product mix to more of a good, better and best assortment, according to suppliers. As a result, teams are looking to fill new positions such as shopper-solutions managers and junior national account managers.

That's not to say that being an expert on Wal-Mart isn't still a fundamental best practice.

"Suppliers should understand what is important to our company. Look at our environmental initiatives and help us with their current products on driving efficiencies in our business relations," said Excell LaFayette Jr., Wal-Mart's director of supplier development. "Wal-Mart has provided Retail Link that will help our relationship and help the suppliers track their business with our company and help them become more efficient. And it's always beneficial if the supplier brings our company merchandise first so we can offer something new to our customers."

When suppliers do bring a new item to Wal-Mart, it's not simply a transactional process. According to team leaders, having top people assigned to the account needs to be supplemented by the best practice of collaboration and knowledge of the market.

"Collaborative planning is a huge win for us," said Bryan Del Sol, team leader for Kodak's digital and film imaging systems at Wal-Mart and Sam's Club. "The lifecycle of some of our digital products is very short and pricing is volatile so it is essential for us to plan together with Wal-Mart to make sure we align all aspects of product launches and promotions to maximize sales opportunities in what can be a narrow window of opportunity."

Collaboration is not a new strategy for achieving success with a retail partner, but it is being taken to a new level with more touch points across functions within Wal-Mart and the suppliers' organization. Despite this situation--talk of the diminished role of the buyer at Wal-Mart and the heightened importance of marketing--it is the buyer who remains the central player in the collaborative equation.

"The communication between the supplier and buyer is the single key element to having a successful relationship with Wal-Mart," said LaFayette. "The suppliers should follow the procedures and processes that are needed to do business with Wal-Mart so that everything will move quickly and the relationship will be a win, win, win for the supplier, for Wal-Mart and most importantly, for our customers.

"Also, suppliers shouldn't sit back and wait for all of the information to come from Wal-Mart. We rely on their expertise as well. We want them to have an idea of the buying season and present their products at the appropriate time and through it all keep an open line of communication with the buyers," said LaFayette.

That's why one of the most important best practices involves understanding where Wal-Mart's business is headed and taking actions that position the supplier for success. For some of the larger teams whose product portfolio includes global brands that means focusing on international growth. Due to their established international presence, these teams are able to establish Wal-Mart-dedicated teams in individual countries where Wal-Mart operates. However, it is important for personnel assigned to those teams to supplement their in-country expertise with the perspective that comes from working directly with those at Wal-Mart's home office.