Walmart to Procure US$10bn Annually From India by 2027
has announced that it will triple its exports of goods from India to US$10bn each year by 2027, in a major endorsement of India’s continuing rise as a global hub of manufacturing. Walmart’s new export commitment is expected to provide a significant boost to micro, small and medium-sized enterprises (MSMEs) in India, alongside ongoing efforts such as its Flipkart Samarth and Walmart Vriddhi supplier development programs. The expansion in sourcing will include helping develop hundreds of new suppliers in categories such as food, pharmaceuticals, consumables, health & wellness and general merchandise, along with apparel, homeware and other key Indian export categories.
Value Chain Creation
Doug McMillon, President and Chief Executive Officer at Walmart, said: “As an international retailer that brings value to customers and communities worldwide, Walmart understands that local entrepreneurs and manufacturers are vital to the success of the global retail sector. We see huge potential for Indian suppliers to grow their businesses by leveraging the unique scale and global distribution opportunity Walmart provides. By significantly accelerating our annual India exports in the coming years, we are supporting the Make in India initiative and helping more local businesses reach international customers while creating jobs and prosperity at home in India. It is also a way for Walmart to bring more high-quality, India-made goods to millions of customers all across the world.”
- Walmart will source US$10bn of goods a year by 2027
- The supplier development program aims to empower 50,000 Indian companies
- This investment is intended to create a sustainable value chain
Walmart has sourced goods from India for more than 20 years, supporting local suppliers to help upgrade their operations and meet international standards, develop new product lines and build new capabilities in packaging, marketing, supply chain management and more. Walmart brings global market intelligence and demand forecasts that help suppliers with strategic planning. This support has contributed to the global success of hundreds of companies, including Welspun, LT Foods and Aniket Metals, plus fast-growing export businesses like Global Green Company and many more.
At the grassroots level, Walmart’s supplier development program Vriddhi, launched a year ago, is bringing export skills and knowledge to MSMEs to prepare them to succeed as suppliers to Walmart, Flipkart and other companies in India and around the world. The goal is to empower 50,000 MSMEs to Make in India for domestic and global supply chains over five years.
India is already one of Walmart’s top sourcing markets, with annual exports worth about US$3bn. India-made apparel, homeware, jewellery, hardlines and other popular products currently reach customers in 14 markets, including the U.S., Canada, Mexico, Central America and the United Kingdom, via Walmart’s office in Bangalore, which opened in 2002. As the sourcing hub ramps up over the next few years, the local team will be empowered to make an even greater impact for even more local businesses in a wider range of sectors.
Each week, over 265 million customers visit approximately 11,400 stores under 55 banners in 26 countries and eCommerce websites under the Walmart brand. With the fiscal year 2020 revenue of US$524bn, the company now employs over 2.2 million people worldwide.
Will Public Procurement Budgets Increase in 2021?
Procurement is more than just a private enterprise. COVID-19 reminded us that sourcing materials is an essential part of the government’s role. Throughout 2022, tiny departments sourced massive amounts of personal protective equipment (PPE), medical supplies, and emergency vaccines and testing kits. Even non-procurement professionals were pulled into the fray, as frantic timelines demanded nothing less.
According to Celeste Frye, co-founder and CEO of Public Works Partners, the crisis brought procurement to the attention of skilled employees who had never considered it. As non-procurement personnel stepped up to help their coworkers, many found that they’d stumbled upon a critical and rewarding job. “Existing public employees have seen the essential nature of the work”, Frye said. “[They’ve] gained some critical skills and possibly [grown] interested in pursuing procurement as a longer-term career”.
Small, Local Suppliers Take Charge
Frye, whose firm helps organisations engage stakeholders and develop long-term procurement strategies, thinks it well worth the effort to open one’s mind to new opportunities. Cooperative contracts, for instance, can help public departments and municipalities save money, time, and effort. By joining together with other towns or cities in the region, public procurement teams aggregate their purchasing power and can drive better deals.
These cooperative contracts have the added benefit of advancing equity. Smaller suppliers that struggle to compete with established firms for government contracts can act as subcontractors, helping big suppliers fulfil bits of the project. Once they get their foot in the door, small, local, and disadvantaged suppliers can then leverage that government relationship to take on additional projects.
Especially as governments start to pay attention to procurement resilience, public procurement departments must expand their requests for proposals (RFPs) to take into account innovative solutions and diverse suppliers. According to Frye, Public Works Partners—a certified female-owned firm—has benefitted from local and state requirements that specify diversity.
Post-Pandemic Funding Swells Procurement Budgets
And the pandemic won’t be the end of it. City governments need to build sustainable energy infrastructure such as solar panels, charging stations, and recycling plants, ensure that masks and medicines are never in short supply, and source new technologies to keep up with cloud and cybersecurity concerns.
Public procurement budgets will likely increase to match demand. As Peter Ware, Partner and Head of Government at Browne Jacobson, explained, “in a non-pandemic world, the [U.K.] government spends on average around £290 billion on outsourced services, goods, and works...anywhere between 10% and 14% of Gross Domestic Product (GDP). Post-pandemic, city procurement will only increase as national governments provide local divisions with emergency funding.
And in truth, government employees might jump at the opportunity. Frye noted that public procurement could give immediate feedback on new programmes: “[Procurement] is where new laws and policies ‘hit the road’ and are implemented”, she said. “Professionals in these fields get the satisfaction of creating real change and seeing quantifiable outcomes of their work”.