Hypotheses on Moving Wal-Mart's CEO to a New Role: Running Global Sourcing and Online Retailing

In late June, Wal-Mart announced it was moving Eduardo Castro-Wright, formerly the retail giant's President and CEO of US operations, to a new role running global sourcing and its online retail business. Procurement Leaders succinctly captures the news headline in a dispatch noting, "The move, which sees Bill Simon taking over as president and CEO of Walmart US, illustrates the company's commitment to online retailing and a resurgent attempt at dethroning Amazon.com as the world's number one online retailer. It also underlies the importance of global sourcing to Walmart's activities."

Furthermore, in a press release noting the appointment, Walmart President and CEO Mike Duke suggest that, "As we continue to become a truly global company and address the business challenges of a rapidly changing world, it is clear that Global.com and Global Sourcing are critical to our future growth and success ... Appointing him to this role demonstrates our commitment and the importance we assign to these areas and to building the next generation Walmart." In addition, the move will "also allow Eduardo to relocate to California to be with his family during his wife's illness."

In other words, there are a couple ways to read into this internal move from a sourcing and supply chain perspective (and a familial one). On the one hand, Eduardo is a strong global operator. He has extensive experience running operations in both Latin America and Asia (he ran all of Honeywell's Asia-Pacific operations in the late 1990s, Wikipedia notes). Clearly, Wal-Mart is facing the greatest challenge it's ever had from a cost management standpoint, with goods coming from China in the coming years given the rising China price. It would seem Eduardo has the right qualifications and on-the-ground experience in the region to navigate all the options Wal-Mart has available (and the general management skills to oversee what is already one of the best global sourcing teams in the market). On the other hand, the personal aspect of Eduardo's situation with his wife suggests that the location and possibly the demands of his old position -- in-country managers in the retail business often have very heavy travel schedules to visit regions and stores -- also points to the need for a change of pace.

In short, from a global procurement and supply chain perspective, it's not worth reading into this announcement as a shake-up inside Wal-Mart or necessarily a shift in strategy. Rather, it appears that Wal-Mart is actually taking care of one of their own during a challenging family time as well as putting a seasoned GM in charge of a global sourcing operation that will clearly require some serious strategic decision making on an operational and cost level, given factors outside of its control in China.

Jason Busch

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