Wal-Mart Orders $1 Billion in Supply Chain Savings

Wal-Mart Orders $1 Billion in Supply Chain Savings

Wal-Mart Stores will use its global transportation and logistics leverage to cut fruit and vegetable prices by $1 billion, the nation's largest grocer said Thursday.

It's part of a broad campaign to make food healthier and less expensive backed by First Lady Michelle Obama, who joined Wal-Mart executives in Washington.

"We can improve how we make and sell food in this country," she said at the event.

Sourcing, packaging and transportation initiatives will help drive costs out of the produce supply chain, said Andrea Thomas, Wal-Mart's senior vice president of sustainability.

"We believe we can save Americans who shop at Wal-Mart approximately $1 billion per year on fresh fruits and vegetables," Thomas said at the D.C. event.

One step toward the goal will be an increase in Wal-Mart's direct relationships with farmers, she said, resulting in more consistent prices and higher income for farmers.

That could mean cutting some ties or changing relations with produce brokers, truckers and other transportation and logistics providers in its supply chain.

This isn't the first time the $405 billion retailer used its purchasing clout to drive down prices or impose sustainability goals and mandates on suppliers.

Wal-Mart's healthier foods plan is similar to its campaign to lower generic drug prices, which the retailer claims has saved consumers $3.4 billion since 2006.

Wal-Mart rolled out its healthier foods initiative in the nation's capital, where it plans to build four stores as part of its strategy to move into more urban markets.

In addition to lowering costs, the cornerstone of its plan is reducing the amount of sodium and sugar and eliminating trans fats in foods Wal-Mart sells.

Wal-Mart pledged to reformulate key product categories of its Great Value private brand and collaborate with suppliers to reformulate national brands by 2015.

As its suppliers reformulate national brands, consumers nationwide will benefit, whether they shop at Wal-Mart or not, the $405 billion company said.

-- Contact William B. Cassidy at wcassidy@joc.com.