Wal-Mart's procurement

The Packer's David Mitchell has some interesting coverage on Wal-Mart's procurement policies.
David writes:


Wal-Mart Stores Inc. has altered its procurement procedures during the past two years, but recent criticisms that the Bentonville, Ark.-based retailer has violated terms of its supplier agreements are unwarranted, the company’s vice president and divisional merchandise manager for produce and floral said.“Wal-Mart honors (its) contracts and offers the suppliers the right to talk to Lee Scott, our CEO, or Rob Walton, our chairman, through the open-door process if we do not,” said Ron McCormick , vice president and divisional merchandise manager for produce and floral.Wal-Mart suppliers were reluctant to comment on changes in the retailer’s buying practices, but sources alleged off the record that the company is increasingly using what it calls “opportunity buys” to source product from other suppliers when the market is lower than the contract price.“The expectation in doing business with Wal-Mart is not what it was two years ago,” said a supplier who spoke on the condition of anonymity.


TK: In a presentation in 2004, Roberta Cook of UC Davis points out that shippers doing long term contracts with Wal-Mart procurement can keep their portfolio of quality growers happy only by compensating them fairly for lost opportunities on the spot market. In my view, when Wal-Mart looks to "opportunity buys" when the spot market is in its favor, it could hurt the long term health of WM's contracted suppliers.