Dive Brief:
- Walmart and Sam's Club are offering faster payments and new financing opportunities to assist diverse suppliers in overcoming access-to-capital challenges, company leadership announced in a press release last week.
- Through a partnership with the financial technology company C2FO, Walmart Inc. has expanded its early payment program using an interface where suppliers pick which of their invoices are to receive early payments, with aims to increase suppliers' "ability to gain access to working capital," according to the release. Walmart will first independently fund the program and plans to provide more funding options through collaborations with banks.
- The program went online Monday and is open to qualifying diverse businesses. The initiative is meant to build on existing programs for early payment to support the success of diverse and minority-owned suppliers.
Dive Insight:
The pandemic pushed many supply chains to forge new connections to ensure product sourcing, and with that came work with historically underutilized businesses to increase supplier diversity. And buyers said they found that diverse suppliers bring more than just a feel-good benefit; they bring financial benefits too.
When Walmart increased women-owned suppliers to its network, it learned that having diverse suppliers that represent its customers was good for business by increasing product assortment and meeting the growing social expectations of customers. That lesson helped to pave the way for more diverse supplier events, including virtual supplier summits that took place last year.
"We have an existing network of more than 2,800 diverse suppliers, and we continue to look for new suppliers," Walmart President and CEO Doug McMillon said in a message on the company's website. "For us, supplier inclusion means delivering better products and a broader selection to the communities we serve."
When demand plummeted for nonessential items at the onset of the pandemic, suppliers faced retailers canceling orders and drawing out payments — putting many suppliers in financial binds in paying employees and other expenses.
Those canceled orders and longer payment windows, if unbalanced, adversely affect how much credit and financing suppliers can receive, especially for suppliers who are cash low.
Walmart says by extending options for accessing capital speeding up payments it could grow the diverse supplier network.
The creation of diverse supplier networks is moving from the planning stage to execution. Among the companies taking action are Walmart competitors.
Target announced earlier this year that it plans to spend over $2 billion with black-owned suppliers by the year 2025.
Meijer debuted a diversity summit in November that connected it with 250 suppliers. Now, the retailer is holding a multi-day, virtual summit this week to attract more diverse suppliers nationwide.
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