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Walmart’s Supply Chain Comes under Scrutiny in South Africa Merger

By Sandy Cosser, 12.04.12 | Comments

Walmart’s merger with Massmart in South Africa has been controversial from the start. For one thing, there is the fact the Walmart has a less than sterling reputation when it comes to working conditions and its treatment of staff. This prompted protests from South African labour unions that were concerned its employment practices would be at odds with South African regulations. Another concern was its supply chain. Local unions want Walmart to support local suppliers, which will aid local economies and maintain employment. Walmart, on the other hand, already has established supply chains which it will, no doubt, want to leverage in the new market.

The merger has faced various trials, tribulations and investigations by the Competition Commission of South Africa and is nearly finished with the process with its contract more or less intact. The commission’s ruling that the merger can go ahead came with a couple of provisos. For example, the Competition Appeal Court has ordered a supply chain management study to ensure that South African suppliers are able to cope with the demands of the merger and will also benefit by it.

Walmart and Massmart aren’t able to simply appoint a company of their own choosing to conduct the study. According to an article on IOL, the order states that the SA Commercial, Catering and Allied Workers Union (Saccawu) will appoint one expert, Walmart and Massmart may appoint another, and the ministers of the departments of Economic Development, Trade and Industry and Agriculture, Forestry and Fisheries will appoint the third. The ministers were those who reviewed the Competition Tribunal’s ruling and so are familiar with the matter.

So far the ministers have appointed Joseph Stiglitz, a former World Bank chief economist and Nobel Prize winner. Walmart has appointed Mike Morris, a political economist from UCT and with trade union experience. Saccawu is still trying to get economist James Hodge on board.

The panelists have until 9 June to complete their study, after which Walmart and Massmart will have to await the next step. 


About The Author:
Sandy Cosser writes on behalf of Oxbridge Academy, which offers supply chain management courses in South Africa.
More info: Supply Chain Management
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