Our strength has historically been based largely on having an efficient operation. This premise demands having low costs in order to be able to offer the right prices, which is accomplished by continuously improving our processes, which in turn ensures efficient execution and operation. Therefore, in 2013 we created an area that formally oversees efficiency-related project management and coordinates productivity initiatives for all formats and areas throughout the six countries, and all in a centralized manner.
Progress in productivity, stores, clubs and distribution centers
The productivity of our associates in stores and clubs in Mexico posted a comp unit improvement of 3.0%. This was accomplished the sale of items per hour worked.
Our logistics operation, which is an essential pillar in supporting the profitable growth of the business, consists of a broad distribution network with distribution centers throughout Mexico and Central America. With this infrastructure we are able to ensure efficient handling and timely delivery of the merchandise our customers want to find on the shelves of all our formats. Our distribution centers located in six cities in Mexico operate at a volume of over 1.8 billion cases, and we were able to improve our productivity by 12.2%, as compared to 2012. We traveled over 200 million kilometers and made almost 700,000 trips to deliver merchandise to our units and to other distribution centers.
Our distribution centers located in Central America were fully integrated to Walmart systems, thereby improving inventory and data management and achieving greater productivity. Likewise, we enhanced the efficiency of merchandise handling, moving more cases per man-hour.
Our distribution centers located in six cities in Mexico operate at a volume of over 1.8 billion cases, and we were able to improve our productivity by 12.2%, as compared to 2012.
Productivity in energy and merchandising
Another accomplishment in productivity in Mexico is the savings stemming from a reduction in energy use in our stores –some 3.3% less and 61 million kWhwhich is equal to the annual energy used by 34,000 homes and 30,000 tons less of CO2 emitted into the atmosphere. Initiatives such as installing doors for refrigerated display cases in our stores, modernizing the lighting system with LED bulbs in our units, among others, helped us to achieve these savings.
Thanks to the new commercial structure and centralized system we now have, productivity in our merchandising departments improved significantly. By focusing on areas of specialization, greater efficiency in merchandise processes, selection and segmentation has been possible. Closer attention is paid to suppliers as they now have a single contact point instead of a different buyer in each format.
At a consolidated level, all these productivity initiatives and disciplined expense management has allowed us to post increases that are less than half the growth rate of our sales floor. On a comparable basis, excluding the store lease expense, general expenses increased 5.2%, whereas the average sales floor growth was 7.1%.
Another accomplishment in productivity in Mexico is the savings stemming from a reduction in energy use in our stores –some 3.3% less and 61 million kWh- which is equal to the annual energy used by 34,000 homes and 30,000 tons less of CO2 emitted into the atmosphere.
Migration of administrative processes to Costa Rica
The need for a flexible organization, ready to adapt to the ever changing needs of the customers, also necessitates having a high-performance administration. This has been accomplished with the creation of our Global Shared Services for Latin America (GSSLA), located in San José, Costa Rica. It is here where we have consolidated the processing of financial operations and transactions, not just for Mexico and Central America, but for the other Latin American countries where Walmart operates.
GSSLA is a service-oriented organization that offers support to our internal customers by consolidating accounting processes, systems, and transactional operations. Among the more important operations that have migrated are: accounts payable and accounts receivable management; asset and master data management; central accounting; payroll processing; payment analysis; and supplier claims. The benefits of having centralized these activities are multiple, such as operational savings, process standardization, implementation of best practices, and leveraging costs and support services.
Standardized processes that generate productivity: ISO 9001 since 2008
At Walmart de México y Centroamérica we are always seeking ways to make our processes more efficient and maintain and increase the quality of all our operations, thereby benefiting our customers and associates. In recognition of our ongoing pursuit of efficiency and productivity, this year we were awarded the Certificate for Quality Management Systems –ISO 9001:2008–, by the Spanish Standardization and Certification Association (AENOR), for the recovery and saving process of tax documents such as invoices for the purchase of merchandise for sale in our self-service stores, restaurants and membership warehouse clubs; for internal supplies; and payments made to suppliers. With this certification we now have 14 ISO-certified processes in the areas of Logistics, Finance and Management, Accountability, Operating Finance, Tax Compliance and Payroll Tax. Other six ISO 9001:2008 certified processes have been transferred to the GSSLA.
Supplier training and assistance
Since we are aware of the fact that our suppliers are fundamental partners in conducting our business strategies, we seek to have mutually beneficial relationships with them, always favoring our customers. We work with micro, small, medium, and large-sized suppliers with whom we establish long-term strategic relations with the purpose of always obtaining top quality, well-priced products.
At Walmart we are constantly extending our regional supplier base, as well as that of SME suppliers, providing them assistance with improvements and access to programs that increase their capacity. Throughout the year we offered training and assistance to 1,700 suppliers in Mexico so they could determine the commercial value of their products, and elements with which they could compete. We also offered over 800 man-hours of free commercial assistance through our website and we had presence in events to identify SMEs. In Central America we assisted 299 suppliers through 17 training sessions.
Driving supplier growth also implies financial assistance. Therefore, we reduced our payment periods for more than 600 SME suppliers, thus improving their liquidity. With Banco Walmart’s Credimpulsa program, we provided financing at competitive rates and quick authorization processes, based on the commercial relationship with any of our operating formats.
