Francis de Pass, Director of Supply Chain & Manufacturing Strategy and Growth of Walmart in Central America on the company’s customer-driven, international supply chain strategy.
ith more than 5,400 retail units and approximately 550,000 associates around the world, Walmart International’s strategy is to build and empower strong local businesses – while simultaneously generating growth for the company and its partners, positively impacting all stakeholders.
Speaking on behalf of the Central America division of Walmart International, Francis de Pass, Senior Director of Supply Chain & Manufacturing Strategy and Growth, joins us to discuss the company’s approach to supply chain and sustainability strategies, with the end goal of serving customers and striving for continuous improvement.
Francis has been with Walmart for nine years and he has witnessed exponential growth during his time at the company. Francis explains that Walmart’s presence in Central America emerged from an acquisition of a joint group of
retailers, manufacturing facilities and distribution centres in the region, including Costa Rica – where he is based.
“Walmart is a tech-powered, peopleled omni retailer, with close to 900 stores in Central America across five countries: Guatemala, Nicaragua, El Salvador, Honduras and Costa Rica,” says Francis. “We've got four formats of stores – our hypermarket, supermarkets, compact discount hypermarket and discount stores. Since the onset of the COVID-19 pandemic, we have embarked on an omnichannel transformation, expanding our retail presence to include both e-commerce and brickand-mortar stores.
“In Central America, we have inherited a multifaceted retail landscape, and my role entails overseeing the ‘support department’ for our pure operators. These operators encompass distribution centres, manufacturing operators
“Walmart is a techpowered, people-led omni retailer, with close to 900 stores in Central America across five countries: Guatemala, Nicaragua, El Salvador, Honduras and Costa Rica”
and transportation,” begins Francis. “I am responsible for leading the support departments, which include Maintenance, Environmental Health and Safety (EHS), Food Safety, Sustainability, Quality Assurance, Systems (including our proprietary warehouse management system (WMS) and SAP platform), Engineering, and Network Planning.
I am proud to work alongside a team of 600 talented associates who contribute to the success of our operations.”
Due to the complexity of the retail environment Walmart inherited when it entered Costa Rica and Central America, Francis describes the need for innovation in its end-toend supply chain strategy.
“To support the stores and the e-commerce part of the business, we have 13 distribution centres and 11 manufacturing plants,”
says Francis. “The manufacturing plants make high-quality private brand products from meat and packaged grains to bakery goods – you name it, and we make them in-house through our manufacturing division. These products are then sent to the distribution centres before being delivered to our stores – this arrangement forms the core of our supply chain.
“But in conjunction, Walmart has become an important importer of merchandise in Central America since some of the countries we operate have an above-average need for imported goods. In certain merchandise categories, the manufacturing capacity inside the countries is not enough to sustain the needs or the demands of the customers.
“As such our supply chain is incredibly complex: 900 stores divided into four banners, plus our 11 manufacturing plants and 13 distribution centres spread over five countries where, in some cases, bureaucratic and inefficient importing processes on borders prevent supplying from one source. Bringing these dynamics together into a smooth operation would not be possible without an end-to-end supply chain strategy.
“This is where things get really interesting for me and my colleagues in our division. What we do is ensure we are able to sustain and promote
the company’s growth every day, every year. Walmart Central America has been growing intensively and still has huge ambitions going forward so we're having more merchandise flowing through our doors, distribution centres and transportation departments year on year.
“To achieve this flow, we need to maintain three things simultaneously, at any time. First, we must be customer-centric: every decision we make has to add value for our
customers. Second, we have to operate end to end. Supply chain has a whiplash characteristic to it: anything that you do upstream will flow downstream. Third, we must be data-driven. While there is something to be said for our professional gut instincts, ultimately all final decisions in our strategies must be informed, arising from clear evidence. This is how we make our supply chain an end-to-end value stream, not just a cost stream.”
Elaborating on the first dynamic of
operating in a customer-centric manner, Francis emphasises how Walmart is constantly striving to improve its value proposition for shoppers and that supply chain strategy is intrinsically connected to this endeavour.
“We have various types of customers with different shopping habits,” says Francis. “So when we think about the customer, we tailor targeted customer value propositions based on their demographics and shopping inclinations, taking into consideration how they engage with us in-store or online.
“Our mission at Walmart, set by our founder Sam Walton, is to save people time and money so they can live better. Whenever and wherever people shop with us, we want them to leave with an experience where they feel that they were given something back. This might be that they saved money, had a pleasant experience in-store and/or saved time by shopping with us online.
“We make sure our supply chain is a value-adding aspect of the business by establishing teams that cross the supply chain-storeonline relationship and thinking of our job as facilitating merchandise flow all the way to the hands of the customer: every part of the chain has to contribute in terms of speed, quality and cost. We find the friction points and work on reducing or
eliminating them as much as possible.
“So, based on our customer value propositions (CVPs), we make sure our supply chain strategy is set as a vehicle for delivering value. Any dollar that we add as cost is something that will have to be paid back by the customer, but on the other hand, any dollar saved can be passed onto the customers. Online, any time we can reduce through our supply chain
or operation is time we save for our customers. For me and my team in supply chain, it’s about considering our place in relation to the customer – how do we contribute to make sure they find what they want, when they want it, while saving them time or money to live better?”
Striving towards these goals and incorporating new solutions requires considered strategic planning and internal collaboration, according to Francis.
“When we think about our solutions we have to embrace continuous improvement in the present and boldness for the future”
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“When we think about our solutions we have to embrace continuous improvement in the present and boldness for the future,” says Francis. “In terms of the latter when it comes to planning ahead, we have a 10+ year horizon for planning in supply chain and manufacturing for Walmart Central America. Our end goal is to be working on our capabilities 10-12 years into the future, looking at which constraints will arise on storage, throughput, infrastructure, etc and designing the best long-term solution for it.”.
“So, this means that in my department of network planning, when we look at what's planned to happen for the next 10 to 12 years,
we need to communicate and engage with colleagues in other business units. We have a very close relationship with our real estate department which oversees store growth and with our store operators to design our future supply chain considering the optimal frictionless exchange with stores. We also have a very close relationship with our omnichannel division, looking at what they have planned on that front for the coming years. We ask ourselves and our internal clients, ‘what role should supply chain play for these departments and others across the company?’ We keep our finger on the pulse, share everything, consider all the variables, anticipate developments and work backwards
to construct the supply chain of the future, today.”
Francis explains how he and his team channel concurrent strategic planning within the 10+ year approach, so they adjust their direction based on the successes or challenges in a given year.
“It's a negotiation, a give-and-take scenario,” summarises Francis.
“We set our sights on the 10+ year horizon, but our concurrent planning approach compares last year’s forecasts against the current year’s performance – establishing accuracy levels that yield our decision-making agenda for the future. We believe it is best practice to set a 10-year horizon in supply chain. Going further than this horizon reduces your accuracy significantly, but at the same time it provides enough anticipation to react on time. It gives you opportunities to work with finance to secure the required CapEx and/or OpEx, consult with planning to put smart project timelines in place and ensure bold strategies in the future.
“When it comes to continuous improvement in the present, it’s a little bit different, as the year-onyear dynamics of the retail sector might include inflation, deflation or national holidays – you have to be dynamic and flexible.
of the month when most public or government organisations and private companies tend to pay wages. If those paydays land on a Friday, we know there's going to be a peak weekend, so we adjust accordingly. Striving for continuous improvement in the present certainly keeps us on our toes.”
So how does Walmart uphold quality whilst balancing adaptability and flexibility in the present with a bold vision for the future? Francis highlights five core components:
• 5S Methodology
• Kaizen
• Value Stream Mapping
• Integrating Business Intelligence and AI
• Internship Program
“For instance, in Central America, we identify in a rolling forecast what we call Pay Days which is the day
“The Five S’s is a methodology developed in Japan, which have been translated to sort, set in order, shine/clean, standardise and sustain,” explains Francis. “We embrace the 5S Methodology to organise a productive work environment every day, executed by micro teams in all departments who look for ways to improve efficiency and effectiveness at a grassroots level. We trained more than 50 of these teams which are starting new projects and making progress in their parts of the business, which is an empowering and rewarding endeavour for those involved.”
“Walmart is publicly committed to its sustainability goals. The four major areas we focus on are climate, nature, waste and people. Our goals are based on these regenerative commitment pillars”
“We also have a Kaizen or continuous improvement methodology working culture within supply chain and manufacturing,” says Francis. “Kaizen is another business philosophy from Japan related to perpetual improvement of processes and operations which involves all employees.”
“Here we integrate engineering philosophy to consider the multitude of processes we wield and map them out to understand where we have non-value-added tasks,” says Francis. “We eliminate or mitigate these as much as possible, meaning that there's no costs or negatives associated with our processes which are not for the good of the merchandise or the good of the company.”
“Recently, we started integrating business intelligence into the supply chain by incorporating and streamlining the vast amount of data that we operate with,” says Francis.
“At the moment, the data is spread across hundreds of databases and they’re not very well interlinked. We are making progress on this front because we have launched business intelligence units which have started gathering data, actively pursuing insights and trends we were missing out on before. In conjunction, we are exploring the potential of artificial intelligence. How can we organise our data better? How can we simplify complex tasks? We’re in the early days here, but it’s an exciting journey to be on.”
“We have been working a lot with internships by partnering with several universities in the five countries we have a presence in within the Central America region,” says Francis. “Each semester we welcome students and offer them rich professional insights through the chance to work with us in the supply chain department. We’ve seen some incredible talent step across our doors with fresh eyes and perspectives, many of whom end up working with us after they complete their degrees.”
Within the broader sweep of the endto-end supply chain strategy and customer-driven approach at Walmart Central America, Francis adds you cannot separate these endeavours from the sustainability agenda at the company. Here he highlights four main pillars of Walmart’s approach.
“Walmart is publicly committed to its sustainability goals,” begins Francis. “The four major areas we focus on are climate, nature, waste and people. Our goals are based on these regenerative commitment pillars.
“The climate commitment pillar is anything to do with our emissions and energy. Our goal is to have zero emissions by 2040 and powered by 100% renewable energy by 2035.
“For the nature pillar, this is where we've committed to land and sea environmental protection. Walmart
has set its sights on protecting millions of acres of landscape and millions of square miles of ocean. Within this pillar, we also deploy sustainable commodities strategies with key resources like palm oil, paper, pulp and timber, soy and seafood.
“With waste, we are transforming our approach to landfills. We strive to divert all waste from going into landfills by 2025. Here in Central America, we have perishable distribution centres to avoid the wastage of fresh produce.
“Finally, the people pillar entails responsible recruitment practices, fostering a positive working culture, helping the communities where we operate and empowering small businesses.
“Our sustainability agenda is incredibly ambitious and here in
Central America specifically we have several exciting projects underway. From using solar energy and recycling water at our manufacturing plants to composting at our stores and starting a pilot for a biodigester at one of our perishable distribution centres – we take a proactive and enthusiastic approach to our sustainability responsibilities.”
One of the exciting projects Francis highlights here also reflects the importance of partner collaboration in striving for sustainability. As Francis explains, pharmaceutical distribution poses unique challenges as the products need to be kept at controlled
temperatures and the total volume of the loads tends to be lower.
“We’ve started working with Cori Motors as a trusted dealer of Build Your Dreams (BYD) vehicles to develop a cold chain logistics capacity at the Walmart pharmaceutical distribution centre in Costa Rica,” says Francis. “We have started working with Cori Motors through the BYD brand to deploy the BYD T9, an EV van with robust air conditioning and hauling capacity. Cori Motors and BYD have been great partners helping us reduce our carbon emissions in our journey towards net zero.”
Looking ahead to the future, Francis
BYD Costa Rica stands out as the premier EV brand in the nation, leading the charge with more than 6,000 units sold since 2019, with its best-selling model, the BYD S1 PRO, exceeding 3,500 units sold. Complementing this success are models like the BYD YUAN PLUS, BYD TANG, BYD DOLPHIN, BYD SEAL, and the latest addition, the BYD SEAGULL. Moreover, BYD has formed strategic partnerships with multinational corporations such as Walmart, leveraging electrical products to slash carbon footprints and operational costs. Notably, the revolutionary Blade Battery sets the standard for durability, boasting an impressive lifespan of 1,200,000 km. Backed by an 8-year or 150,000 km warranty, this cutting-edge technology ensures reliability and longevity, further cementing BYD’s commitment to sustainability and innovation. As the preferred choice for eco-conscious consumers and corporate partners alike, BYD continues to drive towards a greener, more sustainable future for Costa Rica and beyond.
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“Cori Motors and BYD have been great partners helping us reduce our carbon emissions in our journey towards net zero”
believes there will be several key innovative moments in the next 10 years for Walmart International in Central America.
“We're always designing and constructing the supply chain of the future,” insists Francis. “We have a few big projects in the pipeline. One of them relates to the distribution of ambient and perishable products in two of our key markets, which are multimillion-dollar projects. We’re also very excited about the biodigester pilot at one of our sites here in Central America. It’s a trailblazing project for the company which we hope will transform how we manage our perishable waste.
“We’re also looking forward to starting EV trials with several of our vendors in the next two or three years. Central America is a prime space for trialling EVs because the current range for a trailer is what we will normally do as a back-and-forth journey to any of our stores, even our longest trips. We have consistent weather and varied topography so the vehicles can be tested comprehensively.”
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Turn over for 'ADDED VALUE' with Francis.
Francis celebrates the professional collaboration and opportunities to share knowledge in the supply chain industry.
“For us supply chain professionals, we have to look at ourselves as peers and not competitors,” says Francis. “We all have similar goals regarding sustainability, productivity and efficiency and we are in prominent positions to influence decisionmaking. We have a huge responsibility and I like to keep up with what my peers are doing.
“I have a few companies I admire what and how they're doing, and I don't see them as competitors, I see them as inspiration. BrewDog and its founder James Watt in the UK are a prime example, as is IKEA or Mercadona. I follow these people and companies because they share insights and solutions, which I like to then explore further and consider in the context of Walmart and my team.
“For instance, I saw a LinkedIn post by James about a project to run a percentage of the BrewDog
Connect with Francis
vehicle fleet using methane made from by-products of their breweries. Something clicked for me and I took the idea to my team, and from there we forged a business case for our biodigester pilot project in our Perishable Distribution Centre in Costa Rica.
“I like to connect with my peers so we can interact and engage with one another – I’ve found some great ideas from exchanges with my network. LinkedIn is a great opportunity for you to expand your network and start seeing what other people are doing and how they're doing it, as are magazines like CHAIN.
“In a similar vein, a major source of inspiration for me is the World Economic Forum,” says Francis. “I keep track of what they're doing and love how they highlight smaller companies that are developing breakthrough technologies and innovating sustainability strategies like thermal energy storage for cold warehouse and compact wind power to be placed on rooftops which are two ideas we have in the lab right now.”