I came across this article in cio.com. It outlines Wal-Mart’s plans to implement a “major sustainability initiative” across its supply base. Their goal is to” co-develop a worldwide sustainable product index that will establish a “single source of data” to allow Wal-Mart and (eventually) consumers to evaluate the sustainability of Wal-Mart’s suppliers’ products.” This initiative will be broken into three major phases;
- The 100 000 strong Wal-Mart supply base will need to answer a survey on practices in energy and climate, material efficiency, natural resources and people and community
- Wal-Mart will partner with universities, suppliers, retailers and government agencies to “develop a global database of information on the lifecycle of products – from raw materials to disposal”
- The company will then translate the information it’s gathered into a simple rating for consumers about the sustainability of products on Wal-Mart’s shelves.
The upshot of this is that Wal-Mart believes that its customers will want to be able to choose the more sustainable option when shopping for goods. Like price, quality and reputation, sustainability is becoming a buying consideration.
Wal-Mart has been implementing environmental initiatives internally as well. I’ve seen an example of some of Wal-Mart’s environmental efforts in my local store. We’ve recently been updated to a Wal-Mart Supercenter, complete with grocery store. The freezer aisles only light up the freezer displays when somebody walks by. It’s a bit unnerving, but I’m sure over the course of a day it saves significant energy. Other examples are recycling bins with every garbage bin, sales of re-usable bags and low water flow faucets in the washrooms. If you go onto the Wal-Mart (Canada) website, you’ll find a report on their environmental and corporate responsibility efforts.
The cynical amongst us, might look at Wal-Mart’s efforts and put it down to a marketing gimmick. It may be, but I don’t think so. In fact, it doesn’t matter what their motivation is. The reality is that Wal-Mart’s changes both inside their company and through the new rating system their rolling out, are an indicator of a change that is going to impact all of us. Customers, our governments, and our communities are demanding that we reduce our impact on the environment. Companies are going to need to look at their practices, processes and designs in order to reduce the environmental impact of your operations. The interesting thing is, reducing environmental impact often is simply a matter of reducing waste. The magic of this is that in reducing waste and making the company more sustainable, we actually end up reducing costs.
If Wal-Mart’s initiatives are successful, you can imagine that other retailers will be stepping up their efforts to match Wal-Mart’s. The impact of this environmental focus won’t stop with the brand owners. Suppliers and contract manufacturers to those brand owners will be asked to reduce their environmental footprint. Given that this is coming, companies really have two choices. 1) Wait until one of your customers forces the issue and try to catch up or 2) Be a leader and start looking now at your processes to see where waste and poor environmental practices can be eliminated. Those companies that are environmental leaders will have the competitive advantage in the future.
What are your plans to reduce your company’s environmental impact? What tools do you use to measure and improve your sustainability practices? Comment back and let us know.
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Tags: green supply chain, Supply chain management
Posted in Best practices, Supply chain management
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Wal Mart Does what is right for Wal Marts Bottom Line – nothing else.
IN Europe laws have been in place in for years regulating packaging – and you know what – you go into a store in Europe and the Packaging Sucks ,The Marketing Sucks, the Selection Sucks and guess what on a $’s / Square feet the sale SUCK!.
If a retailer only sells what the customer is coming to buy then the retailer is failing, these initiatives will kill sales on items that are impulsive and use packaging to drive that impulse.
These sales currently account for 35% of Wal Marts Sales – Trust me I know – so it all sounds very nice – however it will negatively affect WM”s bottom line – and they will pull out of it.
This is not something new for Wal Mart – they started a version of this 3 years ago and the result in the categories – decreased sales.
The result – cheaper products that didn’t work as well. But hey they were green, they were green and no one bought them.
Please whatever your opinion on this is – don’t believe that Wal-Mart does anything – other than watch its bottom line, which as a public company – it should.
As always Walmart is ahead of the competition in preparing for the inevitable. There is no doubt that green initiatives will play an important role in all aspects of business in the future. Europe is ahead of North America in implementing green initiatives, partly because of legislation and partly because such initiatives end up paying for themselves in through cost reduction, improvement in public perception and sometimes through new product introduction i.e. gren is seen as sustainable rather than merely environment-friendly. Unfortunately, in the US green is still viewed as a marketing ploy and long-term sustainability of businesses hasnt appeared on corporate radars. Yet.
In my organization, a services firm based in the UK, we have several broad-based green initiatives from simple ‘back-end’ measures like server/desktop virtualization to initiatives that change the way we work such as remote working, teleconferencing, and buying green energy.
We are also one of the leading providers of strategic Green IT solutions in the UK.
Supply chain operations (sourcing, manufacturing, transportation, warehousing) constitute the biggest component of energy usage and emissions in any organization and are therefore sustainable/green initiatives can make the biggest impact here. Walmart is only doing what is best for their shareholders, making the company sustainable in the long-term.